VOLUNTARY DISCLOSURE COMING SOON IN ITALY

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VOLUNTARY DISCLOSURE COMING SOON IN ITALY

The return of capital is finding a definition with an amendment to the Financial Stability Act now before the House .

The first drafts on voluntary disclosure provide   for a reduction of penalties by half  if the assets are held in whitelist countries and only reduced by a quarter if it were hidden from the Italian tax authorities  in the blacklist’s countries . There will also be a shield from criminal violations . Nothing punishable to taxpayers who have committed offenses of cheating and non-declaration ordinarily subject to 1 to 3 years’s jail, while for the most serious crimes of fraudulent misrepresentation and false invoicing or accounting tricks the penalty is reduced by half , from a minimum of 18 months to 9 and a maximum of 6 to 3 years imprisonment.

What is the voluntary disclosure?

It is not a tax shelter .

It is not an amnesty .

It does not guarantee anonymity.

There will be time to begin the process until 30 September 2016.

There are situations  in which the procedure for voluntary disclosure will not be possible . This is the case, for example, when the taxpayer is  aware of access, inspections , audits , or the start of any activity of administrative or criminal proceedings for violations of tax laws relating to assets held abroad intends to regulate .

What to do: taxpayers have to take the  first step for the voluntary disclosure that allows the return of capitals. In practice, any interested party must submit a request to the revenue agency that will indicate all of the investments and activities consisting of, or held abroad . At the same time it must provide all documents and information necessary for the reconstruction of income. But be careful of what one says, for claims and false documents is likely to be six months to a year in prison

The voluntary disclosure is a procedure that provides for:

The self-disclosure by the taxpayers Italian nationals and foreigners   resident in Italy of all economic activities and financial assets held abroad ( the self-denunciation must be total and not partial) and, consequently, the loss of anonymity ;

The payment of all taxes relating to the activities and foreign investment have not been declared ;

More favorable treatment for the application of sanctions against the taxpayer who wants to join ;

The possibility to use it for an unlimited period of time (it is not set to expire ) .

What is doing the Revenue Agency

On 31 July 2013, the Internal Revenue Service Circular No . 25 / E, as part of the international fight against tax evasion , identified nell’UCIFI ( Central Office for fighting  the international tax offence) the structure responsible for developing initiatives to encourage voluntary disclosure of economic activities and investments held illegally abroad by any person residing in Italy .

To date, there is pending a decision to provide the necessary clarifications in order to make operating the tool.

The steps of the procedure

At the preliminary phase , the taxpayer meets a professional and provides a complete picture about the assets held abroad and not declared.

What we do:

We assess the situation represented by the client in the light of money laundering legislation ;

We verify if he can take advantage of the voluntary disclosure ;

We shall contact the UCIFI for the confirmation of the possibility of joining the regularization program . Once agreed with the Office of the methods of self-accusation , the taxpayer concerned will evaluate the convenience in pursuing the voluntary disclosure considering that  the acceptance of the procedure immediately entails the loss of anonymity.

The Office will issue notices of assessment in which are indicated the sums due by way of tax , penalty and interest ;

The taxpayer pays what has emerged from the assessment notices and starts to officially declare assets held abroad.

The ascertainable periods

The periods covered by self-report by the taxpayer are those ascertained in accordance with the current rules . In particular :

Investments and assets held in countries with which there is an exchange of information :

In the event of a filed declaration, the assessment must be issued within the fourth year following the year of presentation (until January 1, 2014, the last ascertainable period is December 31, 2009)

In the event of omitted declaration, the assessment must be issued by the fifth year following the year in which the declaration should have been made (until January 1, 2014 the last ascertainable period will be the 31 December 2008) .

Investments and assets held in tax haven countries (so-called black list countries )

In the event of a filed declaration, the assessment must be issued within the eighth year following the year of presentation (until 31 January 2014, the last ascertainable period will be December 31, 2005 ) .

In the event of omitted declaration, the assessment must be issued by the tenth year following the year in which the declaration should have been made (from January 1, 2014 the last ascertainable period will be December 31, 2003 ) .

taxes

In the absence of information or instructions , the taxes due can be calculated using :

the analytical method ;

the presumptive method or flat rate.

The analytical method requires a detailed reconstruction and demonstrable of all income received by the taxpayer over the period ” ascertainable .” Depending on the type of earned income ( dividends , interest, etc.). , Taxed at ordinary degree or in its stead .

The presumptive method the  application of  average reference rate  set by the ECB . The income is then taxed in the ordinary way .

It should be noted that the voluntary disclosure requires the full payment of taxes and accrued interest.

Penalties

The sanctions that will be applied to address both the failure to fill out the form or unfaithful RW is the due and unreported tax.

There is reason to believe that sanctions related  to the RW section  will be imposed directly dall’UCIFI while those  relating to not declared and not paid taxes will be turned over to the various provincial offices .

At the moment there are no legislative decisions  on applicable penalties. However, it is possible to state the following:

the current legislation allows the taxpayer recipient of a notice of assessment , to pay what is required by taking advantage of a reduced fine under cooperative attitude .

Article . 7 , paragraph 4 of Legislative Decree no. 472/1997 allows the Office , upon the occurrence of exceptional circumstances “showing manifest disproportion between the amount of the tax which the infringement relates and the penalty ,” to reduce up to half the applicable penalty.

It is important to note that the current penalty rules provide that , in the case of undeclared activities held in a tax haven country , all the assets are  considered to be the result of foreign income subject to unpaid tax.

Criminal effects

The criminal implications of voluntary disclosure  is one of the most sensitive aspects of the whole procedure . The Legislative Decree no. 74/2000 provides that , above a certain threshold, the misrepresentation and the failure declaration constitutes a criminal offense .

In this regard, a legislative act aimed to decriminalize  all those who join the voluntary disclosure  in the case of unfaithful declaration or non-declaration appears appropriate , given that this would still leave sanctioned  from the point of view of criminal offenses of fraudulent misrepresentation , false abduction of fraudulent billing and payment of tax .

Article 4 D.Ls. 74/2000 : ” Unfaithful Declaration”:

Except for the cases provided for in Articles 2 and 3 , anyone who  indicates in one of the annual statements relating to active elements for a total tax less than the actual or false liabilities shall be punished with imprisonment from one to three years , in order to evade income tax or value added tax, , when collectively the unpaid tax is higher , with reference to single out any of the taxes , to fifty thousand euro ; the total amount of the assets stolen imposition, also by indicating false liabilities , exceeds ten percent of the total amount of the assets mentioned in the declaration, or, at least , is more than two million Euros . “

Article 5 D.Ls. 74/2000 : ” Failure declaration :

And ‘ punished with imprisonment from one to three years anyone , in order to evade income tax or value added tax, no , there being obliged , one of the annual statements relating to such taxes , when the unpaid tax is higher , with reference to single out any of the taxes to thirty thousand Euros . For the purposes of the provision referred to in subsection 1 shall not be deemed omitted the statement submitted within ninety days after the deadline or not signed or not written on a printed conforms to the model laid down. “

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