As a solo indiehacker in Europe, its crazy that I have to be so worried about VAT related things and big tech just goes around the whole thing and doesn't even expect to be charged just fined
You only have to be worried if you're doing something illegal, like the guys in the article. Misfiling something won't land you in jail, just some fines at the most. Intent matters quite a bit.
That’s ok for the big players with deep pockets. For the little guy this is a much bigger problem. As it should. It would just be nice if law breaking would be a bigger problem for the bigger companies too.
> No country is out here destroying productive businesses because they made a paperwork mistake.
New Zealand. The Accident Compensation Corporation, a compulsory insurance scheme, is absolutely feral. Will crush you "because rules" without a thought.
I've misfiled several times due to being young and stupid.
Each time I got a piece of mail asking my to call the IRS to clear it up, and every time the agent was nice and very helpful clearing it up, and not fined.
The IRS used to have a much worse reputation. Congress passed the Internal Revenue Service Restructuring and Reform Act of 1998 and improved their customer service.
If you are found personally responsible for tax evasion >1e6€ then the minimal penalty is prison sentence without parole option. This is true for many EU countries including Italy. Idk. about the max. prison length in Italy for this but e.g. where I live in the EU you are likely looking at ~15 years for 1e9€ tax evasion.
The reason executives commonly avoid such penalties is because they avoid being found personally liable by claiming they didn't known, did misunderstood the situation, where deceived by others etc.
Through it should be noted that this case is a bit unusual and complicated.
The tax dispute itself isn't as simple as Amazone directly having avoided paying their own taxes. And the case of missing taxes has already been settled. This new current investigations are criminal investigation (i.e. the failure of paying taxes is assumed to have been intentional instead of a booking error) and seem to be more targeting executives for having committed crimes (instead of targeting Amazone the company).
Or in other words, Italian prosecutors are feed up US companies not caring for EU law and no one being hold liable.
---
(1): Without option to have it replaced with long time parole.
> If you are found personally responsible for tax evasion >1e6€ then the minimal penalty is prison sentence without parole option. This is true for many EU countries including Italy. Idk. about the max. prison length in Italy for this but e.g. where I live in the EU you are likely looking at ~15 years for 1e9€ tax evasion.
There's o EU wide tax law, so that statement is misleading at best and there's many places where that's false. You're spreading misinformation.
> The reason executives commonly avoid such penalties is because they avoid being found personally liable by claiming they didn't known, did misunderstood the situation, where deceived by others etc.
Misinformation again. This blanket statement in just false. Again, because there is no EU-wide law. It's up to the countries and they handle it very differently.
> The reason executives commonly avoid such penalties is because they avoid being found personally liable by claiming they didn't known, did misunderstood the situation, where deceived by others etc.
In the US, Section 302 of the Sarbanes-Oxley Act exists literally to avoid this: the CEO and CFO have to personally sign filings so they cannot "not know" about financial disclosure content and have plausible deniability. While it only applies to public companies, the model seems reasonable to solve this case too.
"not know" was oversimplified from me, technically such things exist in many countries, most likely also Italy.
But this comes back to how thinks always tend to be more complicate then "clean cut direct tax avoidance".
E.g. here the case isn't as simple as Amazone directly avoiding tax. But them instead to quote:
> Amazon's algorithm and operating models enabled the sale in Italy of goods from tens of thousands of non‑EU sellers - mostly Chinese - without disclosing their identity, helping them avoid paying value‑added tax (VAT)
I.e. Amazon is seen responsible for acting with sever levels of negligence with suspicion of intentionally enabling/supporting tax evasion to profit from it. (And honestly given the level of fraudulent-looking things Amazone allows vendors since a very long time, there is likely some truth to the "intentional supporting malicious actions" part.).
And in turn executives don't claim exactly "they didn't know". They claim they did know and started actions to fix the issue but it the actions failed so you tried other actions and if asked why no bigger actions are tried they claim it didn't look like it was "that" big of a problem through they now realize that was wrong.
The end effect is still the same they doge responsibility as-if they could just claim they didn't know, just with extra steps. Instead of "didn't know" I probably should have used "they claimed incompetence" (and external factors outside of their control) or similar.
