Switzerland and Italy sign agreement on tax issues

Yesterday, Federal Councillor Eveline Widmer-Schlumpf and Italian Finance Minister Pier Carlo Padoan met in Milan and signed a Protocol of Amendment to the double taxation agreement and a roadmap for continued dialogue on financial and tax issues. The agreement will improve relations between Switzerland and Italy in the area of finance and taxation after years of controversy and simplify the regularisation of untaxed assets before the automatic exchange of information is introduced.

The agreement between Switzerland and Italy was initialled on 19 December 2014 and was generally welcomed in the subsequent hearing procedure of the cantons and business associations in Switzerland.

The double taxation agreement (DTA) between Switzerland and Italy will be supplemented by a protocol that makes provision for the OECD standard for the exchange of information upon request. Once it comes into force, it should apply for circumstances from the date of signing, that is, from today. The protocol will be submitted to parliament for approval and is subject to an optional referendum.

Aside from the Protocol of Amendment to the DTA, the two ministers also signed a roadmap for continued dialogue on financial and tax issues. The roadmap contains a clear political commitment to several important aspects of bilateral relations in the area of taxation and finance. For each aspect, binding parameters were agreed or a schedule for the subsequent course of action was drawn up.

The roadmap includes an improvement in the cross-border commuters agreement which should be finalised by mid-2015. Furthermore, Italian taxpayers with an account in Switzerland should be able to take part in the Italian voluntary disclosure programme under the same conditions as those in Italy or other countries. Both countries can make group requests in accordance with the OECD standard to identify persons who wish to conceal untaxed assets.

In addition, the roadmap paves the way for Switzerland's removal from blacklists in Italy and reaffirms the commitment to initiating talks on enhanced market access for financial service providers. It has been established that financial institutions and their employees are not responsible for the tax offences of their clients in principle. Solutions for pending tax issues should also be drawn up for the Italian enclave Campione d'Italia.

After years of controversy, this agreement between Switzerland and Italy is laying new foundations that will make it possible to strengthen cooperation, improve relations between the two countries and develop bilateral economic relations in a constructive atmosphere. The agreement will facilitate the processing of the Italian voluntary disclosure programme recently adopted by Italy's parliament and will considerably increase legal certainty for Italian taxpayers who have an account in Switzerland. This will enable an orderly transition to the future automatic exchange of information in accordance with the OECD standard without massive outflows of capital. In this way, Switzerland's financial centre, and particularly Ticino's financial centre, will continue to enjoy good prospects.