Fraudulent Tax Evasion

Fraudulent Evasion of Tax Payments

Fraudulent evasion of tax payments represents one of the most delicate and insidious offences in corporate tax criminal law, as it intervenes not at the declaration stage but at the level of protecting the State's patrimonial guarantee.

Provided for by Art. 11 of Legislative Decree No. 74 of 10 March 2000, the provision punishes the entrepreneur, director or obligated party who, in order to evade payment of income taxes or VAT – as well as related interest and penalties – for a total amount exceeding €50,000, carries out simulated or fraudulent acts on their own or others' assets, capable of rendering the compulsory collection procedure ineffective, even partially.

The sentencing framework provides for:

• imprisonment from six months to four years;
• imprisonment from one to six years when the debt exceeds €200,000.

The offence does not penalise a failure to file or a false representation of the tax base, but rather the patrimonial conduct that affects the Tax Authority's ability to satisfy its claim.

It is therefore an offence that protects the guarantee function of the taxpayer's assets, lowering the threshold of criminal relevance even in the absence of enforcement proceedings already underway.

In Milan's economic context – characterised by complex corporate structures, extraordinary transactions, asset reorganisations and sophisticated financial dynamics – the line between legitimate asset planning, ordinary corporate transactions and criminally relevant conduct can be extremely thin.

It is precisely in this grey area that the need arises for highly qualified criminal defence, capable of distinguishing between:

• lawful dispositive acts justified by genuine economic reasons;
• formally correct transactions lacking fraudulent connotation;
• conduct actually capable of constituting the criminal offence.

In corporate tax criminal law, the legal qualification of the patrimonial act and the verification of the actual evasive purpose represent the central core of the defence strategy.

Recurring cases in judicial practice

Among the hypotheses frequently subject to challenge are:

• simulated transfers of real estate or shares to family members or compliant parties;
• corporate demerger operations transferring assets to the "good company" while debt remains in the "bad company";
• donations or establishment of asset protection funds in the presence of significant tax debts;
• transfers of liquidity to accounts held by formally unrelated parties;
• extraordinary transactions lacking genuine economic justification.

The offence is classified as a concrete danger crime: it is not necessary for collection to have been formally initiated, nor for the tax credit to be definitively irrecoverable.

It is sufficient that the act, according to an ex ante assessment, is capable of prejudicing the effectiveness of enforcement action.

This aspect makes the offence particularly delicate, as it lowers the threshold of criminal protection compared to the actual enforcement phase.

The two offences under Art. 11 of Legislative Decree 74/2000

Art. 11 of Legislative Decree 74/2000 governs two distinct criminal hypotheses, united by the purpose of removing assets from the State's patrimonial guarantee, but structurally different in objective terms.

1. Fraudulent acts on assets (paragraph 1)

The first offence punishes anyone who, in order to evade payment of taxes, interest or penalties exceeding €50,000:

• carries out simulated alienation of assets;
• performs other fraudulent acts on their own or others' assets;
• with the aim of rendering the compulsory collection procedure wholly or partially ineffective.

A dispositive act that merely reduces the estate is not sufficient. The provision requires an additional element of fraud, i.e., conduct characterised by artifice, simulation or misleading representation of reality, capable of creating an artificial patrimonial shield against the Tax Authority.

In the absence of such a fraudulent element, the act of asset disposal falls within the normal exercise of the entrepreneur's contractual freedom.

2. Evasion through false representation in tax settlement (paragraph 2)

The second hypothesis concerns the phase of tax debt settlement. It punishes anyone who, in order to obtain partial payment of taxes for themselves or others, indicates in the documentation submitted in the context of a tax settlement procedure:

• active elements lower than actual ones;
• fictitious passive elements;
• when the amount exceeds the criminal relevance threshold of €50,000.

In this offence, the conduct does not directly affect the assets, but rather the representation of the financial situation, altering the conditions on which the agreement with the Treasury is based.

It is an offence situated at the boundary between tax criminal law and insolvency law, requiring a highly specialised assessment of the documentation submitted and the actual financial consistency of the enterprise.

Threshold of criminal liability

For the purposes of establishing the offence of fraudulent evasion of tax payments, the €50,000 threshold does not refer to individual tax years, but to the overall amount of the tax debt – including taxes, interest and penalties – existing and enforceable at the time the simulated or fraudulent act was committed.

Exceeding the threshold constitutes an essential element of the offence and not a mere external prerequisite: its existence must be ascertained precisely, with verifiable technical criteria and specific reconstruction of the debt relevant for criminal purposes.

The challenge of the quantum, the actual enforceability of the claim and the correct inclusion of ancillary components therefore constitutes a central node of the defence strategy, as it directly affects the very configurability of the offence.

Subjective element: generic and specific intent

The configurability of the offence of fraudulent evasion of tax payments presupposes a complex subjective structure, articulated on two levels.

First, generic intent is required, consisting of awareness of the existence of a tax debt overall exceeding the threshold of criminal relevance and the will to carry out the dispositive act.

Alongside this element, the provision requires specific intent, namely the purpose of evading payment of taxes, interest or penalties due to the Treasury.

The mere execution of an act of asset disposal – even one relevant under civil or corporate law – is therefore not sufficient. It must be demonstrated that the act was preordained to the removal of the patrimonial guarantee, with full awareness of its suitability to prejudice the effectiveness of future or possible enforcement action.

In corporate tax criminal law, the assessment of the subjective element often constitutes the true pivot of the charge. The defence focuses, in particular, on verifying:

• actual knowledge of the debt at the time of the act;
• the real economic purpose of the transaction;
• the absence of artifice or simulation;
• the compatibility of the act with legitimate business choices.

