Penalties for failing to declare taxes in Italy

Following on from my previous posts about tax changes that have taken place in recent months in Italy, I thought I should follow up with the possible implications of not following the rules given that the rules are being enforced more radically then ever.  The information is care of Philip Laroma Jezzi, International tax lawyer, Via Maggio 7, 50125 Firenze (FI).

1.  If someone has made a tax declaration in the last 4 years but has not declared the correct income, then the authorities can go back those 4 years to reclaim unpaid tax.  The penalties is set between 100% and 200% of the undeclared income.  If you have not submitted a tax declaration then the authorities can go back 5 years and the penalty is set betwen 120% and 240% of the undeclared income.

2.  If the failure to disclose or the error on disclosure is considered a criminal offence ( i.e in any of those years the back tax is €100,000 or more), then possible criminal penalties would apply and the authorities can claim double the amounts of years, i.e 8 or 10.

3.  If you have assets that have not been declared i.e portfolio in the Isle of Man, then the authorities can do one i) impose payment of a penalty calculated between a minimum of 10% and a max of 50% of the undisclosed assets' value PLUS ii) seizure of assets located in Italy worth the amount of the penalty. In case the assets are situated in a black listed country the authorities are entitled to presume (a rebuttable presumption) that these assets consist of undeclared income which they may tax accordingly.  On top of that they may inflict a penalty between 200% and 400% (in case a return has been filed) or between 240% and 480% (in case no tax return has been filed) of any such income. 

So there you have it from Philip Laroma Jezzi who is an International tax lawyer based in Firenze.  Oddly enough the tax system in Italy is not that more complicated than other countries in Europe, but on discussion we felt that it is the perception that is different.  Tax needn't be complicated or worrisome, if you take the correct advice and take the right steps to reduce tax liabilities.

If you would like to speak with someone who can help you through the financial maze in Italy then contact me on gareth.horsfall@spectrum-ifa.com or 333 649 2356