Swiss financial intermediaries in scope for I-FTT purposes must register and pay due FTT
On 26 October 2016 the Italian Revenue Agency (Agenzia delle Entrate) has published a provision outlining that Switzerland has become whitelisted for Italian tax purpose further to amendment of the double tax treaty between Switzerland and Italy. The amendment notably foresees the agreement to exchange information and to provide assistance in the collection of tax credits, which is the driver for Switzerland’s whitelisting.
Further to this whitelisting, Swiss financial intermediaries can no longer rely on the previous treatment under the blacklisting rules, i.e. being treated as the end investor or purchaser in a transaction involving financial products subject to Italian FTT. Under this treatment, the white list financial intermediary counterpart would have charged the Swiss financial intermediary with Italian FTT on a pre-emptive basis and paid it to the Italian Revenue Agency. Although being treated as an end investor was not a substitute for FTT compliance, as a matter of fact being a resident of a black list Country provided a reasonable certainty that no audit by Italian tax authorities was ever going to take place (in the event a black list entity wanted to comply, a specific whitewashing procedure was available).
The whitelisting now leads to the situation where every Swiss financial intermediary (banks and brokers in the first place, but also asset managers, trust companies and notaries in residual cases) needs to levy and account for any Italian FTT due on transactions involving taxable financial products, which means that the intermediary has to fully comply with the duties imposed under the Italian FTT regulations. As the provision amends the whitelist with retroactive effect as of 13 July 2016, Swiss financial intermediaries will need to report taxable transactions and declare the due Italian FTT for the period since entering into force to 31 December 2016 no later than 31 March 2017 with the Agenzia delle Entrate.
The take away
Swiss financial intermediaries can no longer rely on being treated as the end investor for Italian FTT purposes. As of 13 July 2016 Swiss financial intermediaries must autonomously apply and levy any due Italian FTT to their transactions with chargeable financial instruments. It is of utmost importance that the relevant compliance procedures are implemented enabling the Swiss financial intermediary to assess the due Italian FTT and to pay it on time, i.e. no later than 31 March 2017.
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