I think that normally that may be the approach (and I'm not singling out Italy for this, it probably applies to most countries).
On this occasion, however:
> In all previous cases involving other international groups, once a settlement was reached and payment made, prosecutors closed related criminal investigations, either through plea deals or by dropping the cases.
> This time, however, Milan prosecutors did not share the tax authority's approach and decided to press ahead with their probe, leading to a request that the suspects be sent to trial.
Damn, is anyone an expert that can speak to the criminal law involved here?
It’s crazy that executives can jump around the law and not face any criminal charges, then the company picks up the bill (although I’m not ignorant thinking this isn’t usual)
I’m just curious to learn more about how often this is the case and you usually what happens with people afterward
I don't know about Italian law, but in the US tax evasion is pretty difficult in many cases to prove. It is illegal in the US to deliberately defraud the IRS to evade paying taxes, it is not illegal to make a mistake, or claim a deduction you think you can claim when the IRS decides you can't, etc. So prosecutors must prove you had an intent to evade taxes you knew you owed. Because they can rarely meet that bar, criminal charges are rarely brought.
it's for the civil part. (so you need to show the tax office some paper trail that you based your filings on. invoices, bills, contracts, emails, receipts. and if they are formally okay, then the tax agency has to show that they are just fake papers.)
as far as I understand the criminal part still considers intent and so on (and has a higher standard for burden of proof), but if you file for VAT return and then you have zero invoices (and so the numbers simply don't add up) the court can easily find that there was intent to defraud the state. (and then sentencing is based on the amount of damages.)
Not only tech giants, everybody from celebrities to random Joes can get away with it.
My mother's husband owed 70k+ EUR in taxes and at some point the judge proposed and he agreed to 2800 euros.
The trick is to not have a bank account in your name only, you have it joint with a child/spouse and they can't take your money. Nor they can take your house, if you only have one.
Eventually under those situations the judges try to take anything rather than nothing.
I'm not defending this situation, just saying it's widespread and the fact that every two governments come one that does a "condono", which is essentially "let's agree with tax evaders for some 50% of the tax they owe so they are happy and we see something" doesn't help.
Harsher punishment should be warranted, but you can't go to prison for tax evasion.
It's pretty clear. If you have your bank account with 2 owners, and with X on it, X/2 are yours and X/2 belong to the other owner, at any point in time.
Case in point, if one of the owners deceases, you can withdraw X/2 at most. The other half is blocked until the inheritance paperwork is completed and that half has a new legal owner(s).
You 100% should be able to go to prison from tax evasion. Not to fill prisons just to line prison owners' pockets like in the US, but definitely have the possibility for egregious offences.
you can… it’s just not really clear that anyone does. that said, i think if you polled the average joe on the street, they would overwhelmingly say that you can, which is probably a net gain for society.
It is quite independent in Italy actually. The government is pushing for a constitutional amendment to help "fix" this feature. There is going to be a referendum on the change very soon.
the current reform is complicated, and reasonable people can disagree on how to vote, but it goes a bit further than separating prosecutors from judges.
Namely, it also changes the self-regulating body (the CSM, Consiglio Superiore della Magistratura) of the judiciary so that the government and parliament have a bit more authority and the judiciary have a bit less: the organ is split in two, its judiciary members are no longer elected but picked randomly while a part is decided by the political side, and there's an even higher special tribunal.
Proponents say this is necessary, opponents say this is leading towards stronger power of the political majority over the judiciary.
Now, roughly one third of CSM members is nominated by the Parliament and the other one is elected by judges, according to the "correnti" (a sort of parties)
> The government is pushing for a constitutional amendment to help "fix" this feature. There is going to be a referendum on the change very soon.
Italian here.
It's not like that: the referendum is about definitely enforcing the career separation about public persecutor and judges.
Actually they are under the same authority and the member of this authority are elected according to a sort of political parties (unique case in the whole EU) and this creates some distortions in career growths and nominations.
The new schema will create two different authorities and the members will be selected according to a ballot.
