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Italy Stops Cash Payments in 2014 To Combat Tax Evasion

by Ulrika Lomas,, Brussels

31 December 2013

In the interest of increasing the traceability of payments in Italy, and thereby reducing the opportunities for tax evasion, cash payment for certain types of goods and services will be forbidden from January 1, 2014.

For example, according to a provision in the recently-approved 2014 Budget (Stability Law), and given the perceived incidence of unregistered properties in Italy, residential rental payments from the beginning of 2014 will have to be made in ways that exclude the use of cash and ensures their traceability, such as checks or bank transfers.

Within the Stability Law, there is also a provision for the costs of building reconstruction and energy saving, for which large tax deductions of 50 percent and 65 percent respectively have been renewed until December 31, 2014, to be made only by a means of payment, such as a bank transfer or card, that contains the details of both the person claiming the tax deduction and also information on the payment's beneficiary.

Payments by cash or checks are expressly forbidden, as they are for claims made on the purchase of furniture and kitchen equipment to claim for the additional deduction allied to reconstruction or energy-saving work.

The traceability of payments also forms part of the introduction of a "web tax." The Stability Law includes a future obligation for all purchases of online advertising or copyright in Italy to be effected through a business that is registered for Italian value added tax, and that all payments for such services should be made by way of bank transfers, or any other payment instrument, that contains the necessary data.

In addition, as provided for in previous legislation, from January 1, doctors, dentists, lawyers and other professionals should be obliged to have a "point of sale" terminal, so as to allow their clients to pay by bank transfer or cards. However, regulations have not yet been issued with regard to this obligation, and no penalties are foreseen in the legislation for non-adherence.

TAGS: environment | compliance | tax | business | tax compliance | energy | law | banking | internet | professionals | legislation | Italy | construction | regulation | penalties | services

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