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The Italian Government has removed Malta from the Italian blacklist of tax havens. The removal is expected to generate added interest from Italian investors to carry on business in Malta or to use Malta as a centre for international operations given the resulting legal certainty. Early in 2010, the Italian Government introduced a new obligation on Italian businesses to report cross border supplies between Italy and ‘black listed’ countries which included EU member states such as Malta. The obligation was tied to transactions that fall within the scope of VAT and Italian businesses were due to submit the first declaration on 31 August 2010. The aim of this measure is to counteract VAT frauds in Italy and has been adopted after the discovery of a carousel fraud which involved some of the largest players in the telecoms industry.
In particular, the removal from the black list means that Italian individuals who have attempted to transfer their residence to Malta should not have a continued presumed residence in Italy and there should be no additional tax consequences for Italian businesses with subsidiaries or associated companies in Malta.
Over the years, Italy adopted a number of blacklists for different purposes, including a list aimed at restricting transfers of tax residence of individual taxpayers to certain jurisdictions, CFC legislation and non-deductibility of corporate costs and expenses. In the case of EU countries such as Malta the new VAT reporting obligation was heavily criticised considering that there were already adequate arrangements in place between Malta and Italy that provided for exchange of information, in particular, the Intrastat reporting system and the exchange of information clause contained in the DTA.
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