The sleeping giant awakes…

For years Italy has been seen as a place of lazy regulation. Italians seem to pay little attention to their tax obligations and rely on a mixture of over-bureaucracy and lack of interest on the part of those appointed to enforce the law. Non-Italians often see this as one of the many attractive aspects of life in Italy.

But things are changing. The Agenzia delle Entrate has reached agreements with many Comuni which provide the Comuni with an incentive to investigate and report on situations where they suspect income is not being declared, or is being underdeclared: a substantial part of the sums recovered go straight into the Comuni’s coffers, instead of disappearing into the maw of central government in Rome. Clearly the Comuni, with their detailed knowledge of the area are better placed than central government to sniff out evasive practices. But in addition the Comuni now have at their disposal an integrated information system which can even be accessed on the hoof, using portable terminals. At the click of a button officials working for the Comune can have access to all sorts of records about you, including your

  • tax returns from 2002 to date
  • documents registered in the Land Registry
  • ICI payment records
  • any notices of assessment issued for non-payment
  • electricity, gas and water bills from 2004 to date
  • rental contracts, whether registered as landlord or tenant
  • bank transfers made in connection with building works

What should we make of this?

First, we don’t seriously think Italy is sliding towards a Big Brother type state, with neighbour being encouraged to spy on neighbour. At the same time, it would be foolish not to recognise that computer systems are becoming ever more integrated and worldwide many countries are developing reciprocal agreements on information exchange. In a time when local governments are particularly pressed for cash, it is going to be very tempting to the Comuni to attempt to uncover new sources of untaxed income.

Whether resident or not it is important that you take as much care to comply with your obligations in Italy as you do with your obligations in your home country. If you are unsure as to what your obligations are, please contact us.