Corporate, tax and bankruptcy offences: how to defend yourself successfully
Within its areas of expertise, ILA – International Lawyers Associates is a law firm specialising in corporate, tax and bankruptcy offences.
Our lawyers are experts in tax offences, ready to devise an ad hoc legal strategy even for very complex and far-reaching cases.
When do corporate offences occur?
Corporate offences, which are included in the list of offences that may give rise to criminal/administrative liability on the part of the entity that commits them, are regulated in the corpus of private law, which provides, as this type of offence is considered very serious, that the court in collegiate composition has jurisdiction to judge.
In particular, these offences are governed by Title XI, Book Five of the Civil Code and are mainly applicable to companies (whether or not they are subject to compulsory registration in the commercial register) and consortia (cooperatives or groups of companies).
These offences include all offences consisting in the exposure of material facts that do not correspond to the truth, i.e., omissions in the disclosure of information on the economic, asset and/or financial situation of the company or group; omissions capable of misleading the recipients.
The reason behind this fraudulent conduct by the agents (and thus by general managers, directors, auditors, liquidators of a company) would be of a utilitarian nature: they would operate in this way in order to deceive shareholders and/or the public in order to obtain an unlawful profit for themselves or others.
In general, the provisions laid down in this matter are intended to repress conduct by those who perform management or control functions in companies, whether partnerships or corporations, during ordinary business activities, or during ‘business crises’.
The legal assets protected by the rules on corporate offences are various, and among them are: the transparency and correctness of corporate information, the effectiveness of share capital, the integrity of corporate assets the regular functioning of the market, and the supervisory functions over typical business activities.
The heterogeneity of the cases under examination and the high technicality of the subject matter make it easy to understand how in this case qualified legal assistance, such as that of International Lawyers Associates, is indispensable!
Tax offences: a category as broad as it is widespread
Other legal offences that can lead a company, or a private individual, to sanctions, including criminal sanctions, are those falling within the scope of conduct attributable to false and/or incomplete declarations of data collected for the payment of taxes.
In this case, we are in the presence of so-called tax offences (provided for and regulated by Legislative Decree No. 74 of 10 March 2000, updated by Legislative Decree No. 75 of 14 July 2020).
Criminal sanctions, in this area, can arise from unlawful conduct, but also, as in most cases, from exceeding certain thresholds of evaded tax.
There are many taxpayers, in fact, who are unaware of the fact that the incorrect or omitted submission of income tax returns, when certain tax thresholds are exceeded, can lead to the initiation of criminal proceedings; likewise, for entrepreneurs, the failure to pay VAT, again above certain thresholds, can trigger criminal sanctions.
More specifically, what are tax offences?
The main violations of tax regulations that can be of criminal relevance are the following:
- Fraudulent declaration by using invoices or other documents for non-existent transactions;
- Fraudulent misrepresentation through the use of artificial accounting;
- False declaration;
- Tax evasion;
- Failure to declare income or VAT;
- Issuance of false sales invoices;
- Concealment or destruction of accounting documents;
- Failure to pay certified withholding tax or VAT or for undue compensation;
In this respect, fraudulent declarations with the use of invoices or other documents to set up transactions or situations that are not real, i.e. invented, are very important. In all these cases, this is a serious offence, which is also rather insidious, and which can also be said to exist in the event that a taxpayer submitting an annual declaration for direct tax or VAT purposes uses invoices or other documents drawn up for non-existent transactions, with the aim of reducing the amount of taxable income and consequently the payment of tax.
This also includes the offence of issuing invoices or other documents for non-existent transactions committed with the aim of benefiting third parties by means of tax evasion.
Fraudulent declaration by means of other artifices, on the other hand, is another type of offence punishable by law; in this case, it is committed by those who are in charge of compulsory accounting records. A few examples: registering current accounts in the name of nominees or family members, keeping accounts in the black, managing extra-accounting funds, fictitious asset registrations: all these behaviours are punishable under criminal law as they alter income and VAT declarations.
In the most serious cases, the failure to keep accounting records regularly can lead to the crime of concealment or destruction of accounting documents. Recently, however, this particular type of violation has been subject to new amendments.
