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The serendipity of my editorial on why Italy and the Vatican must sign a tax sharing deal - followed by the two doing just that....
On March 23, I wrote the "Featured Perspective" for Tax Notes International, a newsletter to tax professionals, from accountants to lawyers to CFOs to government treasury ministers. Titled "The Vatican Bank: Are the Bad Old Days Finally Over?"
It focused on ongoing negotiations between the Vatican and Italy to reach a historic tax exchange agreement (TIEA). That is something that would make it much more difficult for the Vatican Bank to continue to operate as a tax haven for wealthy Italians. In my article I disclosed that "in private" some top Italian "finance officials and criminal tax prosecutors left little doubt that they were frustrated by the extent to which the Vatican Bank has proven an entrenched and vexing headache."
Citing three reports from 2000-2001 that concluded the Vatican Bank was in the top 10 "most attractive countries for money launderers," one study concluded "that a staggering $55 billion just in illegal Italian money went through the Vatican Bank annually."
My concluding paragraph: "The reforms are coming ever faster. Through June 30, 2014, about 3,000 accounts had been closed. Although the Vatican has not released the details of each, they are known to include accounts belonging to deceased clerics and nonexistent charities. As the previous Vatican Bank president, Ernst von Freyberg, announced last year, ‘‘There are [now] no enormous accounts belonging to Italian families, politicians and bad families.’’ Italy hopes that is true. The only way it can verify that the bad old days of the Vatican Bank are truly over is to sign a TIEA with the church. When that happens — possibly by the end of March, according to some insiders — then Italy will be one step closer to freeing itself of what many officials consider an offshore bank operating in the heart of Rome."
Yesterday, Italy and the Vatican announced they had signed the tax-sharing agreement. I'd like to think that my Tax Notes missive helped nudge - ever so slightly - the Vatican into finally accepting the deal.