A similar proposal was made by the left wing parties few years ago, when they were at the government
Ask any Romanian and they'll tell you they're not. Ask them about the Mario Iorgulescu case [1], with the Italian justice system refusing to extradite him here to Romania only because his (wealthy) dad paid the right people off. And Iorgulescu is not the only such case.
It would be really nice to have a few relevant numbers in the article for context.
If this is just from foreign sellers operating on amazon.it, then 1.4B of evaded taxes sounds like a lot to me, because the total revenue should be well under 50B/y, so this would be a significant fraction of total sales tax (and I'd expect most sellers to not be foreign and thus unaffected).
Would be quite nice to see rich people held accountable for once, curious how this will go.
Billionaire doesn't pay tax: let's settle with you paying half of all stolen money as a fine and we'll drop the case.
A regular citizen doesn't pay tax: lets jail or deport you, bar the entry for a decade, take away your home, car and anything you own in general and make you unable to find job for the rest of your life. Also your tax is double that of the billionaire, glhf ;) .
As Italian, I really disagree. The only entities that pay all the taxes are employees because the taxes are collected directly from the salaries.
Big companies have the opportunity to make tax elusion (there is a reason why many Italian companies have legal HQ in Netherlands or Luxembourg), small companies, artisans and freelancers usually avoid to pajly VAT
> In percentage terms this means that during the 1970s between 15 and 20 percent of Italians evaded taxes while the rate climbed to 26 percent in the 1980s. In the 1990s, tax evasion fell again, hovering between 15 and 20 percent. Workers employed in manufacturing evade very little, whereas the highest evasion rates can be found among the self-employed
> The severity of evasion becomes obvious when we consider that the Italian state annually collects only a total of €350 billion while losing €250 billion through evasion (D’Attoma 2016).
> If one asks Italians why they evade taxes, they primarily say that they evade because everyone else does so
> A distant second is the reason that Italians would be more likely to pay taxes if they had the feeling that the state would spend their money more wisely. Much lower in the ranking come issues such as the soft penalties for evasive behavior, the complexity of the tax rules, and the unlikeliness of being caught. A total of 87.1 percent of all Italians think that their fellow citizens evade taxes
As a solo indiehacker in Europe, its crazy that I have to be so worried about VAT related things and big tech just goes around the whole thing and doesn't even expect to be charged just fined
Well, for once execs are being investigated as well
You only have to be worried if you're doing something illegal, like the guys in the article. Misfiling something won't land you in jail, just some fines at the most. Intent matters quite a bit.
“ just some fines at the most. “
That’s ok for the big players with deep pockets. For the little guy this is a much bigger problem. As it should. It would just be nice if law breaking would be a bigger problem for the bigger companies too.
I think GPs point is that the fines are generally not crazy.
I misfiled stuff a few times and got fined, it's annoying but it's not something that will break your bank.
The behaviour of the tax office varies quite a lot from country to country tho.
Yes. No country is out here destroying productive businesses because they made a paperwork mistake. The penalty is usually proportionate.
But don't trust me, ask your lawyer.
I can see that happening in Australia, our tax office can be absolutely brutal on all but the big companies that can afford really good lawyers.
> No country is out here destroying productive businesses because they made a paperwork mistake.
New Zealand. The Accident Compensation Corporation, a compulsory insurance scheme, is absolutely feral. Will crush you "because rules" without a thought.
What were the rules you broke, and what was the penalty?
Last time I misfiled I got a check from the IRS for a couple hundred bucks.
I've misfiled several times due to being young and stupid.
Each time I got a piece of mail asking my to call the IRS to clear it up, and every time the agent was nice and very helpful clearing it up, and not fined.
The IRS used to have a much worse reputation. Congress passed the Internal Revenue Service Restructuring and Reform Act of 1998 and improved their customer service.
If you are found personally responsible for tax evasion >1e6€ then the minimal penalty is prison sentence without parole option. This is true for many EU countries including Italy. Idk. about the max. prison length in Italy for this but e.g. where I live in the EU you are likely looking at ~15 years for 1e9€ tax evasion.
