Voluntary Disclosure, Italians make peace with the tax man
Which law does this new institute come under?
The first official document that mentions this procedure is a recommendation made by GAFI in 2012: a recommendation put into practice through the creation of a commission headed by Dr. Greco (the so called Greco Commission) at the Justice Ministry. The Greco Commission laid down the first operational indications on the use of Voluntary Disclosure in their first report of April 2013. Subsequently, the circulars of the Tax Authority number 25/E of the 31st July 2013, and number 38/E of the 23rd December 2013, clarified some practical aspects, and finally Law Decree 4 passed last 29th January introduced specific guidelines on the subject of voluntary collaboration or Voluntary Disclosure.
Who will be interested in Voluntary Disclosure?
Italians holding activities abroad which are undeclared to the tax authorities.
What are the requirements?
The tax payer, under the guidance of a trusted professional, must make a declaration requesting the use of Voluntary Disclosure (Prada is a recent example), and stating the intention of either transferring the activities held abroad to an account held with an Italian intermediary, or maintaining the activities abroad.
Is it possible to maintain the activities abroad?
Yes. The tax payer must specify, through a declaration to the tax authority, whether the activities will be maintained directly or indirectly through the use of an Italian fiduciary. In the first case, the tax payer must declare the activities held abroad through the completion of specific sections of their tax return. In the second case, the tax payer is not required to act directly, as the fiduciary will take care of the calculation and the payment of due contributions according to the terms of the law.
Why could it be advantageous to use an Italian fiduciary?
In the case of Voluntary Disclosure, the Italian fiduciary has a similar role to that adopted during the various fiscal amnesties; assuming the role of withholding agent for contributions due, which allows the client to avoid complicated calculations and respect deadlines for payment, whilst still being able to hold activities abroad, especially financial activities, and maintaining managing supervision throughout.