Voluntary disclosure of VAT in Italy: “ravvedimento operoso”

What is "ravvedimento operoso"?

The so called “ravvedimento operoso” is scheme that allows regularizing your Italian tax obligations under reduced penalties. This scheme is governed by art. 13 of the Legislative Decree. n. 472/1997. A business that missed tax payments or tax returns in Italy has the possibility to regularize these obligations benefiting from a reduction of the applicable penalties. The main condition to take advantage of this regime is that tax authorities have not initiated a tax inspection on the items being regularized. This includes automated communications about your tax returns.

The self-regularization implies the spontaneous payment of i) any tax due, ii) the reduced penalty and iii) the interest, calculated on the basis of the legal annual rate, accrued between the original deadline of the payment and the day on which it was actually made. In case of missed tax returns, these will need to be submitted in order to benefit from the voluntary disclosure (provided that the return at hand can be subject to "ravvedimento operoso").

The reduction of the penalty depends on how long it took the taxpayer to voluntarily regularize: the sooner the regularization is performed, the greater the reduction of the penalty is.

Case by case analysis

The bundles foreseen by the Italian law on missed tax payments are the following :

• Penalty reduced to 1/10 of the ordinary penalty, in case of missed payments that are regularized within 30 days from the original deadline.
• Penalty reduced to 1/9 of the minimum, in case the voluntary disclosure takes place within 90 days from the original deadline.
• Penalty reduced to 1/8 of the minimum, in case the voluntary disclosure takes place within the deadline for the submission of the return relating to the year in which the obligation was missed (or within one year from the missed obligation, in case no return is due).
• Penalty reduced to 1/7 of the minimum, in case the voluntary disclosure takes place within the deadline for the submission of the return relating to the year following the one in which the obligation was missed (or within two years from missing the obligation, in case no return is due).
• Penalty reduced to 1/6 of the minimum, in case the voluntary disclosure takes place after the deadline for the submission of the return relating to the year following the one in which the obligation was missed (or after two years from missed obligation, in case no return is due).
• As for missed tax returns: Penalty reduced to 1/10 of the minimum foreseen for failure to submit the return, if this is submitted within 90 days from the original deadline, or to 1/10 of the minimum foreseen for failure to submit the prescribed periodic return, if this is submitted within 30 days from the original deadline. This option refers to the filing obligation of the tax return, as opposed to the payment associated to each return (payments covered above)
• Legislative Decree n. 158/2015 provides that, in the event of late payments made within 90 days from the original deadline, the ordinary penalty is reduced by half, thus passing from 30% to 15%. In addition, in the event of late payments made within 15 days from the deadline, a further reduction of the penalty to 1/15 for each day of delay (1%) is envisaged. Finally, it is important to note that the Italian authorities have published several notices and rulings concerning the possibility to apply the “ravvedimento operoso” to some specific breaches and the methods to be used.

How is the “ordinary penalty” calculated?

In the framework of this procedure, the payment of tax, reduced penalties and interest must be made in a single settlement through the F24 form. Non-resident taxpayers can pay via bank transfer also. In both cases it will be necessary to indicate the split of the amounts and respective “codice tributo” (in the case of TARGET payments these must be indicated in the reference of the payment). For example, in order to regularize the late payment of the July VAT liabilities, it will be required to indicate the following “codici tributo”: 6007 (July monthly VAT payment), 8904 (VAT penalty), 1991 (Interest).