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TAX EVASION

Italian tax evaders rack up €17.5 billion bill

Italy’s financial police on Tuesday announced that it has uncovered nearly 5,000 tax evaders so far in 2013, who have collectively avoided a €17.5 billion bill.

Italian tax evaders rack up €17.5 billion bill
So far in 2013 the Italian authorities have found 4,933 cases of tax evasion. Photo: Rosie Scammell/The Local

A total of 1,771 people have faced charges for failure to declare their earnings, the most severe of the 4,933 cases this year. An estimated estimated €120 billion of taxed is dodged every year in Italy.

As part of the probe the financial police (Guardia di Finanza) found 19,250 irregular workers this year, nearly half of which were working entirely on the black market.

The news comes just weeks after Prime Minister Enrico Letta vowed to “fight relentlessly” against tax evasion, be it international or local.

Since being sworn in in April, Letta’s cabinet has already lost a minister to reports of tax evasion.

In June Josefa Idem, minister for equal opportunities and sport, resigned over allegations that she had failed to pay property tax.

A tax scandal also rocked the famed Italian fashion world earlier this year, as D&G designers Domenico Dolce and Stefano Gabbana were found guilty of avoiding a €200 million bill. The pair are currently appealing the verdict and last month closed their Milan stores in protest of being branded tax evaders.

But high profile Italians are not the only ones facing greater scrutiny.

This week police began rolling out a new computer system, the "redditometro" (revenue-metre), which compares declared revenues with expenditures to crack down on tax cheats.

It will initially analyse the books over the past four years of a sample 35,000 households, including looking at mortgages, cars and even food purchases.

If it identifies a discrepancy of more than 20 percent between intakes and outgoings, the "redditometro" immediately triggers a tax inspection.

The new system is made up of dozens of computers that analyse databases and "can uncover the big tax evaders and the fake poor," Marco di Capua, the deputy director of the tax agency, told reporters.

The system has been criticized by some for not going far enough and by others, mainly right-wing politicians, as a massive interference by the state.

Matteo Salvini, a deputy leader of the right-wing Northern League party, described it as the type of system "used by communist and fascist regimes".

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TAXES

Beskæftigelsesfradraget: What is Denmark’s employment allowance?

Denmark's government may soon announce changes to its tax reform plans, which will give all wage earners a bigger employment allowance. What is this and how will it affect foreigners' earnings?

Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance? 

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes. 

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner. 

How did the government agree to change the employment allowance in its coalition deal? 

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment  allowance to 12.75 percent up to a maximum rebate of 53,600 kroner. 

How might this be further increased, according to Børsen? 

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance. 

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement. 

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.  

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