The subjective element cannot be automatically inferred from the mere existence of the debt or subsequent collection difficulties: it must emerge from a coherent, specific and logically structured body of evidence, in compliance with the principles of legality and culpability.

Differences from the previous regulatory framework

The current configuration of Art. 11 of Legislative Decree 74/2000 marks a clear discontinuity from the previous offence under Art. 97 of Presidential Decree 602/1973.

In particular, the current framework:

• does not require the initiation of access, inspections or audits by the Tax Authority;
• does not presuppose the enrolment of the debt or the formal initiation of enforcement proceedings;
• classifies the offence as a concrete danger crime, significantly lowering the threshold of criminal protection.

Criminal relevance may therefore emerge even at a stage prior to the activation of compulsory collection, provided that at the time of the dispositive act there exists a tax debt overall exceeding the prescribed threshold and the transaction is capable, according to an ex ante assessment, of prejudicing the State's patrimonial guarantee.

This regulatory evolution significantly expands the risk area for entrepreneurs and directors, making criminally relevant conduct that, in the past, would have remained outside the criminal sanctions sphere.

In this context, the distinction between legitimate asset planning, ordinary corporate management and criminally fraudulent conduct requires a highly qualified technical-legal analysis.

Confiscation and preventive seizure

The offence of fraudulent evasion of tax payments is frequently accompanied by the adoption of real precautionary measures, in particular preventive seizure aimed at confiscation by equivalent.

In practice, this may result in:

• freezing of real estate;
• restrictions on corporate shareholdings and quotas;
• freezing of financial resources, current accounts and asset instruments;
• extension of the restriction to assets formally registered to third parties, where deemed available to the suspect.

The confiscable profit is identified as the economic saving deriving from the removal of the tax debt from its fiscal destination, and not in the administrative penalties, which do not constitute profit from the crime but a sanctioning consequence of the offence.

The correct determination of the quantum assumes decisive importance:

• the actual existence and consistency of the debt at the time of the act must be verified;
• any duplications or improper inclusions of interest and accessories must be challenged;
• the concrete attributability of the profit to the suspect's patrimonial sphere must be scrutinised;
• the proportionality of the restriction relative to the hypothetical economic advantage must be assessed.

In corporate tax criminal law, preventive seizure often represents the first and most incisive impact of the investigation on the entrepreneur's life and business continuity. This is why the timely challenge of the precautionary measure and the technical contestation of the profit prerequisite constitute an essential node of the defence strategy.

Corporate liability under Legislative Decree 231/2001

The commission of the offence of fraudulent evasion of tax payments may also determine, where the prerequisites are met, the administrative liability of the company under Art. 25-quinquiesdecies of Legislative Decree 231/2001.

The charge may entail:

• significant pecuniary penalties, calibrated to the quota system;
• prohibitive sanctions, such as the ban on contracting with Public Administration, exclusion from public financing and grants, suspension or limitation of activity;
• significant reputational and operational repercussions, with possible impact on business continuity and relationships with credit institutions and stakeholders.

In corporate tax criminal law, the management of the proceedings cannot be limited to the defence of the natural person. A structured coordination between the position of the director and that of the entity is necessary, with particular attention to:

• verification of the existence of an interest or advantage for the company;
• analysis of the organisational structure and management and control models adopted;
• assessment of the concrete suitability of the 231 model to prevent the commission of the offence;
• preparation of a unitary, coherent and technically sustainable defence strategy.

The correct structuring of the defence under Legislative Decree 231/2001 represents an essential step for the overall protection of the business organisation and for safeguarding its financial and reputational stability.

Legal Aid's defence strategy in Milan

In proceedings for fraudulent evasion of tax payments, the defensive intervention cannot be improvised or limited to a merely formal reading of the case files.

The Firm's activity develops on multiple levels, according to a structured and technically rigorous methodology:

• verification of the actually fraudulent nature of the contested dispositive acts;
• in-depth analysis of the economic, corporate or patrimonial reasons underlying the transactions;
• challenge of the concrete ex ante suitability to prejudice collection;
• precise ascertainment of whether the punishability threshold has been exceeded as a constitutive element of the offence;
• rigorous scrutiny of the subjective element, with particular attention to proof of evasive purpose;
• coordination with any ongoing tax disputes, insolvency proceedings or extraordinary operations.

In Milan's economic context – characterised by complex corporate structures, extraordinary transactions, demergers, reorganisations and sophisticated asset planning – the boundary between legitimate asset management and criminally relevant conduct can be extremely thin.

It is precisely in this area of high complexity that Legal Aid – Società tra Avvocati S.r.l., based in Milan with exclusive competence in corporate criminal law, intervenes.

The defensive action is based on:

• an in-depth technical-accounting analysis of the contested transactions;
• a rigorous criminal law qualification of the facts;
• a precise verification of the evidentiary sustainability of the prosecution's case;
• an integrated protection of the entrepreneur and the corporate organisation.

Why timeliness is decisive

In the offence of fraudulent evasion of tax payments, the time factor assumes decisive importance.

Immediate intervention allows:

• promptly reconstruct the economic and managerial context of the transaction;
• document the lawfulness and rationality of the asset choices;
• exclude the existence of an evasive purpose;
• prevent or counter the application of personal or real precautionary measures, including preventive seizures aimed at confiscation.

In corporate tax criminal law, the distinction between lawful asset planning and fraudulent conduct is not based on automatisms, but on technical and legal assessments of particular complexity, requiring specialist competence and strategic vision.

Truly effective legal protection must be activated from the earliest stages of the proceedings, before the prosecution's approach consolidates and produces effects that are difficult to reverse.