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Vatican enters “white list” and is no longer a tax haven

by Carlo Marroni

The Vatican City is (officially) no longer a tax haven. The Holy See has in fact entered Italy's “white list for tax purposes,” that introduces a financial income tax exemption for the residents of the countries concerned.

The new rule came into effect following the official promulgation on March 23 of legislation by Economy and Finance Minister Pier Carlo Padoan, updating the list of countries that allow an adequate exchange of information with Italy for tax purposes.

The inclusion of the Vatican is a direct consequence of the tax agreement with Italy signed on April 1, 2015 and which took effect on October 15 last year.

The Vatican highlighted that the presence of the Holy See in Italy's fiscal white list “confirms the process towards reforms and transparency,” showing that the Vatican City State “is a cooperative and transparent country with respect to fiscal information.”

The inclusion of the Holy See (along with other countries) is an update of the list first published by Finance Ministry in 1996, and is an automatic result of the Convention promoting the exchange of information for tax purposes and regulating the fulfillment of tax obligations of individuals residing in Italy. The first Article of the Convention regulates the exchange of information for tax purposes.

This white list “for tax purposes”should not be confused with the one concerning the effectiveness of anti-money laundering systems, drafted by the Council of Europe in Strasbourg, that in the past had sent inspectors and drawn up reports.

Although these are two different “white lists,” the inclusion of the Vatican City in the list for tax purposes, according to the Holy See, will however serve as a parameter for assessing the “substantial equivalence” for the inclusion in the anti-money laundering “white list.”