Something to save, but a lot to improve. This is the judgment of Cesare Vento, an expert in trusts and assets of the Origoni-Grippo-Cappelli & Partners firm of Rome, on the text of the decree-law on voluntary disclosure presented by the Government, but now being examined by the Finance commission of the Chamber in the form of a bill. According to the Government's programme, the measure should be approved by Parliament by the spring.
What is there to save?
It is certainly positive that also in Italy, as already in various EU countries and in the USA, there is a desire to resort to a regulatory device which encourages evaders not to continue evading, as was the case with the various amnesties and "shields" of the past, but to settle permanently. In this sense, it is positive that the provision does not allow for the maintenance of anonymity and provides for heavy penal sanctions in the event of partial disclosure, ie not of all previously undeclared foreign assets.
What can be improved?
Many aspects. For example, the provisions that oblige to indicate other subjects involved in the constitution of foreign capital are problematic. It is one thing to encourage the repentant taxpayer to be transparent towards the tax authorities by offering him a sanctioning discount on condition that he pays the evaded taxes, another thing is to force him, in order to regularize his position, to involve other people, as if it were a judicial investigation .
For example?
Just think of the fairly frequent case of Mr. Rossi who, having to pay for an asset purchased by Mr. Bianchi in Italy a few years ago, agreed with him for a "foreign on foreign" payment. If the provision is not modified, neither Mr. Rossi nor Mr. Bianchi would be able to regularize them except by revealing each other's violation. From a legislative point of view, in theory it would be easy to solve this problem by allowing the names of origin and destination of the movements of the account subject to disclosure to be kept secret. Here, however, another problem arises, the solution of which in the new measure is, in my view, of particular importance.
What?
This is the rule according to which undeclared assets held in blacklisted countries, such as Switzerland, are presumed to be the result of evasion, unless the taxpayer proves otherwise. Now, imagine that what Mr. Bianchi received was part of the price of an apartment that he had owned for more than five years, therefore not taxable. In order to overcome the presumption, Mr. Bianchi would necessarily have to reconstruct the real estate sale and consequently also disclose Mr. Rossi's violation. More generally, the rule on the presumption in question is a source of uncertainty and many problems, for example that of reverberating in a theoretical imputability for a tax crime based, precisely, on a presumption and not on concrete facts.
And how is this solved?
It is not easy to find a solution, unless the legislator is willing to take a practical approach: for example, it could be established that, if the taxpayer is unable to overcome the presumption, he must pay a flat rate on the repatriated and non-repatriated value, as it would have been with the original provision, its marginal tax rate (in many cases 43%), without prejudice to the obligation to also pay, in full, the taxes on the financial income generated by the availability in the years still open, the interest and discounted penalties.
Do you agree with the findings made by the Bar Association's Study Centre, relating to the flop risk if the professionals who assist taxpayers are not protected?
Certainly the findings of the Order are acceptable. It is right that the procedure provides for a penal sanction in the event that the taxpayer fails to disclose all foreign assets, or, more generally, provides false information. This is necessarily accompanied by the risk of imputation as competition for the professional who assists him. No professional would be willing to take responsibility for the certainty that his client has, so to speak, told him everything. That said, I believe that, realistically speaking, the flop risk is mainly linked to the excessive onerousness, albeit not in all cases, of regularization.
In your opinion, how will it end?
Representatives of the new government from both main political parties have openly declared that they are counting on the expected revenue from the voluntary disclosure. It therefore seems probable to me that there will be "broad agreements" also in the parliamentary process which should lead to the approval of the new law. The central political issue will naturally be whether, and to what extent, the onerousness of disclosure should be mitigated to encourage revenue.
How much does it help that in Europe there are negotiations with other countries, such as Switzerland, on the exchange of information between different tax systems?
The connection between voluntary disclosure and the progressive strengthening of the exchange of financial information for tax purposes, not only with these countries, is of primary importance. Today is the news that Luxembourg and Austria have given up their resistance and an agreement has therefore been signed on changes to the Savings Directive which will expand the scope of information subject to automatic exchange between EU countries. The subject is very technical and must be seen in the context of international economic policy. Furthermore, as far as non-EU countries are concerned, primarily Switzerland but also, for example, Singapore, the evolutions of domestic legislation are perhaps even more relevant in the sense of including tax evasion as a prerequisite for the crime of money laundering, with the consequent correlative extension of the obligation for banks to report so-called suspicious transactions where they have doubts about the tax regularity of the funds in the country of residence of the so-called beneficial owner.
I can say from professional experience that these topics, of clear relevance, are still poorly understood by almost all the potential interested parties and also by many operators. An attempt has been made to induce taxpayers to make use of the disclosure by fearing that it is better to pay 60 or 70% today than 200 or 400% tomorrow, but it has not been made clear to them why, in some time, the possession and/or movement of a account in the usual tax havens could be automatically traced by the Revenue or be reported to the FIU, the financial intelligence unit at the Bank of Italy, as a suspicious transaction. In my opinion, a communication campaign on these issues that is simple, clear and understandable even to non-experts would help the cause of the revenue expected from voluntary disclosure more than anything else.
