Europe is host to some of the world's largest tax havens, significantly impacting Italy's fiscal health, costing the country around 10 billion euros annually due to tax evasion. Contrary to the common belief of tax havens being exotic islands, the top four — Monaco, Luxembourg, Liechtenstein, and the Channel Islands — all reside within Europe. Such locations have become attractive to wealthy Italian individuals and multinational corporations seeking to exploit low tax regimes.
According to the Cgia, approximately 8,000 Italians have moved their residency to Monaco, enticed by the absence of income and property taxes. This influx of affluent residents includes prominent entrepreneurs, athletes, and celebrities. Meanwhile, Luxembourg has attracted more than six Italian banks and numerous investment funds and corporations wishing to capitalize on its favorable tax environment.
These tax maneuvers and residency choices have dire consequences for Italy. The report from the Cgia reveals the extent of this fiscal leakage, stating, “These tax dodgers make billions without paying taxes, impoverishing us.” The impact stems not only from wealthy individuals but also multinational companies thriving within these tax havens. Their combined actions lead to staggering yearly losses for the Italian treasury.
For example, the analysis points out the disconnect between revenues and taxes paid by major tech firms. Companies under the umbrella of the top 25 web multinationals recorded 9.3 billion euros grossed but only contributed 206 million euros to Italian taxes. Such discrepancies illuminate the challenges Italy faces concerning tax compliance among foreign companies.
Cgia's report highlights four primary characteristics facilitating the designation of these countries as tax havens. These include: minimal corporate taxes, no requirement for physical business presence, low transparency standards which provide loopholes for tax benefits, and lack of cooperation on information exchange with other nations, allowing for widespread tax avoidance.
The implementation of the Global Minimum Tax, set to take effect by 2024, may introduce some relief. This measure establishes a baseline tax rate of 15% for multinational corporations. While the measures bring hope, the anticipated fiscal gains are modest; projections estimate the Italian treasury could see revenues increase to about 500 million euros by 2033 from this global framework. For 2025 alone, only 381.3 million euros are expected to be collected, rising gradually thereafter.
The Cgia emphasizes the necessity for decisive action to tackle tax evasion resulting from globalization and tax competition among Europe’s nations. “They benefit from our infrastructure without contributing accordingly,” said the report, indicating the strain on public services caused by dwindling tax revenues.
Italy's struggle to curb tax evasion and secure its fiscal future will require not just the implementation of the Global Minimum Tax but also increased pressure on tax havens to comply with international standards. With 18,434 foreign multinationals operating through subsidiaries in Italy, the potential for larger tax contributions exists.
Regulatory changes and cross-border cooperation will be pivotal for mitigating the losses experienced due to tax evasion. If all tax obligations were honored, the fiscal situation could vastly improve, relieving the tax burden shared by compliant Italian citizens.
With 17.6 million employed across the country, of which 3.5 million are employed by multinationals, the need for equitable tax practices becomes clear. Protecting Italy’s economic interests will depend significantly on addressing the challenges posed by tax havens and ensuring those profiting from Italian resources contribute their fair share.
Efforts to tackle these systemic issues are more urgent than ever, as they directly affect the fabric of society and the equitable distribution of resources. The path forward calls for reform, oversight, and international cooperation to create a fairer tax system for all.]