On April 1, Italy’s Minister of the Economy and Finance, Pier Carlo Padoan, signed 2 decrees that modify Italy’s “black lists,” and announced on the same day that Italy and the Vatican had signed their previously agreed tax information exchange agreement (TIEA).
The 2 decrees follow the guidelines laid down in Italy’s 2015 Stability (Budget) Law, which established amended criteria for the production of 2 black lists that is expected to boost economic connections with foreign countries.
Under the framework of Italy’s controlled foreign company (CFC) regime, the black list includes territories that do not have an adequate TIEA with Italy and if they have an effective corporate tax rate that is at least 50% lower than the effective tax rate that would be applicable if the company was an Italian resident.
The Stability Law specified another black list under which expenses incurred in transactions with residents in a jurisdiction would not be deductible. For this list, the criterion that such a jurisdiction should not have a privileged tax regime has been eliminated, leaving only the presence of an adequate TIEA with Italy as the determining factor.
The “non-deductibility of costs” list now therefore includes only 46 tax jurisdictions. 21 have been cancelled as already having TIEAs in effect. They are as follows: Alderney, Guernsey, Jersey, the Isle of Man, Gibraltar, the British Virgin Islands, Anguilla, the Netherlands Antilles, Aruba, Belize, Bermuda, Costa Rica, the United Arab Emirates, the Philippines, the Cayman Islands, the Turks and Caicos Islands, Malaysia, Mauritius, Montserrat, and Singapore.
This second list still includes Switzerland, Liechtenstein, and Monaco, despite the fact that all have recently signed TIEAs with Italy. At the time it was indicated that completion of those TIEAs would be a prerequisite for Italians with undeclared assets in those countries to be able to enter into Italy’s current voluntary disclosure program.