Compilation of Italy’s Voluntary Disclosure form for foreigners who are tax residents in Italy

June 30 is the annual deadline for foreigners who are tax residents in Italy to file, together with their tax return, the Voluntary Disclosure form (RW Form) that includes income related to investments held abroad and taxes related to these assets.

It is often the case that foreign nationals who are tax resident in Italy still own assets in the country of origin, or in other countries where they may have lived for work purposes, and have purchased a property or left a current account.

First of all, it is important to clarify the obligations and duties of people who are foreign nationals but resident in Italy but with assets held abroad. Each year from the first tax period in which the foreigner is considered to be tax resident in Italy, they must compile and submit the RW form in order to comply with tax monitoring obligations and the two national taxes on assets held abroad, IVIE (tax on value of property located abroad) and IVAFE (tax on the value of financial assets held abroad).

This year, the Voluntary Disclosure form also contains boxes for the setting out of the taxes on the foreign goods mentioned above, namely IVIE and IVAFE.

The assets to be declared are those held abroad directly by the person who is resident in Italy, without the intervention of any intermediary who is also subject to tax in Italy. If there is an intermediary, then he or she will fulfil the obligations arising from the possession of the assets, including the settlement of the taxes due.

The RW Form must also contain the values of individual assets as of January 1 or from the day of commencement of ownership and those at the end of the tax period (December 31) or on the day on which the asset was sold or disposed of or that it is “physically” returned to Italy.

In addition to this information, it is also necessary to identify the foreign country where the assets or activities are allocated. If the assets are denominated in currencies other than the euro, currency conversion is required. In this case, both the initial value as of January 1 2016 or the start date of the ownership of the assets if later and the value at December 31 or earlier if the date of transfer or termination of activity is earlier, must be converted.

The exchange rate to be used will be the average for December 2015 (for assets held on January 1 2016) or of the month in which the ownership of the activity started or ceased, or that of December 2016 (in case of ownership as of December 31 2016 – see Circular No. 38/E/2013).

It should be noted that it is expressly set out in the legislation that, for the purpose of compiling the RW Form, the exchange rate on a particular date cannot be used, only the monthly average. Once the values of individual assets have been determined, it is important to remember that there are exemptions from declarations or tax for certain categories of goods or below certain quantitative thresholds.

Particular attention is paid to identifying the person that is the “actual owner” of the right or asset. Ministerial Circular no. 38/E of 23 December 2013 deals in part with this concept and its implications in operational and disclosure terms. The Circular strongly states that “not only the ’formal’ owners and the persons who have access to the foreign asset have to disclose it, but also those who can be considered the ’actual holders.’”

This definition of “actual owner” has been borrowed from the anti-money laundering regulations, and therefore shareholdings or assets held by foreign companies or trusts should also be declared if the holding is considered to be significant (more than 25%). The distinction in the declaration between the insertion of the shareholdings or the individual assets will depend on whether the host country allows exchange of tax information or not.

In the case where this is allowed, it will be sufficient to indicate the shareholding, otherwise the individual assets will have to be set out.

For those who have omitted to file or filed incomplete RW forms, it is possible, through starting remedial action, to remedy both omission and incompleteness by paying a significantly reduced sanction.

Finally, the rates for the individual taxes due are: IVIE is 7.6 per thousand of the taxable base (except for the main residence the rate for which is 4 per thousand of the value of the property), while IVAFE is 2 per thousand of the relevant value (except for current and savings accounts for which the fixed tax of €32.40 is due). Taxes are due in proportion to the days of possession during the year and to the percentage of ownership by the taxpayer.

Download PDF Compilation of the RW form: Table 1, 2 and 3 

di Stefano Mazzocchi & Roberto Viscomi

fonte: Il sole 24 ore


How to comply with new rules for launch of automatic exchange of information on current accounts for non-residents

The season for automatic exchange of financial information, for tax purposes, of non-residents in Italy starts April 30. In fact, by that date, financial intermediaries must have sent the Italian Revenue Agency all information to implement the law of June 18 2015 n. 95 and Directive 2014/107/EU, which amended Directive 2011/16/EU on the automatic exchange of information in tax matters (in particular through the Common Reporting Standard – CRS).

This information will then be transmitted, by September 30 2017, to the authorities of the jurisdictions that adhere to the automatic exchange of information.

This exchange of information falls within the scope of international cooperation that is emphasized by both the OECD, through the CRS, and the United States with the signing of intergovernmental agreements for the implementation of the US legislation, Foreign Account Tax Compliance Act (FATCA).

In general the following personal data must be disclosed: name and surname, jurisdiction of residence, tax code identifying the country where the person resides, date and place of birth.

