Italy: What involves the non-disclosure of tax credits in the tax return?

published on 1 February 2024 | reading time approx. 3 minutes

Art. 15 paragraph 1 of the Legislative Decree No. 1/2024 (the so-called Legislative Decree “Fullfilments”) provided that the information to be submitted in the tax returns in relation to tax credits resulting from benefits granted to economic operators will be progressively reduced.

Over the last few years, due to conflicting case-law, increasing doubts had arisen about the possibility for the taxpayer to remedy, by submitting a supplementary statement, failure to indicate the tax credits due in the income tax returns in order to avoid the loss of the accrued tax benefit.

The Italian Tax Authority, in its answer to questioning No. 396 of 9 June 2021, had clarified that the tax credit for R&D investments can be used even in the lack of indication of the tax credit in the section RU of the income tax return relating to the tax period of maturation of the aforementioned credit and in the subsequent ones.

However, in order to avoid canceling of the legislative provision which provided for the obligation to indicate the tax credit in the annual tax return, the taxpayer has to submit an amended tax return for each tax period still integrable to report, in the RU section, the amount of the claim due and pay, for each year, the penalty referred to in art. 8 of the Legislative Decree No. 471/1997.

Nevertheless, this position of the Tax Authority was not agreed upon by some of the jurisprudence which, referring to the research and development tax credits, had upheld the ineligibility of the tax benefit in the event of omitted information in the section RU, as well as the impossibility of submitting a supplementary statement to rectify the omission (Court of Cassation, judgment No. 10867 of 4 April 2022, judgment No. 13343 of 18 May 2021, judgment No. 34266 of 15 November 2021). In fact, the supreme judges held that the tax benefit was subject to a manifestation of will by the taxpayer, irretractable even in the event of an error, to be made directly in the declaration by means of the RU section of the tax return.

More recently, a different jurisprudential orientation has been developed with respect to the above-mentioned one, according to which the failure to indicate the R&D tax credit activities in the income tax return would not lead to the loss of the tax credit, since this case is not provided for by law among those that lead to the forfeiture of the benefit.

The provisions included in the Legislative Decree put an end to the abovementioned diatribe on the subject insofar as it is provided that, starting from the current period up to 31 December 2023, it will be excluded the obligation to indicate in the income tax return the tax credits for which the establishing regulation recognizes as the only method of usage the “external” offsetting through the F24 form, pursuant to Art. 17 of the Legislative Decree No. 241/97, even if they are transferable.

Some tax credits remain unaffected by this regulation, namely:

tax credits whose indication in the tax returns is required in order to acquire specific additional information that would otherwise have to be provided by means of special communications (e.g. industry 4.0 tax credits for the purposes of the RRP)
tax credits qualified as State aid or “de minimis” aid;
tax credits assigned pursuant to Art. 43-ter of Presidential Decree No. 602/1973;
tax credits whose accrued amount is not known to the public administrations, since they are not subject to the submission of specific requests or communications for their use, nor to the issuance of provisions granting or by authorising their use, however denominated, or whose amount cannot be determined in the aforesaid measures.

For the aforementioned credits, which will continue to have to be indicated in the tax return, the indication of the use of offsets will be excluded.