Jeremy Hunt oversaw the signing of a low-tax treaty with San Marino championed by a leading Tory donor, who with his companies has given more than £700,000 to the party and £30,000 to the chancellor. Maurizio Bragagni, a prominent businessman and diplomat for San Marino, was present in No 11 Downing Street when a “double taxation” treaty between the UK and San Marino was signed in May. After the event, Hunt posed for photographs outside No 11 with Bragagni and San Marino’s foreign secretary. Whitehall sources said San Marino had for at least two years been lobbying the government through the Foreign Office to negotiate and sign such a treaty but that the Treasury and HM Revenue and Customs make the decision on which countries to prioritise. A Treasury spokesperson said Hunt had no involvement in the negotiation of the treaty, which was done by HMRC officials, and that the original request for a deal was made by the Foreign Office in 2022 – six months before he became chancellor. They said the process in the Treasury was led by Victoria Atkins, the financial secretary to the Treasury, who signed the document with Bragagni inside No 11. When the tax treaty was signed, the consulate praised the work of the all-party parliamentary group (APPG) on San Marino, comprising MPs and peers, for its “continuous lobbying support” in relation to the UK government on the issue. Hunt is a former member of the APPG on San Marino and visited the small landlocked state, surrounded by Italy, in 2021, declaring hospitality from San Marino for four members of his family and himself, flights, accommodation and food with a total value of £7,869 over three days.
Bragagni was present on the 2021 visit, during which Hunt was awarded an honour by San Marino known as the order of the Knights of St Agatha. At the time, San Marino said it had recognised “Grand Officer” Jeremy Hunt for his “merits in promoting San Marino’s best interests in the UK, for his valuable support during the emergency situation created in the republic during the pandemic”. Bragagni announced the treaty on his website, saying it had come about because of the “determined work of the consulate of San Marino in London” over a period of four years. The Treasury’s explanatory note says it is designed to “eliminate the double taxation of income and gains arising in one country and paid to residents of the other country”. It also said there were “specific measures which combat discriminatory tax treatment and provide for assistance in international tax enforcement”, although the UK already had an agreement on provision of information to tax authorities with San Marino, signed in 2011. One tax and accountancy expert, Richard Murphy, said he believed it could lead to the flow of potential taxation from the UK to San Marino, while another tax expert said they could not see what tax benefits it would bring and thought it appeared principally to be a piece of diplomatic theatre, possibly designed to show that San Marino was a global player. Murphy said: “There will be no financial flows from San Marino to the UK of any consequence. Why are we allowing for the potential of flows from us to them? I think there could be the opportunity for someone to exploit this by ‘treaty shopping’, to set up the opportunity to create a financial services hub in San Marino that could be used for funds to flow out of the UK. “For me, any such possible opportunity is naive at best and totally unnecessary, why do it? You have to question the political judgment of any politician who would want to do that, let alone claim publicity for it.” Asked whether the deal could be perceived to be a potential conflict of interest for Hunt, a Treasury spokesperson said: “We reject these claims as negotiations on this agreement were conducted by HMRC officials and began in April 2022 – long before Jeremy Hunt became chancellor – following a request from the Foreign Office. “The UK, under successive administrations, has signed over 130 double tax treaties, including with the United States, China, Japan, India, Germany and smaller countries. They are designed to prevent tax evasion in the UK and excessive foreign taxation and other forms of discrimination against UK business interests abroad.” The UK has double taxation treaties with many states – including very small ones – but their operation can be controversial if it appears that one country is benefiting more than another. Bragagni and the San Marino consulate did not respond to requests for comment. The Conservative donor has previously been criticised by Labour for comments made in Italian last year about “foreign Muslims” running urban areas and Labour having an “anti-Judeo-Christian identity, which allows Islamic groups to feel at home”, claiming the party’s success in London was partly because “Muslims vote Labour”. At the time, Bragagni said: “I have never knowingly offended anyone. I apologise that my article originally written in Italian caused unnecessary controversy when translated.”