Italy: Reform of administrative tax sanctions approved

published on 11 June 2024 | reading time approx. 3 minutes

The Council of Ministers of 24 May 2024 gave the final go-ahead to the Legislative Decree on the reform of the penalty system implementing Law 111/2023 (so-called tax reform proxy).

Lighter administrative tax penalties, but only starting from violations committed from 1 September 2024. This, in brief, is what was approved by the Council of Ministers on 24 May 2024.

The new rules on administrative tax penalties have no effect, therefore, in pending trials and have as their main objective a lowering of penalties to make the repressive system more harmonious with the principle of proportionality.

But what are the novelties that can be applied from 1 September 2024?

The Legislative Decree under review has made special amendments to Legislative Decree No. 472/97, Legislative Decree No. 471/97 and Legislative Decree No. 473/97. In particular, the main changes concern:

deferment of sums for the definition to the third of the penalties pursuant to Articles 16 and 17 of Legislative Decree 472/97. The taxpayer will be able to apply for the tax and proceed with the payment of the penalties reduced by one third in 8 or 16 instalments if the amounts exceed €50,000;
reintroduction of procedural acquiescence thanks to the new Article 17-bis of Legislative Decree No 472/97, which provides for the reduction to one third of the penalties in the event of partial annulment of the act after the trial has been instituted and waiver of the appeal;
possibility of applying the accumulation of penalties within the voluntary tax amnesty, although limited to the single tax period and the single tax;
reduction of the penalties applicable in the event of:

unfaithful declaration, which will no longer be sanctioned from 90 per cent to 180 per cent, but at a fixed rate of 70 per cent. The same applies to invoicing violations;
income generated abroad, the increase of one third is waived;
undue offsetting of non-existent credits, sanctioned at a fixed rate of 70 per cent and no longer from 100 per cent to 200 per cent;
omitted payments, no longer penalised with 30 per cent of the tax, but with 25 per cent. There remains, however, the duplication of VAT violations arising from omitted or unfaithful invoicing. In fact, both the infringement for omitted/wrong invoicing and the infringement for unfaithful declaration remain, although with the tempering of legal cumulation;

penalty regime of the so-called ‘spy invoice’ pursuant to Article 6 paragraph 8 of Legislative Decree 471/97. Following the reform, the transferee/buyer is subject to a penalty equal to 70 per cent of the tax, which can be avoided by notifying the irregularity to the Italian Tax Authority. The mechanism of the self-invoice, with payment of the VAT and then deducting it upon receipt of the visa, is abolished;
the VAT charged in excess; undue deduction shall be subject to a fixed penalty of between Euro 250 and Euro 10,000 not only in the case of a rate error but also in the case of exempt, excluded, non-taxable transactions;
the omitted declaration, sanctioned at a fixed rate of 120 per cent in case of contestation of the violation. If the declaration is submitted after 90 days from the deadline, but before any control, a penalty of 75 per cent of the tax due will be applied. In the absence of taxes due, the fixed penalty of Euro 250 shall apply. In this regard, it has not been clarified whether taxes due means the balance from the declaration or the taxes still actually to be paid.