The Italian government has recently made another effort to get individuals not complying with national tax rules to disclose their financial affairs in return for limited concessions on criminal penalties, a contrast to some recent practice by the country.

The Italian government has recently made another effort to get individuals not complying with national tax rules to disclose their financial affairs in return for limited concessions on criminal penalties, a contrast to some recent practice by the country.

A decree, on 28 January, set out the programme so that taxpayers declare wealth held outside of Italy in breach of exchange controls.

Like many of its European peers, Italy is seeking to claim undisclosed accounts held in countries such as Switzerland at a time when such nations are battling to replenish public finances and slash debt. Italy has held a number of tax amnesties and programmes; in 2009, for example one of these schemes yielded a total of €95 billion – a media report at the time claimed that 98 per cent of the illegally-held money foreign money had been repatriated. The fact that a fresh disclosure programme is under way suggests authorities still believe, or hope, of reclaiming further revenue.  

“In conclusion, in contrast to the similar tax amnesties launched in Italy over the last decade (known as "Scudo Fiscale"), the programme allows persons to settle the undisclosed holding of foreign assets and the related tax liabilities in return for limited concessions over criminal liabilities and monetary penalties for breaches of exchange control regulations,” [tag|Baker & McKenzie|]Baker & McKenzie[/tag], the international law firm, said in a note. The programme does not grant concessions over unpaid taxes and related penalties, it continued.

The Law Decree, as it is called, must be approved by Italian lawmakers on 30 March, possibly facing further adjustments. To qualify for the voluntary disclosure regime, people and non-commercial entities must be fiscally resident in Italy and prior to 31 December 2013, broke Italian exchange control regulations.

The law firm points out that people cannot use the voluntary process if the tax authorities are already starting action leading to an assessment, such as requests for information or an on-site audit.