Transcript VOLUNTARY DISCLOSURE

Voluntary Disclosure
Patrick Harteveld – Mazars
Claudia C. de Regt – Fineco Bank
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Fight against tax fraud
• Stipulation of updated/new tax treaties and Tax Exchange
Information Agreements (TEAI)
– Tax treaty: Hong Kong, Panama, Singapore (new Protocol), San Marino
and Switzerland (updated Protocol)
– TIEA: Jersey, Guernsey, Isle of Man, Cayman Islands, Bermuda, Cook
Islands, Gibraltar, Liechtenstein, Monaco
• (Automatic) exchange of information
– European Union : Directive 2011/11/EU – as per 1 January 2015 there
will be an automatic exchange of information in relation to dividends,
capital gains, financial income, bank deposits
– OECD: Common Reporting Standard adopted by Global Forum on
Transparency and Exchange of Information for Tax Purposes (October
2014)
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What is Voluntary Disclosure?
• Can be described as an administrative tax procedure by which
the taxpayer makes a so-called «self-declaration» and by
paying the whole of income taxes due, can benefit from a
number of benefits in terms of penalties and criminal
prosecution
• The Italian tax authorities have expressed a positive stance to
introduce the program, providing the «Central Office to fight
illegal tax fraud (UCIFI)» the task to (..) promote activities by
which an incentive is created so that the taxpayer voluntary
discloses all his economic and financial activities and
belongings held abroad (cfr. par. 3.2. of Circ. 25/E/2013).
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Who can make use of the Program?
«International» Voluntary Disclosure
Persons subject to the fiscal monitoring rules and thus the following:
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Natural persons;
Non commercial entities;
Simple partnerships and
Similar entities
as tax residents of Italy are required to annually disclose their assets and
belongings held abroad (fiscal monitoring rules)
The above subjects whilst not being directly the owner of these assets
and belongings are the «effective holders» ex. art. 1, par 2, lett. u) of D.L.
n. 231 of 2007 and Technical Attachment
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«International»
Voluntary Disclosure
Tax residence of natural persons
– Sufficient to be a tax resident in just one outstanding year (Circ. AdE n.
10/E of13 March 2015)
– Art. 2, par. 2 of d.p.r. 917/1986 sets forth that a natural person is
considered a tax resident of Italy if such a person – for the greatest
part of the tax year (> 183 days)
• Has been registered at the Population Register (Anagrafe);
• Has his centre of vital interest in Italy;
• Has his habitual abode in Italy
- Art. 2, par. 2bis dpr 917/1986 sets forth that a natural persons who
emigrated to a blacklisted country is deemed to be a tax resident of
Italy, unless proven differently
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«International»
Voluntary Disclosure
 all investments and financial assets established or held
abroad, also indirectly by virtue of interposed persons,
in violation of the fiscal monitoring rules;
 income connected to above or income which serve to
establish or purchase these belongings or financial
assets as well as income pursuant to the use of these
belongings or financial assets (..);
 additional taxes, not connected to the belongings and
financial assets illegally held abroad (..)
 All-in principle; using the “international” voluntary
disclosure program obliges a taxpayer to use also the
“domestic” voluntary disclosure, but only limited to the
years covered by the international program (cfr. Circ. 13
March 2015, n. 10/E, par. 1.2)
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«Domestic»
Voluntary Disclosure
 Residual and refers to other «internal» violations that cannot be dealt
with through the «international» Voluntary Disclosure
 Refers to «other taxpayers», not necessarily falling within the scope
of the fiscal monitoring rules
 Covers essentially the following taxes:
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Personal and Corporate Income taxes;
Regional / municipal income taxes;
Substitutive taxes (imposte sostitutive)
IRAP
VAT
Violation in relation to withholding taxes
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How can one apply?
The Voluntary Disclosure program allows a taxpayer, before 30
September 2015, to regularize violations committed up to 30
September 2014
The regularization needs to be done by:
1.
Filing a digital return to UCIFI by 30 September 2015 (it is possible to
integrate and correct a prior filing but needs to be done within the same
deadline);
2.
File, within 30 days, but in any case within 30 September 2015, the
consultant’s «Export Report» (relazione) attaching all relevant
documentation and information
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Content of Expert Report?
Provision AdE, 30 January 2015, Prot. n. 2015/13193,
Attachment 4 sets forth the structure of the Expert Report:
1.
