The hairdresser, flowers, pay TV subscriptions, checks from the ex-spouse, rent and mortgage expenses up to the maintenance of the family dog. In short: everything. The government dusts off the income meter, which has always been opposed by the parties now in government. A decree signed by Maurizio Leo, deputy minister of Economy, appeared in the Official Journal yesterday (Tuesday). The tool comes back to life, with some changes, which, by analyzing the lifestyle of each of us and comparing it with the tax return, highlights the discrepancies and therefore the “risk” of tax evasion (total or partial) of natural persons. In that year you earned 1500 euros a month, but did you go on holiday in a luxury hotel and buy two computers and spend a lot on jewellery? The Revenue Agency checks are triggered.
The income meter was established in 1973, modified in 2010 during Berlusconi IV and frozen in 2018 by the Conte government. Now it's back, with an update to the list of items and indices that trigger tax checks.
How does it work
Taxpayers are divided into 11 types of families (couples with children, without children, singles under 35, etc.) in 5 different geographical areas. The expenses and investments present in the Tax Registry system are analysed, as are electronic payments combined with the data emerging from the annual Istat survey on family expenses divided by categories (presumed minimum expenditure) and the amount of savings found and not used. By combining the data, the “contribution capacity” is estimated, i.e. the income that the citizen should have had to cover the expenses made. If the deviation exceeds 20% the assessment is triggered.
The years examined
We start from the 2016 income, taking into account the elements already present in the tax register. The verification is triggered when the verifiable income exceeds the declared income by 20%.
Expenses under the tax lens
There are 56 types of “expenditure” introduced for the analysis and 9 investment items that can be controlled.
We start with food, drinks, clothing and footwear. For these items, in the absence of data in the Tax Registry Information System, a certain expenditure threshold is assumed based on Istat data depending on the category to which one belongs (the type of family and the geographical area). We then move on to the house: therefore expenses for mortgage, rent, condominium, real estate brokerage. What was spent on fuel and energy, household appliances, furniture, household goods, as well as housekeepers and babysitters can then be traced. Then there is the health chapter (medicines and medical visits), transport (insurance, road tax, maintenance costs and for taxis, planes, trains and public transport). Also included in the calculation are all expenses made for communication (mobile phones and bills) and for education (school books, taxes and school fees from nursery to university, language courses, master's degrees, university rentals and holidays and study stays at abroad). And then there is free time (pay-TV, games and toys, radio, television, hi-fi, computers, non-scholastic books, newspapers and magazines, records, stationery, radio, television and internet subscriptions, lottery and lotteries, plants and flowers, radio, television, computer repairs, sports activities). Animals do not escape “earning income”: from horse maintenance to veterinary expenses for dogs, cats and pets. And then the allowances to the ex-spouse, the costume jewellery, the barber and the hairdresser are also counted. Finally, all investments also contribute to the estimate that can trigger the assessment: from shares to stamps, from real estate to gold.
The taxpayer's defense
The contradictory comes into play. Unlike in the past, before sending any document, the Revenue Agency asks the taxpayer for explanations. It will be possible to defend oneself and demonstrate that the financing of the expenses occurred with income different from that possessed in the tax period in question. It may be contested that the attributed expenses have a different amount and that savings built up over the years were used to support them.