The reason executives commonly avoid such penalties is because they avoid being found personally liable by claiming they didn't known, did misunderstood the situation, where deceived by others etc.
Through it should be noted that this case is a bit unusual and complicated. The tax dispute itself isn't as simple as Amazone directly having avoided paying their own taxes. And the case of missing taxes has already been settled. This new current investigations are criminal investigation (i.e. the failure of paying taxes is assumed to have been intentional instead of a booking error) and seem to be more targeting executives for having committed crimes (instead of targeting Amazone the company).
Or in other words, Italian prosecutors are feed up US companies not caring for EU law and no one being hold liable.
---
(1): Without option to have it replaced with long time parole.
> If you are found personally responsible for tax evasion >1e6€ then the minimal penalty is prison sentence without parole option. This is true for many EU countries including Italy. Idk. about the max. prison length in Italy for this but e.g. where I live in the EU you are likely looking at ~15 years for 1e9€ tax evasion.
There's o EU wide tax law, so that statement is misleading at best and there's many places where that's false. You're spreading misinformation.
> The reason executives commonly avoid such penalties is because they avoid being found personally liable by claiming they didn't known, did misunderstood the situation, where deceived by others etc.
Misinformation again. This blanket statement in just false. Again, because there is no EU-wide law. It's up to the countries and they handle it very differently.
> The reason executives commonly avoid such penalties is because they avoid being found personally liable by claiming they didn't known, did misunderstood the situation, where deceived by others etc.
In the US, Section 302 of the Sarbanes-Oxley Act exists literally to avoid this: the CEO and CFO have to personally sign filings so they cannot "not know" about financial disclosure content and have plausible deniability. While it only applies to public companies, the model seems reasonable to solve this case too.
"not know" was oversimplified from me, technically such things exist in many countries, most likely also Italy.
But this comes back to how thinks always tend to be more complicate then "clean cut direct tax avoidance".
E.g. here the case isn't as simple as Amazone directly avoiding tax. But them instead to quote:
> Amazon's algorithm and operating models enabled the sale in Italy of goods from tens of thousands of non‑EU sellers - mostly Chinese - without disclosing their identity, helping them avoid paying value‑added tax (VAT)
I.e. Amazon is seen responsible for acting with sever levels of negligence with suspicion of intentionally enabling/supporting tax evasion to profit from it. (And honestly given the level of fraudulent-looking things Amazone allows vendors since a very long time, there is likely some truth to the "intentional supporting malicious actions" part.).
And in turn executives don't claim exactly "they didn't know". They claim they did know and started actions to fix the issue but it the actions failed so you tried other actions and if asked why no bigger actions are tried they claim it didn't look like it was "that" big of a problem through they now realize that was wrong.
The end effect is still the same they doge responsibility as-if they could just claim they didn't know, just with extra steps. Instead of "didn't know" I probably should have used "they claimed incompetence" (and external factors outside of their control) or similar.
> "not know" was oversimplified from me
Your entire post comes town to "oversimplified", to frame it generous. To frame it factual: misinformation.
> technically such things exist in many countries, most likely also Italy.
Yeah? Which ones? Quote the sections and then we'll continue ...
When you're not wealthy, "some fines at most" can be a really nasty setback
No really the fines in line with the profits and your intent.
Businesses who get into trouble because of taxes are doing it intentionally. Or somebody in the company does it intentionally.
Let me guess. Jeff/Andy make a donation to a certain someone. Tariffs on Italy are threatened. Case is dropped.
I think that normally that may be the approach (and I'm not singling out Italy for this, it probably applies to most countries).
On this occasion, however:
> In all previous cases involving other international groups, once a settlement was reached and payment made, prosecutors closed related criminal investigations, either through plea deals or by dropping the cases.
> This time, however, Milan prosecutors did not share the tax authority's approach and decided to press ahead with their probe, leading to a request that the suspects be sent to trial.
Damn, is anyone an expert that can speak to the criminal law involved here?
