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Vatican and Italy unite against tax evaders

The Vatican said on Wednesday it had signed an agreement to share financial information with Italy in a bid to stamp out tax evasion within the once-secretive city state.

Vatican and Italy unite against tax evaders
The deal followed months of negotiations between the Vatican and Rome. Vatican photo: Shutterstock

The deal followed months of negotiations with Rome and will see the Vatican share information on individuals and companies resident in Italy.

Religious institutes banking with the Institute for Religious Works (IOR), which were previously exempt from paying tax, will now have to find funds for the Italian taxman – with back-payments due for 2014.

Buildings owned by the Holy See in Italy – palaces, basilicas and religious universities given extraterritorial privileges in the Lateran pact of 1929 – remain exempt from taxes.

The new deal clarifies the tax status of the multiple religious entities from around the world which bank with the IOR, a Vatican insider told AFP, describing the previous system as "a bit of a shambles."

Pope Benedict XVI pledged to wipe out corruption after decades of scandals in which the Holy See's bank was accused of turning a blind eye to criminal activities and creating a hot-bed for money-laundering and fraud.

His successor Pope Francis announced a sweeping study of the bank shortly after his election in 2013, creating a special commission to report directly to him before launching a series of reforms.

The bank last year blocked the accounts of 2,000 clients and cut ties with around 3,000 others deemed unsuitable for a bank which was set up specifically to manage Church funds but ended up opening its doors to shady characters.

The IOR was the main shareholder of the Banco Ambrosiano, which collapsed in 1982 amid accusations of ties to the mafia. Its chairman Roberto Calvi – dubbed "God's Banker" – was found hanging from Blackfriars Bridge in London in a suspected murder by mobsters.

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Beskæftigelsesfradraget: What is Denmark’s employment allowance?

Denmark's government may soon announce changes to its tax reform plans, which will give all wage earners a bigger employment allowance. What is this and how will it affect foreigners' earnings?

Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance? 

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes. 

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner. 

How did the government agree to change the employment allowance in its coalition deal? 

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment  allowance to 12.75 percent up to a maximum rebate of 53,600 kroner. 

How might this be further increased, according to Børsen? 

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance. 

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement. 

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.  

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