June 15, 2010 / 3:23 PM / 8 years ago

Tiny San Marino accuses Italy over tax treaty woes

* Amnesty spurs 5 bln euros outflow from San Marino banks

* San Marino says Italy’s stance “incomprehensible”

By Deepa Babington

ROME, June 15 (Reuters) - San Marino’s government on Tuesday accused Italy of imposing a virtual embargo and stalling on a treaty it needs to get off a tax haven blacklist, as the tiny state faces a mass outflow of funds due to Italy’s tax amnesty.

The tiny, landlocked state has been under growing pressure over the past year as it battles the downturn and a global crackdown on offshore banking centres. [ID:nL3512937]

About 5 billion euros, or roughly a third of total deposits, have left San Marino’s banking system because of an Italian scheme aimed at getting citizens to declare secret funds held abroad, San Marino Finance Minister Pasquale Valentini told reporters.

Other San Marino ministers accused Italy of refusing to work on signing a double taxation treaty and said a recently passed Italian law had spooked companies operating in the tiny state by requiring them to provide monthly lists of their activities.

“They want to create a sort of commercial embargo towards San Marino,” Foreign Minister Antonella Mularoni said at the news conference held a few steps away from Italy’s parliament.

“The problem is psychological...especially after Italy’s economy minister said all companies that work in countries on the blacklist of tax havens will find the tax police waiting for them.”

She said Italy had refused to acknowledge steps taken by San Marino to improve transparency and “blocked” all progress on the taxation treaty, without which the hilltop state remains on Italy’s tax haven black list.

“Today Italy’s attitude has become imcomprehensible,” she said, speculating that its stance was probably motivated by an effort to appear tough on tax havens while it asks its own citizens to swallow a 25-billion-euro austerity package.

San Marino was removed from the OECD’s grey list of tax havens in September last year. [ID:nLO654075]

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