Italy Launches New Weapon Against Tax Evasion

Italy Launches New Weapon Against Tax Evasion

Italy's tax authority (Agenzia delle Entrate) on January 1 began using a new anti-evasion weapon called the redditometro that examines taxpayers' expenditures across myriad categories -- including food, entertainment, housing, education, motor vehicles, cellphone usage, and clothing -- and correlates the spending with taxpayers' reported income. If the spending exceeds reported income by at least 20 percent, the tax agency will come calling for an explanation.
 
The redditometro, which was originally passed by Parliament in 2010 but was not formally introduced until an implementing decree was issued in December 2012, is accompanied by a downloadable application that allows taxpayers to self-assess whether they are at risk of being targeted by the tax authority.

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