Tax authorities set to tighten the rules on tax credits and ‘fly-by-night’ companies

The budget also calls for a contribution to the fight against tax evasion. Among the package of measures currently being considered for the Budget Bill – on which final decisions are awaited ahead of its submission to the Council of Ministers – there is also a further crackdown on the use of tax credits. This measure is set to affect both tax offsets and ‘open-and-close’ VAT registrations.

Let’s start with tax offsets. In a sense of continuity with the measure already introduced in the 2026 Budget, among the measures under consideration and likely to be included in the more than 100 clauses of the new Budget Law is a further reduction in the threshold that triggers a ban on the use of tax credits for offsetting against unpaid tax debts that have been entered in the tax register. Following the reduction from 100,000 to 50,000 euros, which came into force on 1 January this year, the proposal under consideration is to lower the threshold further to 30,000 euros. In practice, with €30,000 of tax liabilities and ancillary charges entered in the tax roll for which the payment deadlines have expired, a total ban on horizontal offsetting – that is, between taxes of a different nature – would come into effect from 1 January. In effect, the aim is to target those who evade tax collection by failing to pay their outstanding debts. To lift the ban, it is necessary to pay a portion of the debt that brings the total below the threshold. There are two key aspects worth noting. When the decision was taken last year to tighten the threshold – because a lower debt threshold affects a wider range of taxpayers – the measure was incorporated into the implementation plan for the National Recovery and Resilience Plan (PNRR) on tax administration reform. This was a measure on which the tax authorities had projected increased revenue – amounting to €207 million per annum from 2026 onwards – arising from the forfeiture of tax credits that would otherwise have been used for offsetting by those who do not meet the eligibility criteria under the threshold.

This represents a further restriction on the use of tax credits for offsetting, which nevertheless remains a now structural component of our tax system. The figures bear this out. In the first eight months of 2026, tax revenue saw offsets break through the €36 billion mark (+2.4 per cent compared with the same period in 2025), with more sustained growth in direct taxes (an increase of €732 million on the previous year).

Of course, the problem does not lie with taxpayers who make full and legitimate use of tax credits, but in the various cases of irregularities that have come to light as a result of the anti-fraud measures taken by the Revenue Agency and the Guardia di Finanza. These often involve outright criminal schemes designed to accumulate tax credits whilst leaving ‘empty shells’ with outstanding debts in respect of both tax and social security contributions. For this reason, one of the proposals under consideration for the budget is to block the use of credits purchased for inactive VAT-registered businesses. This move follows on from a radical campaign to tackle the phenomenon of so-called ‘open-and-close’ businesses which, as the Government has claimed in its review of the four years since taking office, has led to the automatic closure of 20,300 irregular businesses. The phenomenon of fraudulent schemes carried out through bogus companies or ‘paper companies’ (so called because they issue false invoices) is a threat not only to the Treasury but to the entire supply chain of businesses operating in compliance with the rules, as they ultimately result in unfair competition that affects not only the sectors in which they are deliberately created but the entire production system.