Vatican and Italy unite against tax evaders

The Vatican said on Wednesday it had signed an agreement to share financial information with Italy in a bid to stamp out tax evasion within the once-secretive city state.

Vatican and Italy unite against tax evaders
The deal followed months of negotiations between the Vatican and Rome. Vatican photo: Shutterstock

The deal followed months of negotiations with Rome and will see the Vatican share information on individuals and companies resident in Italy.

Religious institutes banking with the Institute for Religious Works (IOR), which were previously exempt from paying tax, will now have to find funds for the Italian taxman – with back-payments due for 2014.

Buildings owned by the Holy See in Italy – palaces, basilicas and religious universities given extraterritorial privileges in the Lateran pact of 1929 – remain exempt from taxes.

The new deal clarifies the tax status of the multiple religious entities from around the world which bank with the IOR, a Vatican insider told AFP, describing the previous system as "a bit of a shambles."

Pope Benedict XVI pledged to wipe out corruption after decades of scandals in which the Holy See's bank was accused of turning a blind eye to criminal activities and creating a hot-bed for money-laundering and fraud.

His successor Pope Francis announced a sweeping study of the bank shortly after his election in 2013, creating a special commission to report directly to him before launching a series of reforms.

The bank last year blocked the accounts of 2,000 clients and cut ties with around 3,000 others deemed unsuitable for a bank which was set up specifically to manage Church funds but ended up opening its doors to shady characters.

The IOR was the main shareholder of the Banco Ambrosiano, which collapsed in 1982 amid accusations of ties to the mafia. Its chairman Roberto Calvi – dubbed "God's Banker" – was found hanging from Blackfriars Bridge in London in a suspected murder by mobsters.

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Switzerland and Italy hope to deliver cross-border worker tax deal ‘by 2021’

Switzerland and Italy have pledged to conclude a long-awaited tax arrangement for cross-border workers by the end of the year.

Switzerland and Italy hope to deliver cross-border worker tax deal ‘by 2021’

At a meeting in Rome between Swiss President Simonetta Sommaruga and Italian Prime Minister Giuseppe Conte, the two leaders said progress was being made on a cross-border tax arrangement. 

The agreement, originally negotiated in 2015, has as yet not been signed by either state. 

READ: How Switzerland avoided a coronavirus 'catastrophe' by protecting cross-border workers 

A 1974 agreement between the two countries doesn’t define cross-border worker. 

Sommaruga praised Switzerland’s decision to reject an initiative which would have restricted migration from EU countries and perhaps had impacts on cross-border workers. 

“In last Sunday's referendum, the Swiss people once again said that they want the free movement of people. It is a good thing for our country but it is also a good thing for the whole of Europe,” she said. 

“With neighbouring countries, Switzerland has adopted a regional approach excluding border regions and also cross-border workers from the quarantine regime. 

“I hope we can continue like this.”

While Switzerland rejected the migration limitation initiative, Ticino was one of four of Switzerland’s 26 cantons to vote in favour. 

Conte told reporters he hoped a deal was concluded “as soon as possible” and hoped it would be concluded by 2021. 

Conte hailed Italian cross-border workers as essential to the health system in the southern Swiss canton of Ticino, particularly during the coronavirus pandemic. 

READ: How Switzerland's cross-border workers are growing in number 

In the canton of Ticino, one in five healthcare workers lives over the border in Italy – approximately 4,000 people. Ticino’s population swells from approximately 360,000 people to 440,000 during an average work day due to cross-border workers from Italy.

Unlike with Italy, Switzerland has struck a tax deal for cross-border workers from neighbouring France, which was amended during the coronavirus pandemic.