Tax offence or administrative penalty: what determines the response to tax fraud

When the Tax Agency detects that a taxpayer has not correctly paid their taxes, it can react in two very different ways: by imposing an administrative tax penalty, a fine resolved within the Administration itself, or by filing a criminal complaint for a tax offence, which activates the judicial system and may lead to a conviction with a prison sentence. The difference between the two routes is enormous.

The distinction is not arbitrary. The central criterion is the amount defrauded, with 120,000 euros as the threshold separating the two routes, but it is not the only one: intent and other circumstances also have an influence. It is worth starting from the principle of ne bis in idem, which prohibits penalising twice for the same facts: when the Tax Agency detects that an irregularity may be an offence, it must halt the administrative penalty file and refer the matter to the Public Prosecutor; only if the criminal process concludes without conviction can the administrative route be resumed.

The clearest element is the quantitative threshold. Article 305 of the Criminal Code requires the defrauded amount to exceed 120,000 euros, in relation to each tax and each tax period, for there to be an offence. Below that threshold, the breach may only be penalised administratively. The determination of the amount may be the subject of technical controversy: if it is demonstrated that the real amount is below the threshold, the matter returns to the administrative route and the possibility of a criminal conviction disappears.

The second criterion is the subjective element. The tax offence requires intent, the conscious will to defraud; the administrative infringement may be committed through negligence, carelessness or a wrong application of the regulations. This is very important in practice, because many irregularities occur in a context of regulatory complexity: the self-employed person who applies a wrong VAT rate or the businessperson who follows an incorrect criterion from their adviser may incur an infringement through negligence, but hardly an offence through intent. The burden of proving intent falls on the prosecution.

The consequences differ radically. The administrative route is resolved with the settlement of the debt, the interest and a penalty of between 50% and 150% of the amount, with no criminal record or prison. The criminal route may lead to imprisonment of one to five years in the basic form, two to six in the aggravated form, a fine, loss of subsidies, disqualification from contracting with the Administration and a criminal record; moreover, a criminal conviction does not exempt one from paying the debt.

A fundamental aspect is regularisation: the taxpayer who voluntarily declares the concealed income and pays the amount with its interest before the Administration begins verification actions or the Prosecutor files a complaint is exempt from criminal liability. It is the most important escape valve of the system, and it depends on the moment at which one acts.

It is worth remembering that an accounting error only becomes an offence if it exceeds the threshold and, in addition, there is intent; that if the criminal process has already begun, paying the debt before the trial may be assessed as a mitigating factor; and that both the company and the manager may be convicted simultaneously for the same tax offence.