Italian business publication Il Sole reported last week on an automatic withholding measure on all transfers from abroad that the government says will be retroactive to February 1.
Ostensibly, the measure is to prevent Italians from receiving unclaimed (and thus untaxed) income from abroad.
It’s easier to illustrate this new law with an example:
"Let’s say I want to buy an apartment near Rome and transferred 20,000 EUR from my Swiss account to my own Italian bank account on February 4. The new law states that Italy will simply withhold 20%, or 4,000 EUR, from the transfer, pending proof from me that this is not income.
Essentially, this means the Italian government is putting the burden of proof on its own citizens that they are not money launderers."
ZeroHedge is one of the few outlets covering this story in English. Here is their take on the law:
“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.”
The big takeaway here for anyone outside of Italy is that European governments seem all too willing to control and dip into their citizens’ wealth. As we have seen in Cyprus and Argentina, capital controls and painful financial constraints only incentivize people to adopt alternative currencies, Bitcoin especially.
A question for our readers: If your government enacted a similar 20% automatic withholding on incoming cash, would you be more likely to try sending/receiving Bitcoin as a workaround?