Section RW appears on the income tax return form and, from 2023, also on Form 730 (referred to as Section W).
Section RW must be completed by individuals, unincorporated partnerships, equivalent associations, non-commercial entities and trusts resident in Italy to declare ownership or access to foreign financial investments and assets held abroad.
The following must be declared if held abroad:
This section must be completed even if the investment or asset was no longer held as at 31 December but was held at some point during the year.
Amounts in foreign currency must be stated in euros using an exchange rate specified each year by a specific order from the Director of the Italian Revenue Agency.
Any income generated by the assets or property reported in the RW section – for example, dividends, interest, capital gains or foreign rental income – must then be declared in the relevant income sections.
Separate and severe penalties apply for the failure to submit, or the submission of an inaccurate, Section RW. For this reason, you are advised not to underestimate the importance of completing this section and to consult an expert adviser in the event of any doubts or difficulties.
If foreign assets are not declared, a penalty ranging from 3% to 15% of the undeclared amount may be imposed. These percentages are doubled in the case of assets held in tax havens.
In addition to these penalties, there are those relating to omitted IVIE/IVAFE payments or to taxes on undeclared foreign income
This section is also used to calculate wealth taxes. These taxes are calculated on the basis of the share of ownership and the period of ownership of the property or financial assets during the relevant year.
Taxable persons are individuals, unincorporated partnerships, non-commercial entities that are resident for tax purposes in Italy and hold property, financial products, current accounts and savings accounts abroad.
The tax is currently payable at a rate of 1.06 % of the property’s value (0.4 % in the case of a luxury property and its appurtenances used as a main residence).
Ministerial Circular 28/2012 clarifies that the reference value on which to apply the tax for properties situated in Europe or in countries belonging to the European Economic Area (EEA) (Norway, Iceland, Liechtenstein) is determined according to the following criteria, applied in descending order of priority:
The tax is not payable if, excluding tax credits, it amounts to less than 200 euros.
The tax is payable at a flat rate of 34.20 euros per annum for current accounts and passbooks, and 0.2% for other financial assets and digital assets (e.g. cryptocurrencies).
The basis on which the tax is calculated is generally the market value at the end of the year or on the date the holding ceased. In some cases, such as for shares, bonds and other securities or financial instruments not traded on regulated markets, the nominal value or, failing that, the redemption value must be taken into account. In other cases, such as for cryptocurrencies, in the absence of a market value, the historical purchase cost may be taken into account.
The tax is not payable if the amount is less than €12.00.
Any foreign wealth tax may be deducted from the Italian wealth tax, but only to the extent provided for by a double taxation agreement (see Circular 28/E/2012, Table 1) and up to the limit of the tax due in Italy.
In recent years, the automatic exchange of information between countries has increased significantly. For this reason, the Italian Revenue Agency now has access to a great deal of data from abroad, particularly via the CRS/DAC/FACTA system, and is able to identify any inconsistencies with the information declared in sections RW, RM and RT.
When discrepancies arise, the Agency sends compliance letters to taxpayers. Such communications do not necessarily constitute a tax assessment, but are primarily intended to invite the taxpayer to voluntarily regularise their position, if tax is indeed due, through voluntary disclosure.