It’s crazy that executives can jump around the law and not face any criminal charges, then the company picks up the bill (although I’m not ignorant thinking this isn’t usual)
I’m just curious to learn more about how often this is the case and you usually what happens with people afterward
I don't know about Italian law, but in the US tax evasion is pretty difficult in many cases to prove. It is illegal in the US to deliberately defraud the IRS to evade paying taxes, it is not illegal to make a mistake, or claim a deduction you think you can claim when the IRS decides you can't, etc. So prosecutors must prove you had an intent to evade taxes you knew you owed. Because they can rarely meet that bar, criminal charges are rarely brought.
In Italy, if you are charged of tax evasion, you need to demonstrate that you are not evading. It's called "inversion proof"
that seems terrible
it's for the civil part. (so you need to show the tax office some paper trail that you based your filings on. invoices, bills, contracts, emails, receipts. and if they are formally okay, then the tax agency has to show that they are just fake papers.)
as far as I understand the criminal part still considers intent and so on (and has a higher standard for burden of proof), but if you file for VAT return and then you have zero invoices (and so the numbers simply don't add up) the court can easily find that there was intent to defraud the state. (and then sentencing is based on the amount of damages.)
Doesn't seem to be universal but applied narrowly for example for financial crimes.
While I share your sentiment, perhaps its better that it remain murky to give prosecutors a chance to succeed.
It usually works more like:
source: I'm italian and many tech giants did this already. Apple opened an academy in Naples too.Not only tech giants, everybody from celebrities to random Joes can get away with it.
My mother's husband owed 70k+ EUR in taxes and at some point the judge proposed and he agreed to 2800 euros.
The trick is to not have a bank account in your name only, you have it joint with a child/spouse and they can't take your money. Nor they can take your house, if you only have one.
Eventually under those situations the judges try to take anything rather than nothing.
I'm not defending this situation, just saying it's widespread and the fact that every two governments come one that does a "condono", which is essentially "let's agree with tax evaders for some 50% of the tax they owe so they are happy and we see something" doesn't help.
Harsher punishment should be warranted, but you can't go to prison for tax evasion.
> The trick is to not have a bank account in your name only, you have it joint with a child/spouse and they can't take your money.
Yes they can take 100% of your part of that bank account which amounts at total / # of owners.
The trick is in the mud between what's yours and what's theirs. The induced doubt is lucrative.
It's pretty clear. If you have your bank account with 2 owners, and with X on it, X/2 are yours and X/2 belong to the other owner, at any point in time. Case in point, if one of the owners deceases, you can withdraw X/2 at most. The other half is blocked until the inheritance paperwork is completed and that half has a new legal owner(s).
You 100% should be able to go to prison from tax evasion. Not to fill prisons just to line prison owners' pockets like in the US, but definitely have the possibility for egregious offences.
> You 100% should be able to go to prison from tax evasion.
I said can't, not shouldn't.
In any case I'd still say it's arguable if the punishment matches the crime, I'm not saying I'm against it but I don't fully buy it either.
In Italy we have two law codes: criminal and civil. You can't go to prison for civil offenses like tax evasion in our system.
you can… it’s just not really clear that anyone does. that said, i think if you polled the average joe on the street, they would overwhelmingly say that you can, which is probably a net gain for society.
"Tariffs on Italy are threatened. Case is dropped."
Justice is independent in most EU countries.
But I think tariffs cannot be imposed on individual countries in the EU. At least that was how I understood the situation with Spain.
that is also true. Doesn't really stop Trump from threatening to do it all the tim tho.
Nothing stops that man from saying anything, he himself the least.
There's quite a few asterisks that need to be appended to "independent".
It is quite independent in Italy actually. The government is pushing for a constitutional amendment to help "fix" this feature. There is going to be a referendum on the change very soon.
I have ancestral Italian Citizenship but have never lived in Italy.
I am occasionally called upon by the local consulate to perform my civic duty and vote.
Just this week I sent them back my ballot, now marked, for this referendum in a sealed envelope.
This referendum required me to dig more deeply than usual into Italian politics before I could decide which way I wanted to vote.
I am familiar with this but thought it was for separating prosecutors from judges?
