Tax Avoidance: Criminal Liability For A Foreign Company’s Management

On 22 November 2011 the Criminal Chamber of the Italian Supreme Court (Corte di Cassazione) heard case No. 7739; on 28 February 2012 it issued the judgment deciding, inter alia, on the criminal tax consequences for the managers of a company formally resident abroad but de facto managed in Italy.

According to the Italian Supreme Court, where a foreign company of an Italian group having intercompany transactions with other Italian members of the group for the sole purpose to erode their Italian tax base, and having its place of management in Italy is considered as resident in Italy for tax purposes and is therefore subject to Italian tax provisions including the filing of an Italian income tax return.