Banking Advantages San Marino
Bank Secrecy
Over the centuries the Republic of San Marino has been a hiding place for fugitives from outside its borders and today it has transformed this vocation in business. The State of San Marino is overflowing with havens for those who want a safe place to keep their capital, in fact, there are the more than 50 branch offices of the twelve Credit Institutes. With a bank every six hundred inhabitants, the small State beats the record of the nearby Italian community of Rimini which has a bank every 1000 inhabitants. The reason for such a success? Above all, bank secrecy: a protective wall against the "indiscreet" eye of the Italian tax authorities, the Revenue Agency and the Financial Police. In fact, the wall of reserve of the San Marino Credit Institutes opens only upon request from a foreign Court with penal rogatory. Tax evasion is not taken into account since this is not considered a criminal offense on Mount Titano – only an administrative error. For this reason, in the case of a rogatory for tax evasion, the wall remains. Its bank secrecy policy has earned the Republic the title of "fiscal purgatory" and the membership of the micro-State in the European Union depends on the possibility of its survival. A heated debate is already underway: on the one hand San Marino does not want to relinquish this prerogative of its banks – a national wealth; on the other hand, a large part of the local political scene is favorable to European Union membership. The two positions would seem irreconcilable but, in the meantime in 2004, the Republic of San Marino, to demonstrate its credibility and good intentions, signed the "Ecofin Agreement" with the European Union. On the basis of this agreement, San Marino, along with Austria, Belgium and Luxembourg, introduced the so-called "euro withholding tax" on interest earnings of residents of the European community who have deposits in their banks. The "euro withholding tax" consists of a 15% rate for the first three years from the date of the application of the agreement (2005), 20% for the following three years 35% thereafter. Thanks to this agreement, Italy receives the interest on bank accounts of Italian citizens held on Mount Titano. After the Ecofin Agreement, it would seem that San Marino is unwilling to make "other sacrifices" in order to enter into the European Union.
European withholding tax on accrued interest
With the euro tax of 15%, the withholding tax on bank accounts of Italians in San Marino banks is higher than that of Italian banks. As of today, the withholding tax on accrued interest from bank deposits is 12,5% and, even if the present Italian Government intends to raise it to 20%, the relative draft law is held up in Parliament "until further notice". In the meantime, as of 2008, San Marino has approved a progressive increase of the euro tax to 20%, with another increase, raising it to 35%, within 2011. On the contrary, the fiscal policy made available to San Marino residents amounts to a 5% withholding tax on accrued interest from bank deposits.
Capital Gain
Unlike the Italian banks, the San Marino Credit Institutes do not apply withholding taxes on capital gain earnings. In Italy a 12.5% tax is applied on capital gains.
Stamp Tax
Bank accounts opened in Italian banks are subject to a Stamp Tax of approximately 15 euro each quarter. On the contrary, this type of deduction does not exist for bank accounts held in San Marino.
Opening and closing of bank accounts
There is no particular procedure to follow for a non-resident who wants to open a bank account in a San Marino bank; a proper identity document is sufficient. There is no rule indicating minimum deposits. Lastly, all San Marino Credit Institutes do not all follow the same policy regarding the closure of accounts. Unlike the Italian banks which have all done away with commissions for the extinction of bank accounts, each San Marino bank can act at its own discretion.
