Formula 1 drivers past and present could be at risk following an investigation into athletes’ tax declarations whilst on Italian soil.
Recently, the Italian tax authority announced it would tighten enforcement of its own regulations. In turn, the Government agency is attempting to collect taxes from F1 drivers who have recently completed Grand Prixs in Italy.
A Bologna-based newspaper, Il Resto del Carlino, recently reported that F1 teams and drivers were under investigation. The article emphasised that the Bologna branch of the Guardia di Finanza (Italian Financial Police) was looking into taxes paid whilst on Italian soil.
Italy’s tax laws state that foreign athletes participating in sporting events must be taxed on income earned there. However, it is said that this taxation has been extremely inconsistent for several years. Thus, posing a significant legal issue for teams and drivers.
With this lack of consistency, an Italian lawyer identified by Il Resto del Carlino, Alessandro Mei, requested an investigation into the tax compliance of foreign athletes.
Despite a number of athletes being impacted, F1 is at the centre of this scandal.
How will Formula 1 drivers be impacted?
According to a report by RacingNews365, the Guardia di Finanza has now launched a broad investigation into both current and former F1 drivers, despite tax payments previously not being requested from either the drivers or their teams.
Additionally, letters have reportedly been sent to Drivers, requesting their tax returns for the 2025 year. Drivers must also contact Italian authorities either themselves or through a third-party, to discuss potential steps moving forward.
Sources also suggest that Italian authorities may pursue unpaid taxes wherever legally possible. In some cases, officials are reportedly examining multiple past seasons to determine whether income earned while competing in Italy was properly declared. To create a more in-depth understanding of the situation, Italian officials have also requested detailed descriptions of driver contracts and sponsorship agreements.
Whilst it is unclear what the punishments could be, for some, it could be severe. Under Italian law, unpaid tax over €50,000 can constitute a criminal offence. Potentially resulting in legal proceedings as well as significant financial penalties. All with the existing tax owed.
Since 2019, F1 has held several races in Italy, with at least two scheduled each season until 2026. In 2020, there was an additional race held in Mugello for the Tuscan Grand Prix. Ultimately, this prolonged time in the Country may have altering consequences for Drivers in the future.
These investigations were reportedly mandated by the Country’s court of Auditors, and will take place across all three provinces that hosted races. Whilst the taxation of non-resident athletes has previously been debated in Italy, there have been changes to the law. Placing drivers and F1 in hot water months before the series heads to Monza.
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