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Taxing times Italy’s Monti opens door to bilateral tax treaty

Italian Prime Minister Mario Monti has signaled willingness to open negotiations with Bern for a bilateral tax treaty similar to those agreed between Switzerland and Germany, Britain and Austria.

However Monti qualified his remarks by saying that an agreement would only be possible once the Swiss canton of Ticino agreed to lift a freeze on the tax-at-source revenues of cross-border workers that would normally go to Italy.

Ticino imposed the freeze last June as a way of pressuring the Swiss government to renegotiate the existing agreement with Italy governing taxation of cross-border workers. The canton was also angry that Italy had maintained Switzerland on its blacklist of tax havens, making it harder for Swiss firms to do business in Italy.

Monti said “if there are positive signals” from Ticino that it was ready to lift its freeze on Italian workers’ taxes, he was prepared to “reconsider the entire matter” of a bilateral tax treaty with Switzerland.

The comments represent a change in position for Monti, who has previously refused to entertain the prospect of a bilateral tax treaty with Switzerland. However in recent days he has come under increasing pressure from most Italian political parties who wish to open negotiations with Switzerland.

A spokesperson for the State Secretariat for International Financial Matters said Swiss authorities were in contact with their Italian counterparts. and agencies

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