Portfolio shake-up follows Italy’s move to voluntary disclosure

The international and European financial landscape is witnessing an increasingly important transparency and cooperation process among countries. The introduction of joint instruments aims at fighting tax evasion and regularising assets through the exchange of information among various countries, according to the OECD standard endorsed by the G20. 

In Italy, the voluntary disclosure provisions and the agreement with Switzerland also fall within this scope.

Voluntary disclosure is an important opportunity to regularise asset and financial positions and an opportunity in terms of increased financial assets for a variety of entities. The banks are well aware of this, especially in the ‘private’ sector, even if the role played by financial institutions takes a back seat in this case.

The distinctive features compared to previous tax shields are mainly tied to this new international cooperation among countries and to the possibility of regularising undeclared assets on a voluntary basis. The cooperative attitude adopted by some countries, primarily Switzerland and Monte Carlo, and the collaboration agreement between Italy and Switzerland have now made the sentence “Swiss banking secrecy is inviolable,” an aspect of the past. 

Within a few years, all financial institutions around the world will also be required to report the assets held by their foreign customers to the tax authorities according to the rules dictated by the so-called ‘Common Reporting Standard’.

Unlike the tax shields, the new regulation no longer involves Italian financial intermediaries directly and does not provide for any tax obligation or compliance on their part. The relationship is between the taxpayer – supported by the professional/accountant – and the tax authorities, while the bank manages the regularisation activity even after many months following the successful voluntary co-operation.

In all likelihood, we will be dealing not only with financial assets, but also real estate and companies, although at the moment it is very difficult to predict the impact, including in terms of flows, of the voluntary disclosure.

Voluntary disclosure is an opportunity for customers and their families to take stock of their assets in an intergenerational perspective and of the overall management of their portfolio and the various assets included therein, within the scope of an increasingly detailed and complex regulatory and tax framework.

Once customers decide to adhere to the initiative, they may want to contact their private bank for the best management of their regularised assets. Specialised facilities need to be able to assess the different components of customers’ assets, also using an intergenerational approach. Advisory services need to provide a team of specialists in financial markets who, along with private bankers, support customers in all their investment decisions, providing advisory services on asset management portfolios.

In any event, voluntary disclosure will be a fairly long and complex process, which will essentially witness the involvement of Italian banks only at the very end.

It should also be considered that, in a preliminary phase, some customers may opt for the so-called ‘legal repatriation’, maintaining their financial assets abroad albeit through an Italian trust company. Nonetheless, once the sums have been regularised with the Italian tax authorities, this will result in fully-fledged competition between foreign and Italian banks, in terms of both performance and costs.

Another aspect which should not be underestimated is that, given the current economic scenario, part of the regularised amounts will be injected into the virtuous circle of the national economy, and in particular to support companies’ capitalisation