With the 2020 tax decree, compared to the last intervention in 2015, which was connected to the Budget Law, the legislator has tightened the penalties, lowered certain punishability thresholds, extended the administrative liability of companies for the most serious offences, and introduced for certain offences disproportionate forfeiture and preventive seizure.
In this regard, one of the most important innovations made by the legislation is undoubtedly that concerning the new punishability thresholds.
In this regard, it is necessary to take into account the fact that all offences committed or contested prior to the publication of the tax decree in the Official Gazette serve the old penalties; this is due to the fact that the new legislation provides for an aggravation of the sanctioning treatment with the consequent prohibition of retroactive application.
Bankruptcy offences: types and statute of limitations
From tax offences, a distinction must be made between bankruptcy offences resulting from a declaration of bankruptcy to which an entrepreneur or a company may be subject. Bankruptcy offences include all those criminal offences committed by the entrepreneur or other interested individuals in the period prior to, or during, the declaration of bankruptcy; it is therefore not sufficient to simply be a taxpayer to commit such offences.
The rules governing this category of offences are quite old, being those set out in Title VI of Royal Decree 267 of 16 March 1942, commonly known as the ‘Bankruptcy Law’.
Usually, in these cases, criminal proceedings are initiated following a complaint made by the bankruptcy trustee.
A typical bankruptcy offence is bankruptcy, in its two declinations:
- Fraudulent bankruptcy, which is committed when the entrepreneur misappropriates, conceals, dissimulates, destroys or dissipates all or part of his assets, or, in order to prejudice creditors, exposes non-existent liabilities (asset fraudulent bankruptcy), or when he misappropriates, destroys or falsifies all or part of his assets, in such a way as to procure an unjust profit for himself or others or to prejudice creditors, the books or other accounting records or keeps them in such a way as to make it impossible to reconstruct the assets or the movement of business (documentary fraudulent bankruptcy), or when, for the purpose of favouring certain creditors over others, he makes payments or simulates pre-emption rights (preferential fraudulent bankruptcy).
- Simple bankruptcy, which can be attributed to the bankrupt entrepreneur who has made excessive personal expenditures in relation to his economic condition, or has engaged in grossly imprudent transactions to delay bankruptcy.
The difference between the two offences concerns the subjective element of the offence. In the case of simple bankruptcy, the agent acts without wilful intent, in a reckless and imprudent manner; in fraudulent bankruptcy, on the other hand, the subject acts with a fraudulent will and intent, in the knowledge that he is committing conduct that will diminish the company’s assets and those of its creditors.
On this subject, the Supreme Court recently specified that: “in order for the offence of documental fraudulent bankruptcy to be realised, there is no need for the specific intent of the agent”, i.e. that the agent specifically aims to make it impossible to reconstruct the company’s assets by irregularly keeping accounting records; it is sufficient that the accused person is aware of this (i.e. that he knows that the irregular keeping will imply the failure to reconstruct the company’s assets).
The offence of simple, non-fraudulent documental bankruptcy is committed when the agent keeps the accounting records in a manner that differs from that required by law without being aware that it will make it impossible to reconstruct the company’s assets’ (Judgment No. 30337, Section V).
Lawyers experienced in corporate, tax and bankruptcy offences: the winning tool for ad hoc defence
Corporate, tax and bankruptcy offences are another category of criminal offences in respect of which International Lawyers Associates provides integrated advice and advocacy.
Our lawyers are experts in corporate, tax and bankruptcy offences, specialised in the subject matter in depth and with many successful cases behind them.
As emphasised several times by the consultants working in this very capable firm, when we speak of these offences, we never refer to the same category of offence, but to sometimes completely different cases with different purposes.
To this end, suffice it to say that tax offences are provided for by a special non-codictic law and that they can also represent an administrative-tax offence as well as a criminal offence.
It is precisely for this reason that it is indispensable for companies that are in some way involved in or under investigation for these offences to turn to truly experienced lawyers, such as those of the staff of International Lawyers Associates.
In all these cases, they provide, in addition to the defence in court in the event of an accusation, preventive financial statement audits and make use of truly qualified accountants and auditors who tend to rectify business management errors.
The firm’s lawyers offer consultancy services for corporate, tax and bankruptcy offences, suggesting alternative tax strategies to those always followed by the company, so as to avoid any possible accusations of irregularities upstream during the company’s operations.