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Swiss banking secrecy comes to an end: today Italian and Swiss ministers sign a new Protocol

by Alessandro Galimberti

After 37 years, Italy and Switzerland change their (power) relationship in terms of taxation. The signing on Monday at the Prefecture of Milan of the new Protocol for the Convention on double taxation will mark the end of banking secrecy, a system which under the ironclad principle of client privacy for decades has allowed the creation of deposits eventually used to evade taxes.

At the ceremony are expected the Ministero of Economy Pier Carlo Padoan and delegation chief Vieri Ceriani from Italy, as well as Swiss minister Eveline Widmer Schlumpf and undersecretary Jacques De Vatteville.

The signing takes place within the deadline set by legislation on capital repatriation (the 186/14 law on Voluntary disclosure, which has come into force from January 1). As a result, Switzerland will be immediately removed from Italy’s black list – but only in order to adhere to voluntary disclosure.

This means that Italian taxpayers willing to regulate their position with their tax authority could be spared from paying for 2005-2009, peak years before the crisis. Under the rules, the Italian Revenue Agency cannot impose the taxes initially owed for those years, but only for 2010-2014.

With this evidently political operation, Italy risks of losing some billions of euros in tax revenues, sacrificed on the altar of the hoped final repatriation of thousands of taxpayers and of their assets.

The bilateral agreement unexpectedly leaves unchanged other issues, important especially for Berne, which have been pushed back “sine die” (or to an unclear road map, a term that many think suggests a lack of commitment). Among these issues, there is the access of Swiss banks to the Italian market, the cancellation from other black lists, the regulation of past activities, the immunity for Swiss operators under the new Italian self-laundering crime, and finally the tax discipline for cross-border workers.