Italian Tax Mores

Thomas Donaldson & Al Gini, Case Studies in BE, 4th edt. Prentice Hall, Upper Saddle River, New erse!, "##$, pp. $#%&" A'torit()ile *iscale italiene pornesc de la pre+'m)ia ,corect(- c( nici o *irm( n' ./i declar( corect pro*it'rile, ci le s'0eval'ea+( c' 12%&23. Drept 'rmare, la /ase l'ni d'p( dep'nerea delara)iilor *iscale, a't. *iscale invit( *iecare corpora)ie s( ne4ocie+e m(rimea impo+itelor. 5a+a ne4ocierilor o constit'ie impo+itele pl(tite .n anii anteriori de c(tre *iecare *irm(, pornind'%se de la pre+'m)ia c( *iecare companie c6/ti4( .n *iecare an mai m'lt dec6t .n anii preceden)i. 7a ne4ocieri, *iecare corp. este repre+entat( de 'n commercialista, 'n ins speciali+at .n ast*el de ne4ocieri, e8trem de importante at6t pt *irm( ,impo+it'l de an'l acesta s'nt 0a+a de impo+itare pt an'l 'rm(tor-, c6t /i pt stat, repre+entat de c(tre 'n *'nc)ionar al *isc'l'i. Acest *'nc)ionar pretinde bustarella 9 o /pa4( pe rom6ne/te, de m(rimea c(reia depinde pla*on'l la care se *inali+ea+( ne4ocierile 9 mai aproape sa' mai departe de declara)ia *iscal( a *irmei. :ndi*erent de m(rime, bustarella este incl's( .n onorari'l pretin de commercialista, iar *irma ,.ntr'c6t este m'l)'mit( de red'cerile *iscale o0)in'te- n' disc't( acest onorari' /i nici n' este interesat( s( /tie c6t an'me din acesta repre+int( /pa4a pl(tit(. ;ric'm, stat'l rec'noa/te .ntre4'l onorari' ca s'm( *iscal ded'cti0il( din ta8ele *irmei pt an'l 'rm(tor. ; 0anc( american( de top a deschis o *ilial( .n :talia. D'p( prim'l an de activitate, 0anca a *ost s*(t'it( at6t de c(tre italieni, c6t /i de c(tre americanii c' ceva vechime .n :talia, s( redacte+e declara)ia *iscal( .n stil italian. General mana4er, a*lat la prima sa misi'ne overseas, nici n' a vr't s( a'd(< era necinstit /i .n contradic)ie c' re4'lile din SUA. Drept pt care a completat declara)ia .n stil american, adic( *oarte corect. D'p( $ l'ni, 0anca prime/te o invita)ie la disc')ii. =ons'ltan)ii recomand( an4a>area 'n'i commercialista. ? re*'+( /i trimite o scrisoare, declar6nd c( declara)ia este .n totalitate corect( /i solicit6nd s( i se men)ione+e capitolele as'pra c(rora a't *iscale ital doresc preci+(ri s'plimentare. Aceast( scrisoare n' a primit nici 'n r(sp'ns. D'p( alte $2 de +ile, 0anca prime/te o noti*icare privind o0li4a)iile sale *iscale< de trei ori mai m'lt dec6t re+'lta din declara)ia *iscal( a 0(ncii. Din no' cons'ltan)ii recomand( an4a>area 'n'i commercialista. A*l6nd despre bustarella, ? re*'+( din no'. De/i termen'l e8pira peste $ l'ni, ? trimite 'n cec c' s'ma datorat( *isc'l'i italian con*orm propriilor estim(ri, *(r( s( men)ione+e s'ma din doc'ment'l de noti*icare. 7a #2 de +ile d'p( ce ./i achitase o0li4a)iile *iscale, 0anca a primit o a treia not( de la a'torit()ile *iscale, prin care i se solicta o plat( de "@ ori mai mare. Aoarte s'p(rat, ? a solicitat o .nt6lnire c' director'l o*ici'l'i local de ta8e /i impo+ite. Disc')ia a .ncep't cam a/a< N' se poate s( *i)i serios c6nd pretinde)i c(... N', *ire/te, dar sper(m c( ac'm v%am atras aten)ia, a/a c( p'tem .ncepe s( st(m de vor0(. Ainal< 0anca a *ost *or)at( s( pl(teasc( s'ma care .i *'sese noti*icat( prima dat( ,de 1 ori mai mare-, iar ? a *ost rechemat .n SUA /i .nloc'it.

