Italian tax court upholds income tax recovery over three betting computers

A second-instance tax court in Italy upheld income tax assessments against a company and its two partners over three computers that customers used to access online betting sites. The court rejected the appeal of the two taxpayers and confirmed the assessments for 2016, according to the report.

The case began with an inspection at a commercial premises by officials of the Agenzia delle Dogane e dei Monopoli, together with personnel from the Questura and the Carabinieri. Several computers made available to customers were identified, and technical checks distinguished the stations used for ordinary internet browsing from three devices through which online gaming sites could be accessed.

The Agenzia delle Dogane assessment concerned the single tax on betting, followed by an assessment by the Agenzia delle Entrate against the company for higher taxable income. The tax consequences were then extended to the two partners because of the personal nature of the company and the income attribution regime.

The taxpayers contested the notices, arguing that the computers were simply connected to an open internet network without a specific purpose for gaming activity, and that free web browsing was not enough to show the stations were used to collect or allow bets. The first-instance tax judge rejected the appeals, relying on the inspection findings and on the fact that the assessment of higher income against the company had become final for failure to appeal.

The second-instance court confirmed the rejection of the challenges and set out a legal point: the failure to appeal the assessment concerning the company does not in itself prevent the partners from contesting the basis of the personal taxation, where no final judgment has formed on the company's higher income. In this case, however, the taxpayers' defence was not held sufficient to overcome the inspection findings.

According to the judges, the inspectors had not merely noted the presence of computers connected to the internet but had carried out a specific investigation, identifying only three stations technically linked to access to online betting sites. The distinction from the other devices in the premises was decisive in the assessment of the evidence.

A further element was a statement made during the inspection by one of the taxpayers, who acknowledged that the three computers were made available to customers specifically to connect to online games. The court noted that the statement had not subsequently been contested and was recorded in a public document; challenging its truthfulness would have required the procedural instruments for contesting the content of the document, including, within the terms indicated in the ruling, a querela di falso.

The tax recovery was determined through a presumptive reconstruction of revenues based on the days of use of the equipment intended for gaming. Once the basis of taxation was recognised, the judges found that the taxpayers had made no specific challenges to the quantification of the higher taxable amount attributed to them; the defence had focused exclusively on the purpose of the computers without questioning the calculation method used by the tax administration.

The court rejected the appeal and ordered the two taxpayers, jointly and severally, to pay the costs of the proceedings, in addition to any ancillary amounts. The report notes that the parties' identifying details were omitted for confidentiality reasons.