Possible remedies for declaratory omissions

With the Answer to ruling no. 450 of 20 October 2023, the Italian Revenue Agency provided some clarifications regarding the application of the institution of "ravvedimento operoso", governed by art. 13 of Legislative Decree 472/1997, through which taxpayers can regularize violations relating to omitted or insufficient payments and other tax irregularities, by spontaneously paying the tax due plus interest and the related penalties at a reduced rate.

The ruling was introduced by a company that did not submit VAT returns for several tax periods. Therefore, it turned to the Revenue Agency in order to clarify how to regularize such omissive conduct.

With regard to remedies for failure to declare, firstly, pursuant to Article 13, paragraph 1, letter c) of Legislative Decree 472/1997, omitted VAT return can be remedied by submitting a late return, i.e. within 90 days from the deadline for its submission, and by paying the relevant penalties, in this case, equal to € 25 (i.e. 1/10 of the minimum € 250 – provided for by Article 5, paragraph 3, Legislative Decree 471/1997). 

Alternatively, it is possible to submit an ultra-late declaration, in this regard the Agency in its response to ruling no. 450/2023, as already reiterated by previous practice documents (1), specified  that in any case the declaration submitted more than 90 days after the expiry of the submission deadline is to be considered, in any case, omitted and that, consequently, the relevant sanctions cannot be spontaneously regularized through the institution of “ravvedimento operoso”.

In addition, the tax authorities reiterated that, in case of declaratory omissions, the penalty provided for failure to pay VAT by art. 13 of Legislative Decree no. n. 471/1997, equal to 30% of the tax due can be said to be absorbed by that provided for by Article 5, paragraph 1, of Legislative Decree no. 471/1997, with the consequence that the following apply, alternatively:

• a fixed penalty of € 250 (2), if the taxpayer, despite not having submitted the return, has paid the relevant annual taxes in full and within the terms of the law (3) (i.e. within 90 days of the expiry of the deadline ordinarily provided for the submission of the return) (4);
• a proportional penalty: (i) from 60 to 120 per cent of the amount of taxes due, with a minimum of € 200, if the omitted return is submitted within the deadline for submission of the return relating to the following tax period and, in any case, before any administrative assessment activity of which it initiates formal knowledge (ii) alternatively,  the ordinary one, from 120 to 240 percent of the amount of tax due, with a minimum of €250.

Finally, the Tax Administration specified that the Office, during the audit, will have to take into account the sums spontaneously paid by way of penalties (an operation which, although not remedying the failure to declare, does not encounter any regulatory obstacle) and, in addition, will have to impose the relevant penalties imposed, taking into account:

• Article 7, paragraph 4, of Legislative Decree no. 472/1997 according to which "if circumstances arise that make manifest the disproportion between the amount of the tax to which the violation refers and the penalty, this may be reduced up to half of the minimum". This provision has taken on new importance after the Constitutional Court, with judgment no. 46 of 25 January 2023, enhanced its application, as the only rule of our legal system that allows administrative sanctions to be brought within the limits of proportionality and reasonableness (making their application practically mandatory, especially in striking cases,  such as those in which the taxpayer, although omissive conduct, has subsequently paid the taxes in full, before receiving the notice of assessment);

• Art. 12 of Legislative Decree no. No 472/1997 on the legal cumulation of tax penalties. In particular, the fifth paragraph provides that, in the case of infringements of the same nature committed in different tax periods, the penalty relating to the most severe infringement, increased by half of three times, must be applied.

Considering the above, it is possible for taxpayers who want to remedy the violations relating to the failure to submit the return, to proceed, with the help of professionals in the sector, as follows:

1. submit the return, at the same time paying the higher taxes due;

1. expressly request the Office to impose penalties, taking into account the above provisions (possibly by challenging the relevant act of imposition, if it does not comply with those provisions).

Dott.ssa Noemi Ragusa

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1. See Circular No 42/E of 12 October 2016.
2. The fine of € 250 applies because the first paragraph of art. Article 5 of Legislative Decree 471/1997 provides that, for the purposes of determining the tax due (and the related penalties), the payments made in relation to that tax period must be taken into account. Consequently, if the taxpayer has paid all the amounts due, within the terms described above, the tax still due will be equal to 0 and, consequently, the penalty will be imposed in the minimum provided for by the law.
3. See Art. 8, paragraphs 1 and 6, as well as 2, paragraph 7 of the Decree of the President of the Republic no. 322/1998.
4. The penalty will be € 200, if the return, even if omitted, is submitted within the deadline for submission of the return relating to the following tax period and, in any case, before the start of any administrative assessment of which he or she has had formal knowledge.