Understanding Bank Presumption in Fiscal Assessment

What is Banking Presumption?

Banking presumption refers to the legal inference that monetary transactions within a bank account may indicate unreported income during tax assessments.
However, taxpayers can refute these inferences by providing evidence that substantiates their claims regarding each transaction under scrutiny.

Understanding Banking Presumption

Italian regulations stipulate that deposits made into bank accounts may be treated as undeclared income, commonly known as “black income,” if not adequately justified.
This applies to the majority of taxpayers.
However, for self-employed individuals and businesses, both deposits and withdrawals contribute to this presumption.

The Role of Banking Presumption in Tax Audits

The tax authorities possess the right to utilize bank deposits and withdrawals to call into question the accuracy of an entity’s financial records, whether they belong to a business, professional, or self-employed individual.
Funds deposited could potentially stem from unreported earnings, while withdrawals may be linked to purchases that increase taxable income.

Who is Subject to Banking Assessment?

Banking assessments typically target specific groups like entrepreneurs, freelancers, self-employed individuals, and businesses.
However, suspicious transactions can also lead to assessments for individual taxpayers.

Which Accounts are Reviewed?

When a business or self-employed individual is subject to a banking assessment, scrutiny extends beyond their accounts to include savings books, securities accounts, and the accounts of partners and family members, unless the tax authority can prove that the account holder is only a formal owner and that actual transactions were carried out by another taxpayer.

Defending Against Banking Presumption

During a banking assessment, the tax authority will send the taxpayer details regarding the transactions, which they must justify to negate notions of taxable income.
Taxpayers have the right to contest these findings before the local Tax Commission, providing necessary documentation to validate the source of deposits and the use of withdrawals.