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Don’t play the lottery in Italy – just pay your taxes!

November 2, 2016

3d rendering of lottery balls
www.depositphotos.com/zentilia

 

 

 

 

 

Tax evasion in Italy is rife. It’s estimated that around €109 billion (£97 billion) is lost each year and as a result authorities are unsurprisingly looking at ways to address the issue. However, in a move that perhaps goes against the grain in Europe, Italy has introduced a ‘tax lottery’ as a means of not only identifying those evading correct payments, but also to incentivise citizens to ensure they are compliant by rewarding them.

The scheme – which is due to be piloted next year – will see electronic receipts automatically sent to the national tax authority. Shops and businesses will be required to ask for an individual’s tax code cards when providing receipts in order to automate this process (a measure that is already required at pharmacies in the country).

These numbered electronic receipts will then be entered into a draw to receive prizes in cash or kind which deputy economy minister, Luigi Casero, claims will be substantial. Businesses will also be rewarded if the winning ticket came from their premises.

This not only removes the headache for people when it comes to holding on to paper slips, but it also encourages consumers to actively ask for receipts and businesses to offer them.

While many of us might not have heard of these ‘creative behavioural finance’ schemes before, they have been implemented in other countries. Taiwan, for example, introduced a lottery back in 1951 which takes place on the 25th of odd-numbered months, with a possible cash prize of £270,000. In Portugal, the prizes up for grab range from government bonds to luxury cars.

Introducing the more positive approach to encourage citizens to pay the correct taxes certainly sounds good on paper. However, what it does highlight is that with this new system in place, individuals avoiding tax payments can be caught out when they make a simple purchase in their local shop.

For contractors working in Italy, ensuring you are fully compliant with local tax laws is perhaps more important now than ever before. Even if you think you have your taxes and registration in order, it’s advisable to seek out expert advice in order to avoid potentially hefty penalties.

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