Tax Pills

Medical expenses, all the information to deduct them in tax return
The Italian Revenue Agency dissolves taxpayers' doubts about the possibility to deduct the medical and dental costs, incurred the previous year, in occasion of the annual tax return. Payments of fees to doctors, dentists, surgeons, chiropractors, costs incurred to buy medicines and medical devices, for themselves and for dependent family members, are just some of the expanses in relation to which taxpayers can benefit of a 19% deduction from the Italian personal income tax (Irpef).  In particular, the medical expenses deduction is equal to 19% of the difference between the total amount payed by taxpayers in the year and the franchise of 129.11 euros.
Medical expenses at the top of tax deductions - Healthcare costs represent in Italy the most requested type of deduction by taxpayers. For fiscal year 2016, nearly 700 million fiscal documents, such as cash receipts for the purchase of medicines or invoices related to medical examinations, have been pre-entered by the Italian Revenue Agency in the pre-filled tax return, for an economic value of deductible expenses of about 29 billion euros.
A guide to help taxpayers to get it right – Considering the importance of this deduction for millions of individuals, the Italian Revenue Agency has published a guide, in Italian language, providing all the necessary information on the various types of costs that taxpayers can report in their tax return forms “730” or “Redditi”, depending on the types of incomes. The guide pays attention also to the less common medical expenses incurred, specifying the documents to keep in case of tax inspections and clarifying the cases in which taxpayers can benefit of a deduction from taxable income instead of the 19% deduction from the gross tax. A specific chapter is about medical expenses incurred for relatives with pathologies that entitle to exemption from participation in public health spending. These costs can be deducted even if the family member is not dependent. Moreover, the last section of the guide is dedicated to people with disabilities, who can deduct from general incomes generic medical expenses and specific support incurred in cases of severe and permanent disability or impairment.
Medical expenses abroad – For medical expenses incurred in other Countries, taxpayers can benefit of the same treatment provided for those carried out in Italy. Also in this case, it is necessary to be in possession of the documentation containing the same information required by the Italian Tax Administration for the expenses incurred in Italy. The guide remembers that if the documentation is in a foreign language translation is required. In case of documents issued in English, French, German and Spanish, the translation can be directly performed by taxpayers. There is no translation requirement for residents in Valle d'Aosta if the documentation is written in French, and for residents in Bolzano, if the documents are written in German. For documents drawn up in a language other than English, French, German and Spanish, a sworn translation is required. An exception is provided for taxpayers belonging to the Slovene minority and resident in the Friuli Venezia Giulia region. For them, Slovenian health documentation can be accompanied by a non-sworn translation. It is important to remember that the costs of transferring and staying abroad are not deductible, even though due to health reasons.
The guide “Le spese sanitarie nella dichiarazione dei redditi” is available in the “L’Agenzia Informa” section of the Tax Administration website - - designed to provide easy and intuitive access to information on the most interesting tax matters. 

