Italy has recently introduced legislation instructing banks to withhold 20% on certain inbound wire transfers. The inbound wire transfers affected by this measure include income earned from foreign investments, financial gains, interest, dividends and certain other incomes, transferred into personal bank accounts in Italy. Although the new measure is effective from 1 February 2014, the withholding requirements will not apply until 1 July 2014 as the Tax Agency has recently delayed the implementation date. The new regulation states that withholding payments would be due to the government on a monthly basis. These withheld sums will offset the taxpayer’s annual amount of tax due.

The main features of the new regulations are as follows:

On behalf of the taxpayers, the Agenzia will receive the tax withheld by the bank. Tax will be withheld on overseas income earned through investments, interest, dividends, other financial assets, etc. Salary and money transferred as capital rather than income will be exempted and evidence for this must be submitted. In order to claim exemption, it is necessary for the taxpayer to submit an “autocertificazione” – self-declaration – to the bank. This declaration should state that the income source is not from financial assets held overseas. Employees are responsible for obtaining and submitting all required documentation to their banks for the exemption to apply to salary transfers. Employers are exempt from compliance under this new regulation. They should however inform employees of wire transfers or other monetary payments that originate from international locations.