Jan. 30 (Bloomberg) -- Italy and Switzerland intend to make progress by May in resolving a dispute over Italian tax evaders who hid money in Swiss bank accounts, Economy Minister Fabrizio Saccomanni said.
“We have told our delegations to step up efforts in order to reach a comprehensive deal in due time,” he said at a joint press conference with his Swiss counterpart in Bern today. The two countries should be able to agree on the “timing and ways of the data exchange” by May when Italian President Giorgio Napolitano visits Switzerland, he said.
The Alpine nation is trying shake off its reputation as a tax haven after amassing $2.2 trillion of assets from wealthy clients living outside the country. Switzerland has entered into withholding tax agreements -- which preserve account secrecy while refunding tax revenue -- with the U.K. and Austria, and since 2012 has been in talks with Italy about a similar arrangement.
Last year, Switzerland announced it would be prepared to accept the automatic exchange of bank client information, should that become the global standard. That wouldn’t cover legacy assets, and the Swiss have proposed withholding tax deals to deal with existing account balances.
“We’re still in talks about how we’d regularize the past,” said Swiss Finance Minister Eveline Widmer-Schlumpf said at the press conference. “A withholding tax as we originally discussed isn’t a topic.”
Last week, Italian Prime Minister Enrico Letta’s cabinet announced a voluntary disclosure program allowing tax evaders to come forward and come clean.
“Our solution must build on the Italian program and may not be discriminatory,” Widmer-Schlumpf also said today, adding that Italians with secret Swiss accounts shouldn’t be fined at a different rate than those with undeclared accounts elsewhere in Europe.
Undeclared funds stashed by Italians abroad likely totaled about 140 billion euros ($191 billion) following the tax amnesty implemented in the years 2009 and 2010 by the government then led by Prime Minister Silvio Berlusconi, according to a report published on the Bank of Italy’s website in July 2011. During that amnesty 68.8 percent of declared or repatriated funds came from Switzerland, the report also showed.
In addition to the Italian talks, Widmer-Schlumpf also is seeking an agreement with Greece and will be meeting that country’s finance minister on Feb. 4 in Athens. A withholding tax treaty with Germany failed because of parliamentary opposition in Berlin.
“It’s necessary we finally reach an agreement and then we can plan our future, but not at any condition,” said Claudio Generali, president of the banking association of Ticino, the Swiss region bordering Italy, adding that Switzerland should ensure that the country’s banks have cross-border access in future.
Italy plans to fund cuts to the taxes on labor with any payments it gets out of the voluntary disclosure procedure, Prime Minister Letta said Jan. 24. Saccomanni said the funds will be used to finance the payment of arrears to private companies and co-finance European projects, the Finance Minister said at the same press briefing.
The U.K.’s example demonstrates that Italy might recoup less money than anticipated. As of Dec. 5, the U.K. had received a total of 789 million pounds ($1.3 billion); that compares to a prediction of 3.12 billion pounds for 2013-14 by Chancellor of the Exchequer George Osborne.
To contact the editor responsible for this story: Craig Stirling at email@example.com