Areas of Strength

• Italy has made important steps with respect to the digitalisation of the whole tax administration, with high adaption rates for the digital indicators and the existence of a digital transformation strategy facilitating also the interaction with the taxpayer. Furthermore, the tax administration has put in place systems allowing for the use of artificial intelligence to analyse and cross-reference a wide range of taxpayer financial data. Altogether, these improvements have proved beneficial to the overall tax compliance environment.
• The Italian tax administration has invested substantially in capacity building in terms of tax gap estimations and estimates the tax gap annually using complementary methods. Moreover, different to most of the Member States that engage in tax gap estimations, Italy publishes their tax gap estimations every year. Prevention and enforcement activities are positioned at the highest levels of the decision-making hierarchy and are used to identify priorities within the overall tax compliance strategy.

Areas for Improvement

• While the personal income tax compliance in Italy is continuing to improve slightly, tax evasion propensity remains high. In particular, self-employed individuals account for the largest part of the tax evasion presenting a tax income gap of 59.8% in 2022 (60.9% in 2021). According to estimates, they evade more than half of their tax burden for an estimated value of around EUR 37 billion. In 2025, Italy received a country-specific recommendation that includes further fighting tax evasion.
• Despite improvements, the stock of tax arrears in Italy remains among the highest in the EU, while the overall recovery capacity remains ineffective. The revenue collected in 2022 by the Italian tax administration amounted to 53.5% of total government revenue. To increase the efficiency of the audit’s functions, Italy could for instance exchange experiences and good practice in the use of different tools and collaborate (joint audits) with the corresponding authorities of other Member States. At the same time, of the EUR 72.3 billion in tax evasion assessed in 2024, the actual recovered amount stood at EUR 12.8 billion (17.7%). According to ‘Corte dei Conti’ (Court of Audit), the widespread expectation of future amnesties might be pushing many taxpayers to postpone payments, hoping for subsequent amnesties or the possibility of evading government enforcement action.
• While Italy has a comprehensive monitoring and reporting system on tax expenditures (TEs), their number is still very high and their impact in terms of forgone revenues is larger than in previous years. Although the total number of TEs decreased in 2024 compared to 2024, according to the Commission for Fiscal Expenditures, significant revenues are foregone due to TEs. In 2025 these are budgeted to result in foregone revenues of EUR 119 billion, representing about 11.4% of total government tax revenues collected and 5.8% of GDP. In 2025, Italy received a country-specific recommendation to make the tax system more conducive to growth including by reducing remaining tax expenditures.

Tax Complexity

In 2024, Italy ranked 20^th out of the 27 Member States in the Tax Complexity Index (‘TCI’), where a higher rank corresponds to lower tax complexity. The TCI is based on the Global MNC Tax Complexity Project, a joint research project of Deborah Schanz (LMU Munich) and Caren Sureth-Sloane (Paderborn University). Italy scored 22^nd among the Member States with respect to Tax Framework Complexity and was ranked 15^th in the Tax Code Complexity. This suggests that Italy has room to improve its tax system both in terms of tax processes (notably, in the area of payment and filing, according to the authors) and tax regulations (particularly, in the area of investment incentives), thus making it more friendly and less burdensome for the taxpayer.

The full Commission Staff Working Document of the Mind the Gap Report - Challenges and opportunities for tax compliance and tax expenditure in the EU regarding Italy can be found here.

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