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SWITZERLAND

Italy-Switzerland deal will help catch tax evaders

Italy and Switzerland on Monday signed a "historic agreement" to fight tax evasion, giving Italians until September to disclose funds hidden across the border.

Italy-Switzerland deal will help catch tax evaders
Italy’s finance minister, Pier Carlo Padoan, signed the deal with his Swiss counterpart Eveline Widmer-Schlumpf in Milan. Photo: Olivier Morin/AFP

Italy’s finance minister, Pier Carlo Padoan, signed the deal with his Swiss counterpart Eveline Widmer-Schlumpf in Milan on Monday.

Under the agreement Italian authorities will be able to request more financial information to catch tax evaders.

The protocol was hailed as a “historic agreement” by Italy’s finance ministry, which aims to reclaim billions of euros in lost tax revenue.

Both of the countries’ parliaments must now approve the deal, although authorities will be able to backdate their requests to February 23rd.

Italians who have money stashed away in Swiss bank accounts now have until September to disclose such funds to the authorities and pay their tax bills in full.

Swiss nationals working in Italy are also included in the agreement, Italy’s finance ministry said in a statement.

Switzerland will now be taken off Italy’s “black list”, thanks to the new era of cooperation. 

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TAXES

Italy to cut income tax for lower earners

Italy will drop its income tax bands from five to four and reduce tax rates for those on lower incomes under an agreement reached by key figures in the Italian government on Thursday.

Italy's finance minister Daniele Franco has reached an agreement with the government’s majority parties to cut income tax for lower earners.
Italy's finance minister Daniele Franco has reached an agreement with the government’s majority parties to cut income tax for lower earners. Andreas SOLARO / AFP

Going forward, personal earnings of between 28,000 and 50,000 euros will be taxed at 35 percent in Italy, down from the current rate of 38 percent.

Taxes on earnings between 15,000 and 28,0000 euros will be reduced from 27 percent to 25 percent.

The 41 percent tax band for earnings between 55,000 and 75,000 euros will be abolished altogether, with all income over 50,000 euros now set to be taxed at the top rate of 43 percent.

READ ALSO: EXPLAINED: How Italy’s proposed new budget could affect you

Yearly incomes below 15,000 euros will continue to be taxed at 23 percent.

The agreement was reached as the result of negotiations between Italy’s Economy Minister Daniele Franco and representatives of the majority parties in the Italian government over how to distribute the 8 billion euro tax cut provided for in Italy’s 2022 Budget Law.

Under the terms of the agreement, approximately 7 billion euros will go towards overhauling Italy’s personal income tax, or ‘IRPEF’, though these reforms.

READ ALSO: The rules and deadlines for filing Italian taxes in 2021

The remaining one billion will be used to eliminate the regional production ‘IRAP’ tax on sole proprietors and the self-employed.

The so-called ‘Bonus Renzi’, introduced by former Italian prime minister Matteo Renzi in 2014, which initially awarded an 80 euro and later a 100 euro tax bonus to lower earners, will be scrapped altogether.

Tax experts estimate that the reforms are likely to translate to average yearly savings of 100 euros for those on a 20,000 euro annual salary; 300 euros for those earning 30,000 euros per year, and around 600 for those receiving 40,000 euros per year, according to the Italian news daily Corriere della Sera.

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