Survival of the Richest

Italy
Ownership transparency
Italy has not yet transposed the EU’s 4th Anti Money
Laundering Directive into national legislation. The
government’s plans on the definition of beneficial ownership
of companies, as well as whether the public should have
access to the register of beneficial owners, are still
unclear, 486 but will likely become clear within the coming
year, since the deadline for transposition of the directive
is June 2017. 487 Current legislation defines as a beneficial
owner anyone holding 25 per cent plus one share in a
company. 488 The current law also allows senior managers
to be listed as beneficial owners in cases where the true
beneficial owner cannot be identified. 489
According to the 2015 Financial Secrecy Index, Italy has
the eleventh highest level of financial secrecy out of the 18
countries included in this report (ranked at number 58 at the
global level). 490
Taxation
Tax treaties
In total, Italy has 51 tax treaties with developing countries,
which is significantly above average (42 treaties) among
the countries covered in this report. The average rate of
reduction of developing country tax rates within those
treaties – 2.5 percentage points – is significantly below
average (3.8 percentage points). 491
However, what the average number doesn’t show is that
Italy has several specific treaties which are 'very restrictive',
and include strong limitations on the taxing rights of
the developing countries which are signatories. In fact,
according to research by ActionAid, the UK and Italy hold the
same position as the countries with the largest number of
'very restrictive' treaties with lower income Asian and sub-
Saharan African countries. 492
For example, the Italian tax treaty with the Democratic
Republic of Congo – one of the poorest countries in the
world – completely bans tax on interest payments paid to
overseas lenders. When affiliates of the same multinational
company borrow money from each other, the borrower will
pay interest to the lender. These interest payments can
sometimes be used by multinationals to artificially lower
their profits and tax bills in a certain country, by setting up
an internal loan between a subsidiary in that country and a
subsidiary in a low-tax jurisdiction. When there are no tax
payments on interest payments to overseas lenders, this
kind of abuse becomes even more tempting. 493
Harmful tax practices
According to a study on aggressive tax planning structures,
Italy has nine indicators of such structures, as compared
with the EU average of 10.6. 494 One of the indicators is active,
namely the notional interest deduction for share capital. 495
After the conclusion of the study, Italy has introduced
another active indicator, namely a patent box. 496
Italy offers advance pricing agreements (or ‘sweetheart
deals’) to multinationals. 497 There were 51 deals in force
at the end of 2014, and 68 by the end of 2015, making Italy
the EU country with the sixth highest number of advance
pricing agreements. 498
Global solutions
Italy has not been a supporter of the establishment of an
intergovernmental body on tax under the UN, 499 and there
has been no indication that this position has changed.
Conclusion
On the issue of transparency, Italy still seems very
undecided, and thus neither progressive nor regressive.
The Italian tax treaty system is concerning due to a high
number of 'very restrictive' tax treaties with developing
countries, which significantly undermine the tax system in
those countries.
Regarding the tax payments of multinational corporations,
Italy has shown a strong commitment to ensuring that
corporations pay taxes in Italy. However, at the same time,
attention needs to be paid to the monitoring of indicators of
aggressive tax planning structures, as well as the volume of
advance pricing agreements.
Lastly, it is problematic that Italy does not support the
creation of an intergovernmental UN tax body, which would
give developing countries the chance to participate on a
truly equal footing in the setting of global tax standards.
74 • Survival of the Richest