2.
3/4/5/6
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Introduction – General information on taxpayer;
Connected taxpayers – refer other connected taxpayers;
this is also to be mentioned within the form;
One may think of proxy holders being able to operate on
a foreign bank account (cfr. Circ. 13 March 2015, n. 10/E,
par. 6.1.)
Assets and belongings; income, etc.
Indication on previous declarations done in relation to Tax
Shield (scudo fiscale)
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Which periods are covered?
• A taxpayer can regularize the committed violation in
relation to tax periods still open to a tax audit
• Therefore it is important to besides looking at the
ordinary tax audit terms to also refer to other specific
measures which increase the auditable years:
• Investments and belongings held in Blacklisted countries;
• Periods which fall under a criminal tax offence
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Tax Audit deadlines
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Tax Audit deadlines (2)
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Tax Audit deadlines – Tax Offence
• Currently under review by draft Legislative Decree
«certezza del diritto» :
– Untruthful tax return: increase of evaded tax to € 150.000
and undeclared income to € 3 million;
– Omitted tax return: increase of evaded tax to € 50.000
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How Much does it cost?
The taxpayer needs to take into account:
• The total full amount of taxes payable in
relation to all tax auditable years
• Payment of legal interest
• Administrative penalties due
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Administrative Penalties – Violation of
Fiscal Monitoring Rules
• This violation is punished by:
– An administrative penalty ranging from 3% to 15%
of the amount of the unreported financial assets
and / or belongings;
– When these financial assets and / or belongings
are held in so-called blacklisted countries then
penalties are ranging from 6% (5% between 2004
and 2007) to 30%
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Administrative Penalties – Violation of
Fiscal Monitoring Rules (2)
• Making use of the Voluntary Disclosure Programs means that the
(minimum) penalty is reduced by 50% when the financial assets
and / or belongings:
a) are transferred in Italy or another country allowing an
effective exchange of information (EU, Norway, etc.);
b) were or are already held in such countries;
c) Whenever the taxpayer releases an authorization to its
financial intermediary to transmit all relevant
documentation and / or information attaching a copy of the
authorization
• In all other cases, the taxpayer can still benefit from a penalty
reduction but this is limited to 25% (in relation to the minimum
applied penalty).
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Administrative Penalties – Violation of
Fiscal Monitoring Rules (3)
• Please note that the penalties which
benefitted from the previous penalty
reduction can benefit from another penalty
reduction:
• To a 1/3, whenever the taxpayer fully accepts
the audit report notice (avviso di
accertamento)
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Summary sheet of penalties due in relation to
violation of fiscal monitoring rules (from 2008)
Original location
of belongings and
assets prior to VD
General
penalty
Destination of belongings / assets
after VD
Penalty
reduction
Further reduction
to a 1/3
1,50%
0,50%
Italy or «White list»
3% - 15%
Italy/EU/EEA (Iceland and Norway)
or in presence of an authorization signed by
foreign intermediary
Italy or «White List»
3% - 15%
Other countries than Italy/EU/EEA in lack of
an authorization signed by foreign
intermediary
2,25%
0,75%
3% - 15%
Italy/EU/EEA (Iceland and Norway)
or in presence of an authorization signed by
foreign intermediary
1,50%
0,50%
2,25%
0,75%
3%
1%
4,5%
1,5%
«Black list» with
exchange of
information (e.g.
Switzerland)
«Black list» with
exchange of
information (e.g.
