Milan raids targeting tax cheaters

MILAN The Revenue Agency performs tax raids to cash in revenues lost to tax cheating. But restaurants are loosing incomes and service when controlled during prime time.

By Evelina Bergström

A recent Saturday night in Milan started as normal. Restaurants, nightclubs and bars got ready for the night and guest got seated at the dinner tables. Among the guests were also hundreds of inspectors, ready to conduct a raid in order to increase the Italian tax compliance. The raid, Operation Nightlife (Movida), finished at 5’o clock in the morning after. For some, it was time to close down business forever.

Italy is the third worst tax evader in the world, with Brazil on second and U.S. at the top. The tax evasion culture has been going on for centuries, and is caused by the economical structure that outline the nations economy; small companies, run by families and friends.

Carlo Palumbo, director of the Revenue Agency is satisfied with Operation Nightlife. The Agency collects revenues and operates to increase tax compliance since ten years. According to Carlo Palumbo they have a good reputation and are appreciated among the people.

“The restaurants are positive towards our work and especially for our professionalism. They are grateful that the cheaters are caught,” he says.











Felt like Big Brother

Positivism is however absent when restaurant owners describes the Agency and the tax raid. Sergio Ingrilli, Manager at Osteria di Brera says that two people came in and ordered food like normal guest. After a while they announced their errand and what came thereafter was discomfort and irritation.

“I felt like I was participating in the reality show Big Brother. While more and more guests attended the restaurant we tried to do work. But there was somebody in the way overlooking everything we did”, he says.

Ingrilli was afraid to loose both on income and service level. Although he supports any attempt to increase tax compliance, he is sceptical about the method of the Revenue Agency.

Ingrilli’s restaurant is the opposite of a stereotypical tax evader. A businessman started it two years ago and the employees are not family members or old friends.

“A main objective since we started has been to keep the finances honest and intact,” says Sergio Ingrilli.

Strong suspicion behind all controls

Alfredo Zini runs the family owned restaurant Al Tronco. Photo: Evelina Bergström

Alfredo Zini, Vice President of the restaurant Union (FIPE) support the latest raids targeting restaurants, nightclubs and bars.

“Tax evasion is distorting for the competition and honest owners have to pay for what the dishonest avoid,” he says.

Alfredo Zini’s niece serves us espresso while his sister sets tables for the upcoming lunch. Besides working for the union, he runs restaurant Al Tronco. He has been in the business since childhood and you could say he is a stereotypical tax evader. But according to himself – an exception proving the rule.

With some of the highest taxes in Europe, Alfredo Zini thinks that Italy is a cruel country to run a business in. But he does not pity the cheaters. Those who employ without registration and avoid the taxman will have too profitable business and compete on unfair basis.

“If you don’t pay your tax, it is fair enough that you have to shut down your business,” he says.

Colleagues of Alfredo Zini are feeling they are badly treated and do not want to talk to journalists. According to Alfredo Zini, small owners feel forced to evade taxes to survive, and therefore feel unfairly punished by the inspections.

Alessandro Cassala owner of the Castle Bar have always paid his taxes, and therefore never been checked. Photo: Evelina Bergström

But there are no random raids that intrude the small companies and miss the big betrayers. The Revenue Agency and Carlo Palumbo says that careful planning and long-term analysing lies behind the choice of targets and what restaurants to control.

“It would be ineffective and expensive to make unsystematic controls,” dismisses Carlo Palumbo.

Doubled income and illegal workers

When suspecting serious forms of tax cheating, the military graded Finance Police (Guardia di Finanza) takes care of the raid. Like when souvenir stores recently was controlled in China Town. But normally inspectors come from the local Revenue Agency, INPS (labour market inspection) and the local police.

Operation nightlife is so far the biggest raid in Milan and was conducted by 405 inspectors hitting at the same time, to decrease the risk of warnings and gossip within the restaurants. After checking all relevant papers, inspectors stood by the cash machines and investigated the money exchange until closing time.

The raids will continue

Jewelers, restaurateurs and real estate agents all declare taxable incomes of less than 20.000 euro a year. An income lower than mechanics, that declares around 30.000 euro a year. Restaurants are only some, among many well-known tax avoiders, but not the only targets for inspection.

Who will come next? Palumbo and the Revenue Agency wont give that information at the moment. But a message that Palumbo can guarantee is that the raids have only just started.▶


RELATED ARTICLE: Tax cheating: an inherited family business (By Evelina Bergström)


Souvernir store in Milan’s China Town is raided by the Financial Police (Guardia di Finanza).

About Bergström Evelina