Italy tax audit reform limits assessment periods while courts keep broader controls

The new tax reform law and the updated Statute of the Taxpayer aim to shorten fiscal audit periods by making the limitation period start from the tax year in which the taxable event arose. The reform seeks to curb “infinite” audits that could be triggered many years later, especially concerning loss carryforwards, tax credits, building bonuses, shareholder loans, incremental expenses and amortisation of goodwill.

However, the Italian Supreme Court (Corte di Cassazione) continues to favour an interpretation that bases the limitation on the year of utilization rather than the year of origin, maintaining the possibility of prolonged audits in many cases. The Court’s rulings, including several United Sections judgments, often align with the tax authority’s position.

In parallel, the forfettario (flat‑rate) regime introduced two income thresholds: €85,000 and €100,000. Earnings up to €85,000 keep taxpayers in the regime. Surpassing €85,001 but staying below €100,000 triggers a delayed exit, effective from the following year, with changes to accounting, social‑security contributions and VAT obligations. Exceeding €100,000 causes an immediate exit, applying VAT retroactively to the triggering transaction and shifting the tax rate to ordinary IRPEF.