In Italy, non-payment, late payment or underpayment of taxes results in a handful of penalties – established in Article 13, paragraph 1 of Legislative Decree no. 471/1997. The standard penalty is 30% of the unpaid or late-paid amount, but it may be reduced to 15% if the payment is made within 90 days. The taxpayer can choose to correct their tax situation voluntarily through a process called “voluntary correction,” which allows them to receive additional reductions in these penalties.

In this article, you’ll learn more about what voluntary correction is, what different kinds of voluntary correction exist, what the penalties are, and how to pay them.

What’s in this article?

• What is voluntary correction?
  
• Kinds of voluntary correction and penalties
  
• How to calculate interest
  
• How to pay
  

What is voluntary correction?

Voluntary correction (in Italian, “ravvedimento operoso”), introduced by Legislative Decree no. 472 of 1997, is an important aspect of Italian tax law. It allows taxpayers to correct missed tax payments and benefit from reduced penalties.

In addition to the standard penalties, the taxpayer must also pay interest on missed payments. This interest is based on the annual rate set by the Ministry of Economy and Finance, which decreased from 5% to 2.50% on 1 January 2024.

The key change benefiting taxpayers was introduced by Legislative Decree no. 158/2015, which amended the law on penalties for late or missed payments. It reduced the standard penalty for late or missed payments made within 90 days from 30% to 15%. As a result, the standard penalty is as follows:

• For payments up to 14 days late: 15% penalty, reduced to 1/15 per day
  
• For payments between 15 and 90 days late: 15% penalty
  
• For payments over 90 days late: standard 30% penalty
  

However, a voluntary tax agreement allows the taxpayer to correct the situation by paying the taxes originally owed, the reduced penalty mentioned above, and the interest.

Kinds of voluntary correction and penalties

The reduction of penalties is based on the amount of time that elapsed between the tax violation and the time of voluntary correction. There are different time brackets, each with a certain level of penalty reduction. The longer the delay in resolving the tax violation, the smaller the reduction. Let’s look at the details to understand how penalties are calculated for voluntary corrections:

• Sprint correction
  Applies up to the 14th day of late payment and allows the taxpayer to correct their situation by paying the tax due, with a penalty of only 0.1%, which is 1/15 of the minimum 15% for each day of delay, further reduced to 1/10. Additionally, daily interest based on the annual reference rate should be included.

• Quick correction
  Applies up to 30 days from the date of the tax violation for cases of non-payment or late payment. In this case, the penalty is 1.5% (1/10 of 15%).

• Interim or quarterly correction
  Applies when errors and omissions are corrected within 90 days after the filing deadline. Or, if there is no periodic return, it applies within 90 days of the omission or error. The penalty is reduced to 1/9 of the minimum.

• Long or annual correction
  Applies when errors and omissions are corrected by the deadline for filing the return for the year in which the violation occurred. Or, if there is no periodic return, it applies within one year of the omission or error. The penalty is reduced to 1/8 of the minimum (after 90 days, it is 30%).

• Two-year correction
  Applies for payments made by the deadline for submission of the return for the following year. Or, if no return is due, it applies within two years of the omission. The applicable penalty is 1/7 of the minimum.

• Extended or ultra-biennial correction
  Applies if errors and omissions are corrected by the due date of the return for the year after the violation occurred. Or, if no return is due, it applies more than two years after the error or omission. The penalty is reduced to 1/6 of the minimum.

• Post-audit (processo verbale di constatazione or PVC) correction
  Applies if the regularisation occurs after the violation is confirmed in a tax audit (a PVC, or “report of findings”), except in cases where tax receipts or delivery notes are not issued, or fiscal devices are not installed. The penalty is reduced to 1/5 of the minimum.

• Correction after failure to file a return
  Applies in cases of failure to file a return, if submitted no more than 90 days late. The penalty is reduced to 1/10 of the minimum.

If a taxpayer who chooses voluntary correction can’t pay the full amount at once, the law allows partial corrections to be made. Article 4 of the Legislative Decree of 30 April 2019, which amends Legislative Decree number 472 from 18 December 1997, introduced Article 13-bis – which officially acknowledges the existing practice of partial correction, allowing citizens to comply with regulations more flexibly. Partial correction and fractional penalties allow a taxpayer to comply by paying the total amount owed in several instalments, with penalties and interest applied proportionately. Partial correction only applies to taxes administered by the Agenzia delle Entrate.

How to calculate interest

Interest on late payments should be calculated daily at the current legal interest rate from the due date of the payment (or failure to pay) until the debt is paid in full through correction. Keep in mind that if the period for calculating interest on voluntary correction spans several years, the interest rate may not be fixed and may change from one period to another. Here are the interest rates for recent years:

• 2024: 2.5%
  
• 2023: 5%
  
• 2022: 1.25%
  
• 2021: 0.01%
  
• 2020: 0.05%
  
• 2019: 0.8%
  
• 2018: 0.3%
  
• 2017: 0.1%
  
• 2016: 0.2%
  
• 2015: 0.5%
  
• 2014: 1%
  

Therefore, taxpayers who want to take advantage of the 2024 tax amnesty for violations up to the end of 2023 will need to use the interest rates from different periods. For violations from 1 January 2024 onward, the interest rate will be 2.5%.

A special tool can be downloaded to simplify the calculation of penalties and interest for voluntary tax corrections with the Agenzia delle Entrate. The tool, called Compliance, allows you to calculate penalties and interest for the purpose of regularising errors through voluntary tax corrections, addressing errors that resulted in higher tax due or lower credit used.

Keeping up-to-date with ever-changing tax regulations can be a challenge for your business. Tools such as Stripe Tax can simplify tax compliance by generating detailed reports that are useful for filing tax returns.

How to pay

For payments to regularize your position through voluntary correction, the taxpayer should use:

• Form F24 for income tax (IRPEF, IRES), related substitute taxes, VAT, IRAP, and entertainment tax
  
• Form F24 (Elide) for registration fees, real estate, and land registry fees
  
• Form F23 for registration tax and other indirect taxes
  

With regard to the F24 form, taxpayers who do not have a value-added tax (VAT) number can make the payment electronically, or by submitting the paper form at the Agenzia delle Entrate counters or at banks or post offices. Those with VAT numbers, on the other hand, must submit the form electronically through the Agenzia delle Entrate online portal, or by using their bank’s online service. You can do this yourself, or you can use an accredited agent such as an accountant, trade association, or tax support centre (CAF).

You should enter the relevant tax codes when filling out the forms. Here are the principal codes of Form F24 for the voluntary payment of IRPEF, IRES, and VAT:

IRPEF

IRES

VAT

A full list of tax codes for voluntary correction is available on the Agenzia delle Entrate website. You should always consult with your accountant to ensure compliance.