In the 2020 Finance Bill, the Italian Government announced its intention to combat tax evasion, thought to cost more than 100 billion Euros a year to a national budget in constant deficit.
In these times of blaring proclamations, politicians are marketing the new rules using the same slogan of “handcuffs to tax evaders!” that marked the era of the pre-existing criminal tax rules (from 1982 to 2000).
This new attempt to combat tax evasion - in Italy a bigger problem than elsewhere – is based around new criminal tax rules, essentially (a) increasing penalties for tax crimes and (b) lowering the thresholds of punishable offences.
On this issue, policy has fluctuated. Criminal penalties were increased in 2011, reduced in 2015 and are about to be increased again this year. The effect of these changes on tax evasion appears to have been marginal.
However, the new package includes a rule that could mean that the assets of the person suspected of a tax crime could be seized right from the start of a criminal investigation. This preventive seizure could lead to the forfeiture of those assets in case of conviction.
Furthermore, the seizure would no longer be limited to the amount of the evaded tax but would automatically extend to all assets which the person under investigation cannot justify as having a legitimate origin. It is the same draconian measure previously reserved for members of criminal associations (mafia, camorra and the like) that are by law assumed of having an illicit provenance.
The spirit of this “reform” seems clear. The law now assumes that the suspected tax evader committed not only the tax crime under investigation, but others not yet judicially ascertained, and which enabled him (or her) to build up a fortune. That fortune may now be confiscated.
It is a worrying development for corporations and, especially, corporate officers: in most tax crimes, the perpetrator is the person who signed the tax return. He or she is now exposed to the terrible risk of seizure of their entire fortune, and the need to justify its legitimate origin, even in cases of petty tax violations.