Private Clients Tax Voluntary Disclosure in Italy After the adoption of the Automatic Exchange of Information, Italian taxpayers will only have until 2016 to regularize their assets. On July 21, 2014, the Organization for Economic Cooperation and Development in Europe (OECD) published the Standard for the Automatic Exchange of Information in tax matters. According to this standard, all countries of the world are called upon to adopt procedures to carry out an automatic exchange of banking information. An initial group of 51 countries, including Italy, has joined this exchange, to start in 2016. Any Italian tax entity that has foreign accounts (not only in Switzerland) will therefore have to deal with this procedure. Switzerland announced that it will transmit information for 2017 in 2018. Italian taxpayers thus have two years to regularize their tax situation. They will have this option thanks to the Legislative Decree on provisions concerning emergence and return of funds held abroad as well as to the strengthening of the fight against tax evasion (better known as Voluntary Disclosure, VD). In return for VD, Italy will introduce the crime of “selflaundering” into its national law, which upon expiration of of the VD will make the tax position of non-complying taxpayers very complicated and risky. were never increased, the cost of penalties will average 1% for each year in addition to taxes due, depending on the type of income. 2. Simplified calculation The Taxpayer will have the right to opt for a flat-rate payment of taxes so long as the average amount does not exceed the amount of € 2 million at December 31 of each year. In that case, income will be calculated at 5% per year, at the rate of 27% (1.35% annually), as well as reduced fines (1% for each year). 3. Tax agreement between Italy and Switzerland According to Italian law, the doubling of penalties and time of assessment for income tax are eliminated if, within 60 days after the enactment of the law, Switzerland (a blacklisted state for Italy) enters into an agreement to permit the effective exchange of information under Article 26 of the Model of the OECD Convention against Double Taxation. In that case, taxes and penalties will be calculated over 5 years. These are the main pieces of the coming legislation: 4. Exclusion of criminal offenses Any person providing voluntary cooperation will enjoy exemption from punishment for the crimes of misrepresentation, failure to declare, non-payment of certified withholding tax, and non-payment of VAT, as well as any crimes of fraudulent misrepresentation using invoices or nonexistent transactions or other mechanisms. This exclusion applies to individuals as well as entities. 1. Ordinary procedure For anyone adhering to the VD will have to reimburse to the State the taxes due as if the income had been declared ordinarily. Default interest shall also be due and penalties minimized. For example, with assets of EUR 3 million which 5. The practices of Revenue Pending adoption of Voluntary Disclosure, Italian Inland Revenue has already dealt with several cases of emergence of capital held abroad. It is therefore possible to take this route even in the absence of a legal text. Voluntary Disclosure in Italy / Tax / November 2014 Voluntary Disclosure in Italy KPMG has developed a pragmatic approach to protect the confidentiality of ours clients during Voluntary Disclosure procedures. Our approach involves performing procedures in two phases: the first in Switzerland – inventory of assets, reconstruction of their origin, and calculation of taxes and penalties – and the second in Italy – Italy Inland Revenue processing, definition of arrangements for payment of taxes and penalties. Voluntary Disclosure in Italy Swiss bank Switzerland Client • Inventory of assets • Estimate - Income - Taxes Italy • Case for voluntary disclosure Revenue Agency • Presentation of case for voluntary disclosure • Definition of investigation into income, taxes and fine ✗ Grafik2_Selbstanzeige-Italien_EN_290714.indd 1 29.07.2014 16:43:21 Our work is paid at an hourly rate and not a percentage. The fees vary from case to case, depending on the number of transactions and the complexity of transactions that the client has carried out during the period under review. Our fees may vary depending on the completeness of the documents the bank provides. If the documentation does not provide the information requested, the time required for our work could be longer. Indicative fees range from CHF 10,000 (EUR 8,200) for case A to CHF 110,000 (USD 90,000) for case D, and cannot be quantified for case E, the average hourly rate for which may be greater if the case turns out to be particularly complex. Again, each case has its own peculiarities, and fees will vary depending on the individual situation. Please note that the possible involvement of a criminal lawyer in Italy is not included in our fee. Fees are stated net of expenses (3.5% for Switzerland, 5% for Italy) and VAT if due (8% for Switzerland, 22% in Italy) and net a 4% social security contribution due in Italy. To provide a better understanding of the costs of the procedure, we have developed a guide to the fees for the following cases: Case Description A Flat-rate calculation B Limited number of annual investments (about 10) and a maximum of 5 deposits/transfers during the reporting period, on a consolidated basis. No other assets (property, boat, gold, etc.). C Usual number of annual investments (about 30) and a maximum of 10 deposits/transfers during the reporting period, on a consolidated basis. Limited number. D High number of annual investments and deposits/transfers originating from business activity. Use of external investment structures. Presence of other assets. E Case D but with additional elements of greater complexity. Contact us KPMG Via Balestra 33 6900 Lugano KPMG Via Balestra 33 6900 Lugano KPMG Via Vittor Pisani 27 IT-20124 Milano Lars Schlichting Legal Partner T: +41 58 249 32 53 E: [email protected] Olivier Schmid Tax consultancy Senior Manager T: +41 58 249 32 50 E: [email protected] Antonio Deidda Tax consultancy Partner T: +39 02 676 44 762 E: [email protected] www.kpmg.ch/voluntary-disclosures The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2014 KPMG Holding AG/SA, a Swiss corporation, is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. Printed in Switzerland. The KPMG name and logo are registered trademarks.
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