Italian Tax Mores

The :talian *ederal corporate ta8 s!stem has an o**icial, le4al ta8 str'ct're and ta8 rates >'st as the U.S. s!stem does. However, all similarit! 0etween the two s!stems ends here. The :talian ta8 a'thorities ass'me that no :talian corporation wo'ld ever s'0mit a ta8 ret'rn which shows its tr'e pro*its 0't rather wo'ld s'0mit a ret'rn which 'nderstates act'al pro*its 0! an!where 0etween 123 and &23B their ass'mption is essentiall! correct. There*ore, a0o't si8 months a*ter the ann'al deadline *or *illin4 corporate ta8 ret'rns, the ta8 a'thorities iss'e to each corporation an Cinvitation to disc'ssD its ta8 ret'rn. The p'rpose o* this notice is to arran4e a personal meetin4 0etween them and representatives o* the corporation. At this meetin4, the :talian reven'e service states the amo'nt o* corporate income ta8 which it 0elieves is d'e. :ts position is developed *rom 0oth prior !earsE ta8es act'all! paid and the c'rrent !earEs ret'rnB the amo'nt which the ta8 a'thorities claim is d'e is 4enerall! several times that shown on the corporationEs ret'rn *or the c'rrent !ear. :n short, the corporationEs ta8 ret'rn and the reven'e serviceEs stated position are the openin4 o**ers *or the several ro'nds o* 0ar4ainin4 which will *ollow. The :talian corporation is t!picall! represented in s'ch ne4ociation 0! its commercialista, a *'nction which e8ists in :talian societ! *or the primar! p'rpose o* ne4ociatin4 corporate ,or individ'al- ta8 pa!ments with the :talian ta8 a'thoritiesB th's, the mana4ement o* an :talian corporation seldom, i* ever, has to meet directl! with the :talian reven'e service and pro0a0l! has a minim'm awareness o* the details o* the ne4ociation other than the *inal settlement.

5oth the *inal settlement and the ne4ociations are e8tremel! important to the corporation, the ta8 a'thorities, and the commercialista. Since the ta8 a'thorities ass'me that a corporation always earned more mone! this !ear than last !ear and never has a loss, the amo'nt o* the *inal settlement, i. e., corporate ta8es which will act'all! 0e paid, 0ecomes, *or all practical p'rposes, the *loor *or the start o* ne8t !earEs ne4ociations. The *inal settlement also represents the amo'nt o* reven'e the :talian 4overnment will collect in ta8es to help *inance the cost o* r'nnin4 the co'ntr!. However, since lar4e amo'nts o* mone! are involved and two individ'als havin4 vested personal interests are cond'ctin4 the ne4ociations, the amo'nt o* bustarella 9 t!picall! a s'0stantial cash pa!ment CreF'estedD 0! the :talian reven'e a4ent *rom the commercialista 9 's'all! determines whether the *inal settlement is closer to the corporationEs ori4inal ta8 ret'rn or to the *iscal a'thorit!Es ori4inal ne4ociatin4 position. Ghatever bustarella is paid d'rin4 the ne4ociation is 's'all! incl'ded 0! the commercialista in his l'mp%s'm *ee C*or services renderedD to his corporate client. :* the *inal settlement is *avora0le to the corporation, and it is the commercialistaEs >o0 to see that it is, then the corporation is not liHel! to complain a0o't the amo'nt o* its commercialistEs *ee, nor will it ever Hnow how m'ch o* that *ee was represented 0! bustarella and how m'ch remained *or the commercialista as pa!ment *or his ne4ociatin4 services. :n an! case, the ta8 a'thorities will reco4ni+e the *'ll amo'nt o* the *ee as a ta8 ded'cti0le e8pense on the corporationEs ta8 ret'rn *or the *ollowin4 !ear. A0o't "@ !ears a4o, a leadin4 American 0anH opened a 0anH s'0sidiar! in a ma>or :talian cit!. At the end o* its *irst !ear o* operation, the 0anH was advised 0! its local law!ers and ta8 acco'ntants, 0oth *rom 0ranches o* U.S. companies, to *ile its ta8 ret'rn C:talian%st!leD, i. e., to 'nderstate its act'al pro*its 0! a si4ni*icant amo'nt. The American 4eneral mana4er o* the