Switzerland)
3% - 15%
«Black list» without
exchange of
information
6%-30%
«Black list» exchange
of information
6%-30%
Other countries than Italy/UE/SEE in lack of
an authorization signed by foreign
intermediary
Italy/UE/SEE (Iceland and Norway)
or in presence of an authorization signed by
foreign intermediary
Other countries than Italy/EU/EEA in lack of
an authorization signed by foreign
intermediary
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Administrative Penalties – Unpaid taxes
• The general penalty rates are between 100% 200% (untruthful tax return) and 120% - 240%
(omitted tax return). These are increased by 1/3 if
«foreign» income;
• The penalty rate can be reduced by 25%;
• Afterwards, an additional penalty reduction can
be taken to:
– 1/6 in case taxpayer fully accepts audit report;
– 1/3 in case taxpayer intends to make use of a tax
settlement (accertamento con adesione)
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Summary sheet of penalties due in
relation to untruthful tax return
Reduction by
accepting audit
report (1/6)
Location of income
General penalty
Penalty reduction
VD
Italy
100%
75%
12,50%
«White list»
country
133%
~100%
~16,62%
«Black list» signing
exchange of
agreement
200%
~100%
~16,62%
«Black list» not
signing exchange of
information
agreement
200%
150%
33,3%
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Reconstruction of foreign assets and
belongings
• In order for a correct reconstruction it is necessary that
the consultant acquires from its client:
– copies of bank statements in relation to the tax auditable
years;
– contracts and other documents indicating the origin of the
«foreign» financial assets and belongings and related
movements (withdrawals and / or contributions);
– Possible mandates given to fiduciaries and effective
beneficiaries;
– A so-called self-declaration by which the client declares
that all information and documents provided to the
consultant are conform the truth
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«Simplified» reconstruction of taxes due
• Rather than analytically calculating the taxes
due, a taxpayer may opt for a «simplified»
calculation provided the average annual
amount of the financial assets is not greater
than € 2 million
• In that regard, a 5% income is deemed in
relation to the foreign assets which is taxed at
27%.
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«Simplified» reconstruction of taxes due (2)
PRO:
Not necessary to analytically reconstruct
income;
Easier to apply;
Generally not debatable in terms of taxable
base;
Is beneficial if taxpayer was able to generate a
high return on investment
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«Simplified» reconstruction of taxes due (3)
CONS:
 No compensation allowed in terms of capital
losses;
 May lead to a higher tax in comparison with an
analytical approach (e.g. return on investment
have been, generally, lower than 5% recently and
average taxation was, generally, 12,5% up to
2011, 20% onward and 26% as per 1 July 2014);
 Only applicable on financial assets and not any
other belongings (e.g. immovable property)
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Other benefits – Exemption from Criminal
prosecution
A taxpayer making use of the Voluntary Disclosure
program is exempt from Criminal prosecution in
relation to a number of criminal / tax offences, being
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Other benefits – Exemption from Criminal
prosecution (2)
A taxpayer making use of the Voluntary Disclosure
program is exempt from Criminal prosecution in
relation to a number of criminal / tax offences, being
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New offence of «auto-riciclaggio»
The new art. 648ter 1 of the Italian Criminal Code
foresees that:
«whoever, having committed or taken part in
committing with intent a crime, uses substitutes or
transfers the money, goods or other items deriving from
the illicit activities in economic, financial,
entrepreneurial or speculative activities, such to
concretely hinder the identification of their illicit origin
(..), will be punished (..)»
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Impediments
• A taxpayer may not use the Voluntary Disclosure program
whenever he, or another person jointly responsible, is formally
aware of access, inspections, verifications or any other kind of audit
activity from the Italian tax authorities (e.g. the receipt of merely
questionnaire is sufficient);
• Nonetheless, if a taxpayer is subject to an audit and has finalized
the procedure in relation to a tax period, it may re-open the
relevant tax period for the purpose of the Voluntary Disclosure; also
the audit in relation to a specific tax does not preclude the use of
the Voluntary Disclosure program in relation to other relevant tax
years or other taxes (Cfr. Circ. 13 March 2015, n. 10/E, par. 3);
• In any case, whenever the Voluntary Disclosure Program cannot be
used, the taxpayer may still use the voluntary settlement program
(ravvedimento operoso)
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Finalization of the procedure
The taxpayer needs to pay in a single instalment (or in three equal
instalments), all amounts due in relation to the unpaid taxes and
violations of the fiscal monitoring rules
The taxpayer may not make use of compensation mechanism as of
art. 17 of D.L. 241/1997 not may it pay in additional instalments
The procedure is correctly finalized upon payment of all sums due;
therefore failure to pay just one of the due instalments means that
the Voluntary Disclosure Program is not correctly concluded
This means that the Italian tax authorities will recalculate the
administrative penalties due (no reduction) and the taxpayer cannot
benefit from the exemption of criminal prosecution
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Thank you for your attention
Patrick Harteveld
Mazars S.p.A. – Studio Associato
Legale e Tributario
Via Ludovisi 16, 00187 Roma
Email: [email protected]
Tel: +39 06 6976301
Claudia C. de Regt
Personal Financial Advisor
Fineco Bank
Via degli Scipioni 260
00192 Roma
Email: [email protected]
Tel: +39 337 869926
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