VOLUNTARY DISCLOSURE – FAQ

 

1. What is the international voluntary disclosure?It is the procedure introduced by Law no. 186/2014 which allows the repatriation of personal estate held abroad illegally or improperly declared in Italy.

   2. Who has access to the voluntary cooperation procedure?

   All those who qualify or qualified as tax resident in Italy in the tax years when violations occurred.

   3. Can I apply for the international voluntary disclosure procedure if I am not tax resident in Italy in the filing year?

   It’s correct.

   4. Can I access the voluntary cooperation procedure if I am are resident in a black-list country during tax years covered by the violations?

   Yes, provided that there are no means to win the presumption relating to the fiscal residence in Italy in art. 2, paragraph 2-bis of the Italian Tax Code.

   5. Which tax years can be object of the procedure?

   All tax years from 2010 to 2014 (except for cases where doubling of terms applies).

   6. How much is the penalty applied on violations related to fiscal monitoring?

 

• 1.5% of the value of investments as at December 31 of each year object of infringment for assets and goods held in a not blacklist Country or in a blacklist Country that has signed an agreement for the exchange of information with Italy
• 3% for goods and assets held in a blacklist Country

Above sanctions are reduced to 1/3 in settlement with the Inland Revenue of the amounts due.

7. How much is the penalty applied on personal income tax violations?

For income earned in countries Blacklist or blacklist countries that have signed an agreement with Italy for the exchange of information: 16.625% (penalties for unfaithful return); 20% (sanctions for missed declaration) in case of agreement with the Inland Revenue on the due amounts.

For products in Black list income countries: 25% (penalties for unfaithful return); 30% (sanctions for non-declaration) in case of agreement with the Inland Revenue on the due amounts.

8. What is it meant by “Doubling of terms”?

It is the enlargement of the tax periods object of the procedure as a result of holding financial assets and assets in countries that have not signed agreements with Italy for the automatic exchange of information (i.e. tax years between 2005 and 2014).

9. What are the activities and assets covered by the regularization?

The activities and assets subject of the voluntary disclosure procedure may be shareholding in foreign entities, foreign bonds and similar securities, Italian government bonds and securities issued abroad, foreign currencies, life insurance policies, derivatives, precious metals, options, supplementary pension schemes organized or operated by corporations and foreign entities, trusts, real estate held outside of Italy, etc.

10. What type of income may be subject to regularization procedure?

The type of income covered by the voluntary disclosure procedure International may be foreign financial income (foreign dividends, gains on the sale of foreign investments, interest on bank accounts or foreign bonds, etc.), land income (rental income of a real estate located abroad), self-employment income, income from employment, and, more generally, all types of income that are not properly specified in the tax return of the relating fiscal year.

11. Which are the steps to be undertaken?

The voluntary disclosure includes the following phases of execution:

• meeting with the taxpayer
• anti-money laundering check
• estimate of the operation cost
• undersignment of the necessary mandate to the professional in charge
• calculations
• preparation and submission of the accompanying report, the duly translated

documentation and, where necessary, of the SO-CALLED “Waiver”

• compilation and submission of the application form
• discussion of the case at the Agency’s offices of the competent tax office

2. Is it possible to estimate in advance the repatriation cost ?

   It is certainly possible to make a first estimate of the tax and penalty charge of international voluntary disclosure, provided that detailed information about the amounts and foreign income not properly declared in Italy are available to the professional in charge.

   13. Is it allowed to regularize assets held abroad if the income received in Italy has not been properly declared?

   And ‘allowed access to the procedure of international voluntary disclosure provided simultaneously arranging for the regularization of income earned domestically for the same taxable period.

   14. If I hold a property located in Italy through a foreign trust, is this considered to be owned abroad?

   It’s correct.

   15. How are the assets held abroad for voluntary disclosure purposes valued?

   The activities and assets held abroad are to be valued according to the criteria established for the preparation of the form RW of tax years subject of voluntary disclosure.
   
   16. Which blacklist countries have signed in 2015 the agreement for the exchange of information with Italy?

   Countries that have signed the agreement for the exchange of information with Italy for voluntary disclosure purposes are Switzerland, Liechtenstein, Monaco and the Vatican City

 

7. What are the methods of determining the tax due at the time of regularization?The voluntary disclosure may be implemented via recourse to the “analytical method” or the “flat-rate” method.