The financial data that must be exchanged are the account number, the name and tax code of the financial institution that is obliged to send data and the balance or the value of the account as at December 31 2016.

In the case of custody of financial assets, the gross revenues from portfolio management in addition to the balances must also be shared. The financial intermediary must also indicate the currency in which the data was collected.

It will be relevant to all the relationships with banks (i.e accounts, savings deposit and similar) in place after January 1 2016. For the relationship existing by December 31 2015, the law makes a difference between relevant accounts with a balance of $1,000,000 and not relevant when the balance is below that amount at the date above.

Depending on whether the account is relevant or not, there are higher or lower requirements regarding the verification to be carried out by the intermediary that has to send the required information.

Financial intermediaries will therefore be obliged to carry out and report on a type of tax due diligence on all accounts held by non-residents where the main duties consist of: a) verifying the truthfulness of the tax residence declared by the taxpayer who must show the residence certificates issued by the public institutions of the country in which he or she claims to be resident; b) the correct identification of the “Account Holder” who is the actual beneficiary regardless of the person who has the powers to manage the use of the sums in the account.

The regulation, among other things, provides that every year the actual account holder must be contacted at least once a year to verify the accuracy of the information required by the tax due diligence procedure. This must be done for at least 10 consecutive years from when the account is identified as an account subject to exchange of information on the basis of the rules described above.

From a look at the annexes to the legislation, today there are more than 90 states that have pledged to exchange information, with a division between those who will exchange information in 2017 (and therefore also for 2016) and those which have pledged to do so from 2018 which will cover information from 1 January 2017.

It should also be stressed that this regulation applies to both our citizens resident abroad for tax purposes and to foreign tax residents in Italy.

Di Stefano Mazzocchi e Roberto Viscomi

Effect on non-residents of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters

With the reopening of the Voluntary Disclosure program by the Italian government, it becomes particularly interesting to understand how and on what legal basis tax information can be exchanged between countries. The exchange of tax information involves three major categories of taxpayers:

(i) Italian people and entities that are tax resident in Italy and who hold assets abroad,

(ii) foreign people and entities who are tax resident in Italy but also have assets abroad, perhaps in their country of origin and

(iii) persons who do not reside in Italy but have businesses or receive income here.

The element that is common to all these taxpayers is that, on the basis of international tax cooperation agreements, information or data on these activities can be exchanged between the two countries (i.e. the tax residence of the taxpayer and the country where the asset is located or from where they obtain the income).

Among the most important international agreement in this field is the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (also known by the acronym MAAT). This agreement was signed in Strasbourg in 1988 and Italy acceded to that agreement with law no. 19 of 10 February 2005 which took effect on 1 May 2006. In 2010, the Convention underwent a make-over resulting in the taking effect of the Protocol of June 1 2011.

The people who are affected by the Convention are taxpayers who, based on their residence together with the location of their property, are resident in countries that have ratified the Convention and that hold assets or receive income in another country that has also joined the Convention. Here the status of the countries that have adhered to the convention.

From scrolling through this information, the date of entry into force for each country as well as the data that can be exchanged can be identified. Article 27, paragraph 6 of the Convention provides that the Convention takes effect for that country on January 1 of the year following its ratification of the Convention.

However, paragraph 7 of the same article provides that in the presence of tax evasion under the law of the country requesting administrative assistance, the information and assistance required from the country where the offence has occurred can also extend to tax periods preceding the entry into force of the Convention.

This broad provision may be limited under article 30 paragraph 1 letter f) of MAAT under which a subscribing country may seek to limit the period for which it undertakes to provide the information relevant to the crime by the requesting country to the three tax periods preceding the entry into force of the Convention.

Italy has not exercised this option while other countries such as Luxembourg or Switzerland have done so (here is the list of limitations ). Italy has therefore indicated its willingness to provide tax information without putting any time limits on the time period of the requests. So while Italy will provide the information requested by another State without time limits, conversely Italy will need to check if the country from which it requests tax information has opted for a time limitation referred to above.

Essentially a taxpayer will have to check on the links (which are constantly updated) if the relevant country has opted for a time limit as provided for by Article 30 and the time when the country signed and implemented the MAAT.

Finally, it is worth remembering that the main areas of collaboration that a subscribing country may obtain from another subscribing country are:

(a) tax information that is already in existence and available to the relevant local tax authority for which there is automatic exchange, upon request or spontaneously;

(b) cooperation in the enforcement of tax debts accrued in the requesting country;

(c)assistance in the service of documents.


by Stefano Mazzocchi and Roberto Viscomi
Fonte: il sole 24 ore

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