The Italian government issued a Legislative Decree No. 75 on 15 July 2020 in order to implement EU Directive 2017/1371, also known as the PIF Directive which is intended to support the ongoing harmonisation of the EU Member States' criminal laws. The Decree became effective on 30 July 2020 and establishes new criminal offences related to corporate liability outlined under Legislative Decree No. 231 8 June 200, Decree 231, whereby criminal acts executed by legal representatives, directors or executives (both formal or de facto) or employees which prove to be to the advantage of or in the interest of an entity will trigger criminal liability for both them and the entity that appears to have benefitted,
Vincenzo Senatore, a partner in the corporate and commercial department, commented "the new Decree significantly strengthens the existing law and all companies undertaking cross-border transactions should review their compliance regimes." Vincenzo further commented "there are robust penalties for businesses that breach the new Decree which will have significant long-term consequences. The company officers, professional service advisors and employees who have conduct of the tax affairs of the business should be monitored to avoid both advertent and inadvertent breaches of the new Decree."
Whilst the liability enshrined in Decree 231 is designated "administrative" in actual practice it has a quasi-criminal aspect. An offender's suspected actions are investigated by public prosecutors and any related cases that arise are heard in criminal courts and are subject to criminal procedural rules. Initially, Decree 231 did not consider tax crimes, however, this was amended in 2019 to include tax offences, for example:
- filing fraudulent tax returns featuring non-existent transactions by means of invoices and other documents or any other artifice;
- issuing invoices and other documents for non-existent transactions;
- concealing or destroying accounting documents;
- fraudulent failure to pay taxes.
Under the PIF Directive the concept of "serious offence" is defined as:
- cross-border – connected to two or more Member States;
- the value gained by the offence should be equal to €10 million.
The new Decree escalates the serious offences to additionally include:
- failure to file VAT tax returns;
- filing false VAT tax returns;
- undue VAT offsetting.
The inclusion of the offences for tax misdemeanours in the new Decree enables the Italian prosecutors to enforce VAT offences with the criminal tax regime outlined in the PIF Directive. There are hard-hitting penalties for those organisations that breach the new Decree 75 designed to have a deterrent effect as follows:
- the organisation could be disqualified from business;
- the authorisations, licenses and concessions granted to the business in connection with the office could be subject to suspension or even revocation;
- a ban applied on contracting with the public administration, other than for receiving public service;
- the company could be rendered ineligible for incentives, loans, contributions or subsidies and the possible revocation of those already granted;
- A ban could be placed on all company advertising.
An organisation that is found to have breached the new Decree could be subjected to the whole raft of penalties available which would effectively leave the business unable to trade or struggling to attract and execute any business.
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