0anH, who was on his *irst overseas assi4nment, re*'sed to do so 0oth 0eca'se he considered it dishonest and 0eca'se it was inconsistent with the practices o* his parent compan! in the United States. A0o't si8 months a*ter *illin4 its CAmerican%st!leD ta8 ret'rn, the 0anH received an Cinvitation to disc'ssD notice *rom the :talian ta8 a'thorities. The 0anHEs 4eneral mana4er cons'lted with his law!ers and ta8 acco'ntants who s'44ested to hire a commercialista. He re>ected this advice and instead wrote a letter to the :talian reven'e service not onl! statin4 that his *irmEs corporate ret'rn was correct as *iled 0't also reF'estin4 that the! in*orm him o* an! speci*ic items a0o't which the! had F'estions. His letter was never answered. A0o't si8t! da!s a*ter receivin4 the initial Cinvitation to disc'ssD notice, the 0anH received a *ormal ta8 assessment notice callin4 *or a ta8 o* appro8imatel! three times that shown on the 0anHEs corporate ta8 ret'rnB the ta8 a'thorities simpl! ass'med the 0anHEs ori4inal ret'rn had 0een 0ased on 4enerall! accepted :talian practices, and the! reacted accordin4l!. The 0anHEs 4eneral mana4er a4ain cons'lted with his law!ers and ta8 acco'ntants who a4ain s'44ested he hire a commercialista who Hnew how to handle these matters. Upon learnin4 that the commercialista wo'ld pro0a0l! have to pa! bustarella to his reven'e service co'nterpart in order to reach a settlement, the 4eneral mana4er a4ain chose to i4nore his advisors. :nstead, he responded 0! sendin4 the :talian reven'e service a checH *or the *'ll amo'nt o* ta8es d'e accordin4 to the 0anHEs American%st!le ta8 ret'rn even tho'4h the d'e date *or the pa!ment was almost si8 months henceB he made no re*errence to the amo'nt o* corporate ta8es shown on the *ormal ta8 assessment notice.

Ninet! da!s a*ter pa!in4 its ta8es, the 0anH received a third notice *rom the *iscal a'thorities. This one contained the statement, Cwe have received !o'r corporate ta8 ret'rn *or "# 9 and have determined that the lira eF'ivalent o* I$ million o* interest paid on deposits is not an allowa0le e8pense *or *ederal ta8 p'rposes. Accordin4l!, the total ta8 d'e *or "#% is lira 1.D Since interest paid on deposits is an! 0anHEs lar4est sin4le e8pense item, the new ta8 assessment was *or an amo'nt man! times lar4er than that shown in the initial ta8 assessment notice and almost *i*teen times lar4er than the ta8es which the 0anH had act'all! paid. The 0anHEs 4eneral mana4er was 'nderstanda0l! ver! 'pset. He immediatel! arran4ed an appointment to meet personall! with the mana4er o* the :talian reven'e serviceEs local o**ice. Shortl! a*ter the start o* their meetin4, the conversation went somethin4 liHe this< GJNJRA7 ?ANAGJR< CKo' canEt reall! 0e serio's a0o't disallowin4 interest paid on deposits as a ta8 ded'cti0le e8pense.D :TA7:AN RJLJNUJ SJRL:=J< DPerhaps. However, we tho'4ht it wo'ld 4et !o'r attention. Now that !o'Ere here, shall we 0e4in o'r ne4ociationsMD :n the end, the 0anH was *orced to pa! ta8es shown on the ori4inal ta8 assessment, and the American mana4er was recalled to the United States and replaced.