By Aki Corsoni-HusainAki Corsoni-Husain, Ayana HullAyana Hull, Carolynn VivianCarolynn Vivian, Emily YiolitisEmily Yiolitis | Harney Westwood & Riegels

On 1 April 2015 the British Virgin Islands (BVI), Cayman Islands and 19 other jurisdictions were removed from Italy’s blacklist of jurisdictions. As a result it will now be easier for Italian individuals and companies to engage in business with those based in the Cayman Islands and the BVI.

The change, implemented in the form of decree by Italy’s Minister of the Economy and Finance, means that the jurisdictions removed are no longer subject to Italy’s “non-deductibility of costs” blacklist. It means that expenses incurred by Italian businesses in transactions with residents in non-blacklisted jurisdictions will be deductible. The decree implemented certain provisions of Italy’s 2015 Stability (Budget) Law and reduced the blacklist criteria so that any country which has a Tax Information Exchange Agreement (TIEA) with Italy in place is effectively removed from the list. Under the revised criteria there is no longer a requirement for foreign jurisdictions to have an “adequate level of taxation.”

As Italy continues with its economic reforms, a total of 21 jurisdictions have been removed from the blacklist. The jurisdictions which have been removed are considered under the Italian regime to have an adequate level of tax information exchange with Italy and therefore are no longer blacklisted. 46 other countries and jurisdictions remain on the blacklist.

The Cayman Islands and Italy signed a bilateral TIEA in December 2012 and BVI and Cayman are (via the United Kingdom) subject to the requirements for tax information exchange under the multilateral Convention on Mutual Administrative Assistance in Tax Matters, of which Italy is also a signatory. The removal of these jurisdictions from Italy’s blacklists is expected to boost economic ties and improve trade and tax relations between Italy and each of the respective jurisdictions.