triggers tax checks?

Tax investigations: what can the Revenue Agency do if it notices a series of transfers from one account to another of the same person?

More and more people are holders of two or more current accounts. The low costs of online accounts allow an economic and practical management of relations with the bank without having to queue at the counter. But what is the risk in the event of a transfer? A Girocco triggers tax checks? Let’s take a practical example.

Imagine that a taxpayer, owner of two current accounts, is used to move, occasionally, sums from one account to another, without a specific reason.

One day, the Revenue Agency checks the destination account of these transfers for tax purposes and there it realizes that there is precisely a rather substantial wealth. Thus, assuming that such money transfers are due to undeclared income, he notifies him of an assessment. He can do it? The transfer entry can be controlled by the taxman. This was explained by the Campania Regional Tax Commission in a recent ruling [1].

The problems of bank transfers

In tax matters and, in particular, in the context of the management of current accounts, there is a very strict legal regulation contained in the Consolidated Law on Income Taxes: all cash payments made on your current account or wire transfers received they consider themselves “income” and, therefore, must be taxed. This is excluded only if the taxpayer is able to prove that the money deposited or received in the account has already been taxed at the source (for example, a game win) or is tax-free (for example, the sale of a used object or a donation of parents or spouse).

There is therefore what is technically called “inversion of the burden of proof”: the financial administration is entitled, in the absence of evidence to the contrary, to assume that the operation hides black.

Summarizing what has been said so far we can simplify the concept. In the case of “incoming” movements on the current account, in order not to have problems with the Revenue Agency there are only two hypotheses:

• or the amount is “denounced“In the tax return and, therefore, taxes are paid on it (by admission of the same taxpayer it is in fact a taxable income);
• o the taxpayer proves that the amount was not to be reported in the tax return because free or already taxed at source. However, in the absence of such proof, the Revenue Agency is entitled to automatically assume that the sum is taxable and, therefore, can tax it with the application of sanctions.

The transfers: what are they?

The difference between credit transfers and wire transfers is simple and known to everyone. THE transfers they are shifts of money between accounts of different people. Instead, the transfer entry it is a movement of money between accounts of the same subject. The disposition from an account of a subject to one of which the latter is always a turnaround co-owner with another person.

Edoardo is married to Raffaella. Edoardo has his own bank account and one co-registered with his wife. At the moment he makes a disposition from his own account to the joint one he is making a transfer.

Are there tax checks on transfers?

The problem that has been posed to the judges is whether, for transfers, the same tax rules apply as for wire transfers. In other words, money from another bank account of the same taxpayer can trigger the presumption of income as well as for transfers from third parties? According to the tax courts, the answer is negative.

For Irpef and VAT purposes, the movements all within the assets of the same taxpayer are irrelevant: the movements of wealth on the same subject do not therefore determine the reversal of the burden of proof.

In such cases, in fact, the transaction essentially results in one all internal movement to the municipality holding current accounts which is not relevant for the purposes of determining the taxable income and does not refer to taxable transactions.

Once the taxpayer has shown that the payments recorded on the current account subject to verification come from a disposition made by another current account attributable to him (i.e. they are the result of a transfer entry), but not subject to further verification, the Inland Revenue cannot assume that it is black as, instead, it can do with transfers from third parties or cash payments. Therefore, the burden will be placed on the office to demonstrate that the amount paid into the first current account is taxable.