Italy: Italy issues guidelines on prevention of tax evasion

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Italy: Italy issues guidelines on prevention of tax evasion

Sponsored by

sponsored-firms-hager.png
ib-italy.jpg

On August 8 2019, the Italian tax administration published Circular Letter N19/E.

On August 8 2019, the Italian tax administration published Circular Letter N19/E. In this document the tax authorities provided guidelines on prevention of tax evasion measures, focusing on large taxpayers, small and medium-sized enterprises and self-employed workers.

Two main directives can be identified: the strengthening of exchange of information procedures as a crucial tool to fight tax evasion and tax avoidance in a globalised business environment; and the circular letter defines objectives and operational activities to foster mechanisms of interaction between the tax authorities and taxpayers (cooperative compliance approach).

Below we will provide some highlights of the new guidelines addressing large and small/medium-sized taxpayers and international businesses.

Large taxpayers – turnover of more than €100 million euros ($109 million)

For large taxpayers, who fall under the territorial competency of the regional tax offices, the Central Revenue will reinforce support activities in favour of such regional offices. This 'mentoring activity' will be concentrated on those taxpayers with estimated relevant tax risk or on those who do not show collaborative and transparent conduct.

As for automated control, compliance activities should be encouraged to intercept aggressive domestic and international tax planning phenomena using databases and information already available to the Central Revenue.

With reference to inspection activities and potential tax litigation consequences, the intention is to give priority to positions involving tax periods for which the statute of limitation is going to expire on December 31 2019, and to improve reliability in terms of challenges raised against taxpayers and increase the technical components contained in those challenges.

Small and medium-sized enterprises

Small and medium-sized enterprises represent the cluster of taxpayers containing the most VAT number holders. In 2018, the Italian tax authorities sent letters to taxpayers with particular anomalies in their tax returns in order to encourage the voluntary fulfilment of tax obligations and the emersion of the taxable base.

In terms of progressing actions to tackle tax evasion, this year can be characterised by four important changes from a tax standpoint:

  • The introduction of mandatory electronic invoicing;

  • As of July 1 2019, the electronic transmission of daily fee data (trasmissione telematica) started for subjects who in the previous year achieved a turnover of more than €400,000;

  • The expansion of the flat-rate scheme (regime forfettario); and

  • The approval of 175 reliability synthetic standards for the 2018 tax period (in Italian referred to as ISA:

These standards measure data and information relating to several tax periods through a statistical-economic method. With ISA, the Central Revenue will verify the normality and consistency of taxpayers' professional or corporate management.

International activities

In terms of international business, in recent years, attention has turned towards the automatic exchange of information, relating, for example, to:

  • Income;

  • Financial accounts in accordance with the common reporting standard (CRS);

  • Advance agreements on international taxation topics;

  • Country-by-country reporting (CbCR), exchanged under the bilateral and multilateral agreements; and

  • In the European context, on the basis of Directive 2016/881/EU (DAC4), which was transposed within the EU, as the BEPS Action 13 of the OECD's Inclusive Framework.

Advance agreements are important in the tax compliance processes of companies that operate in an international environment. The discipline has recently evolved, moving from the international ruling governed by Article 8 of Law Decree 269 of September 30 2003, to preventive agreements for companies with international activities regulated by Article 31-ter of DPR 600 of 1973.

As a general takeaway on methods and approaches of the Central Revenue, this circular letter emphasises that administrative cooperation as regards taxes is one of the main resources used to fight tax evasion and tackle tax avoidance schemes, on at least two levels: the fulfilment of domestic compliance provisions (including adherence to optional regimes such as the transfer pricing documentation regime and the IP box regime), and the exchange of information with foreign tax authorities (including CbCR, CRS, EU directives and contemporaneous tax inspections).

In a similar landscape, the capacity of the Italian Central Revenue to process and organise all the information that is to be collected will be a crucial turning point in identifying: first, those taxpayers with high-risk tax profiles (both in relation to their size and their industry), and then the law provisions that need to be implemented to make the anti-tax avoidance tools more effective.

Hager & Partners

T: +39 02 7780711

E: gianluca.nieddu@hager-partners.it and barbara.scampuddu@hager-partners.it

W: www.hager-partners.it

more across site & shared bottom lb ros

More from across our site

Effective audit management requires more than documentation; it’s the way taxpayers engage that can shape audit direction, manage procedural ambiguity, and preserve options for appeal or litigation
American advisers are falling short of client expectations when it comes to providing value-added services, but remaining tight-lipped won’t make the problem go away
Awards
The Social Impact Awards unveil new categories to reflect a changing legal and social landscape
Australia's approach to tax policy has undergone significant shifts in recent years, reflecting global trends and unique domestic considerations. These developments merit close attention from tax professionals
The UK has temporarily dodged the 50% rate due to a trade deal signed with the US in May; in other news, Ryan acquired a Northern Irish tax firm
Following a $28 million funding round, Aibidia wants to ‘double down’ on the US market via partnerships with the ‘big four’, the Finnish TP tech provider’s CEO tells ITR
The Luxembourg-based TP leader tells ITR about relishing the intellectual challenge of his practice, his admiration for Stephen Hawking, and what makes tax cool
The case to determine whether the tariff regime is constitutional will eventually find its way to the US Supreme Court, ITR has also heard
In other news, the Council of the EU pledged support to a CBAM simplification and exemption initiative, and Portugal issued new VAT filing guidance
While Brazil’s sweeping tax updates are a triumph for modernisation, Giuliano Gioia of Sovos warns that MNEs with a Brazilian footprint should be prepared for a short and sharp adjustment
Gift this article