Is this some indirect effect of that?
the current reform is complicated, and reasonable people can disagree on how to vote, but it goes a bit further than separating prosecutors from judges.
Namely, it also changes the self-regulating body (the CSM, Consiglio Superiore della Magistratura) of the judiciary so that the government and parliament have a bit more authority and the judiciary have a bit less: the organ is split in two, its judiciary members are no longer elected but picked randomly while a part is decided by the political side, and there's an even higher special tribunal.
Proponents say this is necessary, opponents say this is leading towards stronger power of the political majority over the judiciary.
> while a part is decided by the political side
Now, roughly one third of CSM members is nominated by the Parliament and the other one is elected by judges, according to the "correnti" (a sort of parties)
For reference: https://en.wikipedia.org/wiki/2026_Italian_constitutional_re...
> The government is pushing for a constitutional amendment to help "fix" this feature. There is going to be a referendum on the change very soon.
Italian here. It's not like that: the referendum is about definitely enforcing the career separation about public persecutor and judges. Actually they are under the same authority and the member of this authority are elected according to a sort of political parties (unique case in the whole EU) and this creates some distortions in career growths and nominations. The new schema will create two different authorities and the members will be selected according to a ballot.
A similar proposal was made by the left wing parties few years ago, when they were at the government
> It is quite independent in Italy actually.
Ask any Romanian and they'll tell you they're not. Ask them about the Mario Iorgulescu case [1], with the Italian justice system refusing to extradite him here to Romania only because his (wealthy) dad paid the right people off. And Iorgulescu is not the only such case.
[1] https://www.romaniajournal.ro/society-people/law-crime/mario...
Honest sellers pay VAT, and scofflaws get sales. Yeah they gotta throw down the gauntlet here or else VAT is only for suckers.
It would be really nice to have a few relevant numbers in the article for context.
If this is just from foreign sellers operating on amazon.it, then 1.4B of evaded taxes sounds like a lot to me, because the total revenue should be well under 50B/y, so this would be a significant fraction of total sales tax (and I'd expect most sellers to not be foreign and thus unaffected).
Would be quite nice to see rich people held accountable for once, curious how this will go.
> and I'd expect most sellers to not be foreign and thus unaffected
Most sellers probably are foreign.
They will settle for a few million lol
Billionaire doesn't pay tax: let's settle with you paying half of all stolen money as a fine and we'll drop the case.
A regular citizen doesn't pay tax: lets jail or deport you, bar the entry for a decade, take away your home, car and anything you own in general and make you unable to find job for the rest of your life. Also your tax is double that of the billionaire, glhf ;) .
In Italy, the only entities consistently paying taxes are large corporations. Literally everyone else is constantly evading them.
As Italian, I really disagree. The only entities that pay all the taxes are employees because the taxes are collected directly from the salaries.
Big companies have the opportunity to make tax elusion (there is a reason why many Italian companies have legal HQ in Netherlands or Luxembourg), small companies, artisans and freelancers usually avoid to pajly VAT
https://academic.oup.com/book/36357/chapter/319888230#426336...
> In percentage terms this means that during the 1970s between 15 and 20 percent of Italians evaded taxes while the rate climbed to 26 percent in the 1980s. In the 1990s, tax evasion fell again, hovering between 15 and 20 percent. Workers employed in manufacturing evade very little, whereas the highest evasion rates can be found among the self-employed
> The severity of evasion becomes obvious when we consider that the Italian state annually collects only a total of €350 billion while losing €250 billion through evasion (D’Attoma 2016).
> If one asks Italians why they evade taxes, they primarily say that they evade because everyone else does so
> A distant second is the reason that Italians would be more likely to pay taxes if they had the feeling that the state would spend their money more wisely. Much lower in the ranking come issues such as the soft penalties for evasive behavior, the complexity of the tax rules, and the unlikeliness of being caught. A total of 87.1 percent of all Italians think that their fellow citizens evade taxes
as a freelancer i must be doing something wrong then.
Actually, you're doing something right. Everyone else is doing something wrong.
Taxes dont get deducted from people's salaries?
they do, the above comment is a generic populist rant