Italy’s Crackdown on Tax Evasion Deals Another Blow to Swiss Banks
Financial industry in Ticino, an Italian-speaking canton, is particularly hard hitBy Giovanni Legorano and John Letzing, WSJ
Feb. 9, 2016 11:12 a.m. ET
LUGANO, Switzerland—Rome’s latest crackdown on tax evasion is serving up fresh headaches for Swiss banks and dealing a sharp blow to the financial industry in Ticino, an Italian-speaking sliver of Switzerland pinched between the Alps and Italy’s northern border.
Switzerland, the world’s biggest repository for foreign wealth, has bled assets in recent years as tax evaders succumb to pressure from their home countries and come clean. Now Italy, in the thick of an aggressive new tax amnesty program, is squeezing money out of Ticino’s banks, long dependent on Italians who flocked to the Swiss canton, or state, to avoid the taxman at home. That is leaving the canton grasping for a new future.
In December, Rome said its amnesty—which threatened possible criminal penalties for those who didn’t step forward—had unearthed €40 billion ($44.6 billion) in undeclared money belonging to Italians in Swiss banks, about two-thirds of it in Ticino. That follows Italy’s prior recovery of €60 billion from Switzerland during back-to-back amnesties in 2009-2010, mostly from Ticino.
“Italian clients found themselves with basically nowhere to go,” said Paolo Bernasconi, a Swiss tax lawyer and former prosecutor based in Ticino. “Their safest option was to come clean. There are no more countries that offer the level of safety that Switzerland offered.”