Italian Revenue Agency – Tax Police joint regulation No. 183995 of 2nd July 2021 – Guidance for tax monitoring
Prepared by Carlo Romano, Marco Longobardi and Massimo Pinardi
The regulation No. 183995 of 2nd July 2021 (source: ItaliaOggi) issued jointly by the Italian Revenue Agency (hereinafter “IRA”) and Italian Tax Police (hereinafter “ITP”) enables the competent Offices (i.e., Analysis and Strategy Unit against international tax fraud, on the one hand, and Special Departments of the ITP, on the other hand) to request, inter alia, banking and financial intermediaries to provide evidence of transactions with foreign countries, even with reference to masses of taxpayers.
The main purpose of the regulation is to strengthen the so-called tax monitoring pursuant to decree-law No. 167/1990 as well as the related tools for facing the unlawful transfer and holding of economic and financial assets abroad, thus allowing the collection of significant and relevant information on cross-border transactions that may conceal tax fraud and other offences.
The above-mentioned goal will be reached by delivering requests and inquiries, even on a massive scale, to financial and non-financial operators in order to perform tax investigations and assessments.
In particular, the regulation gives specific guidance aimed at implementing the current legal framework which consists of:
- Decree-law No. 167 of 28th June 1990 (converted into Law No. 227 of 4th August 1990);
- Decree-law No. 90 of 25th May 2017 (concerning the implementation of EU Directive
2015/849 (Fourth Anti-Money Laundering Directive); - regulation jointly signed by the IRA’s Director and the General Commander of ITP on 21st July 2020.
Recipients of requests
The recipients of requests and inquiries are intermediaries, banks, investment companies, cryptocurrency companies, electronic money institutions, trust companies, financing companies, online gaming companies and, last but not least, accountants, lawyers and notaries.
Such requests may be performed also “notwithstanding any provisions in force” (sentence which seems to refer on the one hand to the Legislative Decree No. 231/2007 and, on the other hand, to the provisions on financial investigations set forth by Articles 32 of Presidential Decree no. 600/1973 and 51 of Presidential Decree no. 633/1972) upon a specific authorization released by the Head of Taxpayers Division and of the General Command of ITP or other appointed authority.
Subject of inquiry
Requests will be concerned with cross-border transactions or related matters (i.e. beneficial ownership – also in the meaning relevant for anti-money laundering laws – of foreign companies that have purchased real estate located in Italy through resident professionals) performed in a specific period.
More specifically, subjects of inquiry will be the following:
- parties involved in the operation(s);
- amounts and currencies;
- nature of transaction;
- identification of beneficial owners (also from an anti-money laundering standpoint).
The transactions that the tax authorities intend to detect are those exceeding 15,000 euro (triggering laws on tax monitoring, i.e. disclosure of foreign assets within the RW form), regardless of whether the transaction is actually one or has been split into multiple ones.
The inquiries will be covering not only individuals or entities treated as such, but “also foreign transactions carried out on behalf of, or in the interest of, corporations, commercial entities and commercial partnerships, whether or not they are [tax] resident [in Italy]”;
The term “transaction” may include any activity performed with financial
operators, even “extemporaneously, by means of a single relevant transaction from an
accounting standpoint”.
More specifically, the term “transaction” also refers to those:
- which stem from a “formal contractual relationship” and take actually place within such framework;
- so-called ”off-the-accounts”, that are instantly completed in the very first direct contact with the intermediary (for which there may be problems of identification and traceability).
Requests may be “nominative” (i.e. identifying the subject by means of a tax code or
personal data) as well as “massive” (i.e. aimed at the extraction of a set of transactions
meeting the requirements subject to inquiry, regardless of the parties to the same transactions).
Tax investigations and assessments
The regulation at hand also provides that “the gathered information can, however, solely source and trigger tax investigations or financial investigations, the results of which shall be evaluated under the ordinary rules on evidence”.
Delivery of requests and inquiries
Requests and inquiries for tax monitoring (as well as responses from operators) will be delivered only by electronic means, i.e. by certified e-mail or ordinary e-mail.
Responses may be provided within 15 and 30 days, depending on the width of inquiry (the deadline will start from the receipt of the questionnaire/request).
Penalties for failed or late reply
Since there is no special penalty provision pursuant to Law-Decree No. 167 of 28th June 1990, the joint regulation recalls the following administrative sanctions:
- from €2.000 to €21.000 in the case of insurance companies and bodies,
companies and entities institutionally collecting or making payments on behalf of third parties or operating in financial management and intermediation activities also as a fiduciary (including Poste Italiane S.p.A.); - from €250 to €2.000 for any other recipient of requests and inquiries other than those just mentioned.
Conclusions
The financial information regarded by the regulation at stake – which can be already collected (at least, in part) through the “ordinary” financial and anti-money laundering investigations – can be now collected through targeted investigations jointly performed by the IRA and ITP on financial transactions (also “off-the-accounts”) in order to verify the source of the funds transferred and/or held abroad, and thus aiming at discovering any possible tax fraud. To this end, it seems appropriate to provide a timely and exhaustive response to such requests, even by engaging professionals in the dialogue with the competent authorities.
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