Italy signs treaty with Switzerland to tackle tax evasion

Italian Economy Minister Pier Carlo Padoan on Monday signed a treaty with his Swiss counterpart Eveline Widmer-Schlumpf which marks the end of bank secrecy and helps identify potential tax evaders.

The treaty, signed in Milan, breaks the principle of client privacy that has permitted the creation of deposits used to dodge taxes for decades, a statement from the Italian economy ministry said.

Italian authorities will be able to ask information about hidden assets in Switzerland, in line with the standards of the Organization for Economic Development and Co-operation (OECD), and encourage their voluntary repatriation.

Therefore Switzerland will be removed from Italy's blacklist of tax havens, the statement added.

Under the new rules, Italian citizens willing to come clean about their undeclared income on a voluntary basis are spared from paying taxes for the 2005-2009 period, Il Sole 24 Ore economic newspaper wrote.

A "road map" for the amendment of tax rules on cross-border workers and other forms of collaboration was also included in the treaty, which will be subject to parliament approval.

"Taking a long-term view, public finances will significantly benefit" from the agreement with Switzerland, Padoan said.

He stressed that confidence between citizens and the State will be also strengthened.

"Billions of euros will return to the State," Italian Prime Minister Matteo Renzi commented on the treaty, which came after some three years of bilateral negotiations, in his words posted on a social network.

According to a recent estimation of Italian authorities, more than 90 billion euros (102 billion U.S. dollars) in taxes were dodged every year between 2007 and 2012.

"It is impossible to make a correct estimation of the amount of money which will return to Italy thanks to the treaty," Maurizio Mazziero, founder of Mazziero Research, an independent financial research firm based in Milan, told Xinhua.

Due to its high public debt, Italy is still far away from being able to lighten heavy tax burden which strongly hampers economic growth, Mazziero underlined.

Switzerland is only one of the so-called tax havens in the world, where evaders can hide their assets, he noted.

However, Monday's treaty was a concrete step to help fight tax evasion besides giving a positive message to honest citizens, Mazziero told Xinhua.

Local reports said a similar tax information-sharing treaty was set to be signed between Italy and Liechtenstein on Thursday. Enditem