Former cross-border pensioner: “San Marino takes action”

“The ‘double taxation’ of former Italian cross-border pensioners in San Marino has not been resolved and, in fact, seems to be still far from being resolved. The San Marino trade unions are aware of this, to which many cross-border workers have turned in recent years and which have been increasingly turned over to in the last period by the tax office, which, as is known, demands an account of the taxes not paid in Italy on that income, considering that the taxes paid to San Marino (source) are meaningless. But at the same time they are withheld, so that in fact a double taxation is created, despite the fact that the bilateral convention allows precisely to avoid this. How? Secretary Enzo Merlini explains that the CSdL believes that “the most effective way to protect those who receive tax bills from the tax office is the one that it has adopted together with the CGIL for the members of both organizations, namely the sponsorship of appeals up to, if necessary, the Supreme Court”. “The first step is to appeal to the tax office itself, which, as expected, was dismissed. The second step is to appeal to the Tax Court, which has two levels of judgment. Ultimately, the action could reach the Supreme Court so that it can make a final ruling on the San Marino ‘case’. So, it will take a long time; it could take several years. ” In any case, “if the San Marino theory is proven (and we believe it is correct), the Italian tax authorities will have to refund the 5 years of extra taxes paid to the former cross-border commuting pensioners, because they will not have to pay the tax difference in Italy as they did. Conversely, Merlini claims that “if the tax authorities’ theory prevails, that the taxes can only be paid in Italy, then the San Marino tax authorities will have to refund 5 years of taxes to the former cross-border commuting pensioners”. Obviously, this is an Italian ruling, so it cannot force the San Marino government to do so, but if that is the case, San Marino must also take note of it somehow.

The activation of the MAP was done by an Italian pensioner, also with the support of the San Marino Commission? “We do not think it is the best. We also considered the MAP hypothesis but abandoned it because we had no confidence in its effectiveness; On the positive side, this procedure suspends the validity of the tax bill, but if the parties cannot reach an agreement, they will only waste time and expenses. I find it difficult to imagine that one of the two governments with opposing positions will abandon its position in favor of the other. In fact, there is no middle ground unless a political solution emerges, but this should not be decided by the governments but by them”.

‘A diplomatic move is needed’

Thus, diplomacy was restarted: “Foreign Minister Luca Beccari was also present at the debate organized by the Commission on May 29”, recalled Enzo Merlini. Asked about the double taxation of former cross-border commuting pensioners, he said that the tax authorities of both countries should agree on the matter. We have been arguing for some time that the problem is not an administrative one, but a political one. Although the San Marino government wrote as soon as the Convention came into force in 2014 that the issue was resolved and that pension taxes on former Italian cross-border workers could only be paid in San Marino, the Italian government never issued any similar regulation. In fact, “the CSdL secretary added, “the tax authorities’ move was based on the theory that San Marino was in violation of the Convention, that our country must not withhold pension taxes. However, as is widely debated, the opposite is true. It should be noted that most conventions clearly provide that taxes are paid where citizens reside and where they use public services. Apparently, the Italian and San Marino governments at the time instead took into account the generosity of the Titanic social security system, offering social security checks far higher than the contributions paid. Therefore, we agreed that our country would withhold taxes, taking into account the greater spending power of pensioners in Italy. The San Marino government should demand that the Belpas government abide by the agreement, rather than entrusting the handling of the dispute to other authorities. This is a Pilates-like attitude”, accused Merini, citing responses supporting this criticism (See the letters in the photo below) The Italian Ministry of Foreign Affairs, in response to a citizen who requested an explanation on the double taxation issue, stated that “the Italian Ministry of Foreign Affairs places the blame for the lack of an ‘agreed solution’ on the San Marino Government, because it would have taken time. My completely personal understanding is that the Italian Government does not intend to give different instructions to the Tax Administration until San Marino accepts the modifications to the Convention as requested. I do not know if the San Marino Government will decide to comply with the Italian request”, warns Merlini, “but I want people to talk about it, rather than know about it indirectly”.

Applause from the San Marino Committee

Although Italy and San Marino have signed a tax relief agreement, the issue of tax outflows continues to be discussed, affecting former cross-border pensioners who, after a lifetime of working on Titan, find themselves having to pay tax in two countries. The 2014 Convention against Double Taxation explicitly states that taxation can only be paid in one country.

This time the focus was on the subject of Federica Onori, Councillor of Azione and Secretary of Foreign Affairs and Communities of the Third Committee of the Chamber of Commerce. The deputy was elected in a foreign constituency and is therefore sensitive to certain issues, in fact he has in recent days addressed written questions to the Minister of Economy and the Minister of Foreign Affairs regarding the double taxation of pre-retirement cross-border workers in San Marino. In the text, Hon. Onori asked whether it would be appropriate to launch as soon as possible within her mandate a provisional bilateral technical table that could resolve, by common agreement between the States, difficulties or doubts in the interpretation of the scope of double taxation signed customs.

Thus, the President of the San Marino Council, Alessandro Amadi, praised the initiative of the councillors, which undoubtedly helped to bring into sharp focus a problem that directly affects thousands of former cross-border pensioners and their families over a long period of time, but above all, to thank the more than 8,000 Italian workers who climb Mount Titano every day to work, contributing to the overall economy of the country they are in. Despite repeated requests, especially from the trade unions, there are still no concrete signs that the impasse can be broken.

President Amadeus then thanked H.E. Federica Onori for having raised in the appropriate institutional forums the demands of former Italian workers in San Marino, many of whom are no longer receiving large pensions and therefore have to deal with unsustainable cuts. “The dialogue and discussion with H.E. Onori has been ongoing for some time, focusing first of all on the reality of Italians abroad and therefore also on cross-border workers: a structural and continuously growing phenomenon in the labour market”.