Italy’s voluntary disclosure in search of a second chance. Set by the Revenue Agency a new round of fiscal clarification and guidance. Available online an internet application to help calculate sanctions and interest due
Taxpayers who decide to remedy spontaneously the omissions and irregularities committed until September 30, 2016 on the holding of financial assets may apply to Italy’s second version of the Voluntary Disclosure Program – VDP - by 31 July 2017, while payment of the VDP and submission of the supporting documentation must be filed by 30 September 2017. With a technical note, Circular n.19/E, published today and available online at, the Revenue Agency has provided further clarification on how to access the Voluntary Disclosure introduced, in its second version, by Decree n.193/2016.
What is the voluntary disclosure program and what the benefits for taxpayers who choose to join it - The VD program will enable taxpayers who chose to come forward and declare wealth held outside of Italy in violation of Italian exchange control regulations, to get substantial concessions over either potential fiscal penalties or from prosecution for the main tax and money-laundering crimes taxpayers may have committed in relation to the assets held abroad
Why the new Voluntary Disclosure – In this context, Circular n.19/E illustrates and clarifies the new fiscal measures applied to the second edition of the Voluntary Disclosure. Particularly, as explained by the Revenue document, the opportunity to reopen the deadlines to regularize eventual violations or omissions, was driven by the decision to offer a further chance in view of the fact that the fight against international tax evasion was going to be, as it actually happened, particularly intensified, as showed by the commitment by the Tax Authorities of more advanced economies in establishing a more and more effective and shared strategy to counter international tax frauds and evasion. Additionally, the scope of the network of agreements on the exchange of tax information has been extended, thus contributing to broadening the list of countries involved and thus allowing taxpayers, in the case of investment or financial activities managed within these States, to benefit from specific facilities provided by the Voluntary collaboration procedure.
The list of countries offering special benefits to those who adhere to the voluntary disclosure  - The regulatory changes introduced by Decree n. 193/2016 allow some benefit extensions, under the voluntary cooperation procedure, for taxpayers who hold investments or financial activities in so-called black listed States that have entered into specific information exchange agreements, pursuant to Article 26 of the OECD model or conforming to the TIEA one, which entered into force before October 24, 2016. Thereby, the above list of countries has been expanded so that to benefit from further reductions in sanctioning measures as well as the failure to apply the doubling of deadlines for the detection and rejection of violations of fiscal monitoring obligations. Guernsey, Hong Kong, Cayman Islands, Isle of Man, Cook Islands, Jersey and Gibraltar are also listed on this list as they have signed an information exchange agreement in force on 24 October 2016.This new Voluntary edition has extended the list of countries to further mitigate sanctions and non-application Of the doubling of terms for the assessment and rejection of violations of tax monitoring obligations. Guernsey, Hong Kong, Cayman Islands, Isle of Man, Cook Islands, Jersey and Gibraltar are also included in this list, which have entered into an information exchange agreement in force on 24 October 2016.
Available a definite version of the software that will help taxpayers to calculate the sums due - The parties concerned will be able to provide spontaneous payment of the sums due, taxes, penalties and interest by 30 September 2017. The Agency clarifies that it is possible to reschedule the payment in three Monthly installments of equal amount and that, in that case, payment of the first installment must be made by 30 September 2017.
In order to facilitate the calculation of the sums to be paid, the Revenue Agency has made available an application that allows taxpayers who adhere to the voluntary collaboration procedure to independently calculate the sums due to the Tax Authority. The application is available without registration on , the official Revenue Agency website, within the online tax services dedicated section. The procedure, other than to help calculate the sums due as sanctions and interest, provides the information necessary for compiling the relevant F24 payment model.
VDP, Who can participate and adhere - The VD new program is mainly addressed to taxpayers who:
•on or prior to 30 September 2016, were resident, for tax purposes, in Italy and did not comply with the Italian exchange control regulations;
•have not already benefited from the VD program's first edition;
•have not already had formal knowledge of the commencement of any actions by the tax administration leading to a possible tax assessment (such as an on-site audit, request for documents or information, etc.) or the commencement of a criminal procedure for violations of tax provisions connected to the subject of the disclosure.
The benefits for taxpayers who choose to join it - The VD program will enable taxpayers who chose to come forward and declare wealth held outside of Italy in violation of Italian exchange control regulations, to get substantial concessions over either potential fiscal penalties or from prosecution for the main tax and money-laundering crimes the taxpayers may have committed in relation to the assets held abroad.
Please take in mind, the VD is not a tax amnesty measure, in fact it has a cost to be paid by the taxpayers who adhere - Clearly, on the other side, to the participants in the program will be required a full disclosure of their identity and of all their assets and investments abroad as well as the payment of the full amount of previously unpaid taxes and related interest. Finally, taxpayers are not allowed to file more than one voluntary disclosure request.
What about cash – Moreover, the new VD program involves the disclosure of cash or other bearer instruments not held with a financial intermediary and irrespective of whether such types of assets have been located within or outside the Italian territory. Indeed, in such case the effectiveness of the VD program is subject to: a self-declaration by the taxpayers in which he/she states that such assets do not originate from crimes which are not among those crimes whose penalty is excluded by the VD;
•the presence of a notary public at the time of opening of the safe box, if the assets are stored in a safe box;
•such assets are transferred to an authorized intermediary and kept in an escrow account until the VD procedure is finalized.
The new role of Italy’s Revenue Agency – In this VD new version, the Italian Revenue Agency will only intervene in exceptional circumstances. Namely in case of any mistakes regarding the assessment of the amount due. In particular, the Agency will have the powers to address any faults in the use of the VD procedure up until December 31st, 2018. In case of mistakes, taxpayers will be subject to severe sanctions.
What makes the new VD attractive or the changing international fiscal scenario - The success of the previous VD was based on the offer of regularizing assets held abroad before the introduction of the automatic exchange of information between Italy and some financial havens, such as Switzerland and Monaco (as well as FATCA and CRS). Another incentive was the introduction of a new criminal offence for 'self-laundering', in other words, any attempt by those using the voluntary disclosure process to disguise the origins of undeclared funds or goods. The incentives remain the same, except for those who are holding undisclosed assets in the countries that have already agreed to automatically exchange information from 1st January 2017. These taxpayers will have to remit all taxes that would have been payable on undisclosed assets, but with much reduced administrative penalties.
The international context and the demise of banking secrecy or how the voluntary disclosure arises from the change in the international scenario - The worldwide financial crisis has affected not only businesses and families over the last fifteen years, but above all sovereign debt, forcing countries to adopt a global, coordinated approach to combatting domestic fiscal crime and plan to recover large amounts of taxes which have been evaded over the years.
Oecd leading role in pave the way for a more strictly anti-evasion world - The driving force behind the change in international fiscal matters, which, as a knock-on effect saw the demise of banking secrecy, was OECD, the Paris organization which is constantly at the forefront of pushing for improvement and ensuring inter-government cooperation in order to combat international tax elusion and tax evasion. OECD, in collaboration with the G20 countries and the EU, drew up the new multilateral Standard Form, inspired by the bilateral regulations contained in FATCA (Foreign Account Tax Compliance Act), promoted by the United States of America and aimed at favoring an automatic exchange of information between non-US financial intermediates and the Internal Revenue Services on finances held by US Persons, which was already operating in Italy. The new multilateral Standard Form aimed to automatically exchange information (also known as the CRS – Common Reporting Standard) that financial authorities were obliged to provide foreign financial authorities for the countries in which their clients were resident. At present 101 countries have undertaken to adhere to the automatic exchange of information pursuant to the Common Reporting Standard; 54 of the same (the so-called early adopters), including Italy, have also undertaken to implement the new standard as of 2017, using financial year 2016 as the first year of reference – while the other 47 – including Switzerland, The United Arab Emirates, Monaco and The Bahamas shall commence said exchange in 2018 for the 2017 financial year.

FiscoOggi è una pubblicazione dell'Agenzia delle Entrate - Ufficio Comunicazione
Testata registrata al Tribunale di Roma il 19.9.2001 con n. 405/2001
Direttore responsabile Claudio Borgnino