   18. What is meant by “related persons“?

   Anyone who has a relevant position for the purposes of the tax monitoring beyond the capital and financial assets in emerging or that have a connection with income tax deducted at highlighted.

   19. Which is the structure of the “accompanying report“?

   The accompanying report to the voluntary disclosure model will be structured into the following sections:

   – INTRODUCTION
   – RELATED PERSONS
   –           FOREIGN INVESTMENTS

–           INCOME RELATED TO THE FOREIGN INVESTMENTS
–           FOREIGN INVESTMENT UPON DISCLOSURE DATE
–           HIGHER TAXABLE BASIS AND NOT OPERATED WITHHOLDINGS
–           EFFECTS OF CONFIDENTIAL STATEMENTS OF ART. 13-bis OF DL 78/09

20. What are the operating procedures for the repatriation of capital to Italy?

The taxpayer who subscribes the voluntary disclosure procedure will physically repatriate financial assets in Italy by recurring to a financial intermediary residing in Italy; may continue to hold financial assets abroad in the direct-contracting arrangements subject to the sending of the waiver. The legal repatriation may be also carried out setting the assets in the name of a Trust Company.

21. Can I keep my assets abroad by joining the voluntary disclosure?

Of course, by filling out and submitting to the Revenue the “waiver”.

22. Can I deduct taxes paid abroad within the voluntary disclosure?

The Tax Office behavior has not been so consistent for the time being. Generally, foreign tax credit on real estate tax can be claimed if supporting documents are available.

23. What are the criminal consequences?

The international voluntary disclosure procedure allows the exclusion of criminal liability for fraudulent misrepresentation crimes by invoices or other documents for nonexistent transactions by other artifices, misrepresentation, non declaration, non-payment of withholding certified and non-payment of VAT. It also exempt the taxpayer from punishment for crimes of money laundering, use of money, goods or benefits of illegal origin.

24. What documentation must be filed at the time of submission of the application form?

All documents containing the balance of foreign assets at December 31 of each tax year, foreign income withdrawn from taxation in Italy and any other document which may help to appropriately represent the situation of the taxpayer before the competent Offices the Italian tax authority.

25. Is it a sworn translation required for documents written in a foreign language?

If the documentation is written in English, French, German or Spanish, the translation can be performed by the taxpayer and with his signature. If written in a different language, a certified translation is required.

26. Which Tax Administration Office the voluntary disclosure must be addressed to?

To Regional Management indicated in the transmission receipt of the required model.

27. Which elements would generate a denial of the voluntary disclosure procedure?

 

Foreclosure applies in case of formal knowledge, by the taxpayer, of access, inspections, verifications or any administrative investigation activity or criminal proceedings for violation of tax laws.

28. Does an “invitation”, “request” or “questionnaire” received by a taxpayer prior to filing the model precludes access to the voluntary disclosure procedure?

Yes, as confirmed by the Explanatory Circular of 13 March 2015.

29. If the tax payer is assessed on Italian incomes, is it still possible to regularize the foreign assets and incomes?

Yes, as confirmed by the Explanatory Circular of 13 March 2015.

30. What are the timelines?

The relay timing of the voluntary disclosure depends on the engagement and calculation complexity.

31. What is the activity of licensed professional?

The qualified professional must:

–           at the outset, fulfill anti-money laundering legislation;
–           draw up the professional mandate and the proposal of professional services;
–           make the calculations using the most appropriate method to the proposed case;
–           complete and submit the application form;
–           prepare and submit the accompanying report and its annexes;
–           discuss the case with the Inland Revenue.

 

2. Is it possible to amend the originally filed application form?

Yes, provided that the sending is made within 30 days of the original model.

33. What happens if the infringer dies?

If the taxpayer dies after May 31, 2016, the model must be filed no later than 31 December 2016. If the offender dies before starting the voluntary disclosure, the heir can start it anyway.

 

If the death occurs following the initiation of the procedure, the heir is entitled to continue it or abandon it by presenting a new instance as heir.

 

If the heir is author of further violations, will in turn present themselves a request for access to the voluntary cooperation procedure with regard to its position of possibly including its hereditary share.

34. How can I avoid the doubling of the assessment terms?

 

The financial assets and / or assets the subject of voluntary international disclosure must be owned in a non blacklist Country or in a blacklist Country that has signed an agreement with Italy for the exchange of information.

35. If foreign activities have been the subject of a confidential statement (tax shelter) as how is it necessary to act?

The successful accession to the tax shield must be mentioned and taken into account.