Sunday, February 16, 2014

Bombshell from Italy ! Has Italy started cash confiscation protocol - and retroactive to February 1 , 2014 ? "Money Launderer Until Proven Innocent:" - Italy Imposes 20% Tax Withholding On All Inbound Money Transfers ....... And how long before this 20 percent withholding applies throughout the Eurozone in order to prevent Italy bank runs and monetary forum shopping to avoid Italy's confiscation scheme ?

( So,  based on Italy's recent political history , does Renzi get deposed by Alfano before Italy's bonds go sideways once again ? )

Monday, February 17, 2014 7:05 PM

Italy has 4th Government in 3 Years, the Last 3 Unelected; Questions of the Day

Following the ouster of Italian prime minister Enrico Letta in a political party power struggle, Matteo Renzi Set for Mandate to Lead Italy’s Next Government.
 Matteo Renzi will on Monday be formally handed the job of forming Italy’s fourth government in just over two years with the aim of presenting his reform programme to parliament by the end of the week.

The 39-year-old leader of the centre-left Democrats, who ousted prime minister Enrico Letta in a party power struggle, has a mid-morning appointment at the presidential palace where he is expected to receive the mandate to govern from Giorgio Napolitano, Italy’s 88-year-old head of state. 

Despite Mr Renzi’s hurry to take over following last Thursday’s party coup, the timetable slipped over the weekend after his likely centre-right coalition allies asked for more time to agree on their agenda and the division of cabinet posts. Nonetheless, the presidential mandate will arrive in time to reassure financial markets at the start of the week that the process is moving ahead.

Although markets were relatively sanguine after Mr Letta’s ousting, there is some concern that Italy’s lending could increase should Mr Renzi consider breaching the 3 per cent budget deficit limit.

Fabrizio Saccomanni, outgoing finance minister, has added his voice to Jos√© Manuel Barroso, European Commission president, who prodded Mr Renzi to stay on course with Italy’s economic reforms while maintaining fiscal discipline. Mr Saccomanni urged Mr Renzi not to contemplate breaching the budget deficit limit set by Brussels.

Mr Renzi’s first challenge is to work out a coalition deal with Angelino Alfano, leader of the New Centre-Right, whose support is vital for the Democrats to secure the majority they lack in the Senate following inconclusive elections a year ago.

Mr Alfano, who held the posts of deputy prime minister and interior minister under Mr Letta, warned at the weekend: “We cannot do things in a rush.

Polls suggest a majority of Italians, while pinning their hopes on Mr Renzi breaking political logjams blocking reforms, do not approve of how the mayor of Florence reneged on his repeated promises to seek office only through the ballot box.

Opposition in parliament will be dominated by the centre-right Forza Italia of former prime minister Silvio Berlusconi and the anti-establishment Five Star Movement led by comic-activist Beppe Grillo.

Mr Renzi, who is not even a member of parliament, is set to become Italy’s third prime minister after Mr Letta and technocrat Mario Monti, who were nominated by the head of state without having won an election.
Questions of the Day

  1. Can you have a mandate with no votes?
  2. Can someone who breaks repeated promises win confidence of his constituency?
  3. Can Renzi succeed in implementing badly needed  reforms including dismantling union work rules, or will that stir up more pitchfork protests?
  4. Can Renzi possibly meet deficit targets mandated by the nannycrats in Brussels?

I propose the answer is "no" to all of the above questions.

Mike "Mish" Shedlock

"Money Launderer Until Proven Innocent:" - Italy Imposes 20% Tax Withholding On All Inbound Money Transfers

Tyler Durden's picture

While the propaganda surrounding Europe's "recovery" has reached deafening levels, what is going on behind the scenes is quite the opposite, and in the latest example that Europe is increasingly formalizing a regime of implicit capital controls, we learn that Italy has just ordered banks to withhold a 20% tax on all inbound wire transfers: a decree which on to of everything will apply retroactively to February 1. As Il Sole reports, "the deductions will be automatic (unless prior request for exclusion), and then it will be up to the taxpayer to prove that the money is not in the nature of compensation "income." In other words, as of this moment, but really starting two weeks ago, all Italians are money launderers unless proven innocent.
Some more details on Italy's latest decision to limit capital flows into the country, Google translated:
... the collection is the result of the decision to consider any transfer from abroad and directed to an individual Italian, as a component of taxable income, subject to proof to the contrary, which must be date the taxpayer receives the sum on your account. However, the first payments to the Treasury by intermediaries (mainly banks) will be performed July 16, so that the deemed payment accrued from February 1 until June 30 (and therefore set aside and with interest). Next, you will pay the withholding every 16th of the month following the effective perception of the sum. In fact, alltaxpayers who receive a transfer from abroad on their personal account - and not professional or business - will be applied to the deduction, as an advance which will then be computed in the annual tax return.
What Italy appears to be focusing on are direct income payments where individuals get compensation via bank transfer. Of course, since the tax is superceding, good luck to any Italian citizen explaining the origin of every inbound money transfer and it is in accordance with the law. `
It is, therefore, a real "held" that will not be applied only in the case where the taxpayer proves that the amount received or quenched and does not have a connotation income but only and exclusively sheet: for example, the transfer incoming could be a return of a loan made in the past, or the return of a deposit, the date for the conduct of a house leased abroad.
Reasoning aside, what Italy just did is enforce a "shotgun" withholding tax on all inbound money:
The mechanism that provides a primary role to the bank official that is to receive the declaration of the taxpayer and evaluate it. In any case, you make the deduction or not, the name of the recipient will be reported by the bank Revenue Agency. And the taxpayer has until February 28 of the year following the year of the deduction to attest to the improper application of withholding tax to the bank and ask for a refund.
Even Il Sole admits that the new tax is so ad hoc that confusion will surely follow:
As is apparent from the wording of the measure, there is not even a standard for the development of self but, certainly, there will be a "balancing" between assets and funds held abroad (the RW of the UNICO) and income flows in entry: in short, it is likely that the intermediary in addition to the self-certification may require a taxable person to the performance of the RW framework from which we must infer what good has originated the incoming cash flow.
Of course, what will end up happening, is that more Italians- especially the wealthiest ones - will open bank accounts either in other Eurozone nations that have not established such a draconian wire transfer regime, or - more realistically - in such New Normal tax havens as Singapore now that Switzerland's main business model for centuries has been destroyed. The end result will be even less capital inflows into Italy - just the opposite of what the desperate Italian government is trying to achieve. But that is a concern for the next Italian government and the one promptly replacing it. For the time being, let's all pretend Europe is fixed, even as it prepares for the nuclear option: the confiscation of retirement savings.