The Challenge: A Mountain of Uncollected Tax

A novel strategy is under consideration to reclaim a portion of the staggering €1.3 trillion in uncollected tax revenue, often referred to as the “warehouse” of fiscal folder cases. This initiative brings together both public and private sector experts, including representatives from prominent law firms. These stakeholders were initially consulted by a Ministerial Commission established by the Deputy Minister for Economy, followed by discussions in Parliament during a survey on the “warehouse” led by the Finance Commission president.

Drawing parallels with Non-performing Loans (NPLs)

The core concept involves applying a similar approach to uncollected tax credits as was successfully used to manage banks’ non-performing loans (NPLs) in recent years. Back in 2016, credit institutions faced a daunting €300 billion in NPLs, dwarfing the levels held by French banks at the time. Through the intervention of specialized entities, securitization processes, and government guarantees, these NPLs were reduced to €50 billion, compared to France’s €120 billion.

Can the NPL Model Work for Tax Credits?

The question now is whether this successful mechanism can be replicated for tax credits. according to specialized operators,the answer is a resounding yes. A key voice in this discussion is Amco, a public entity controlled by the Ministry of Economy and a major player in managing distressed assets, with a portfolio valued at €33.5 billion.

Amco’s Assessment: A Significant Portion is “Workable”

Data presented by Amco to the government and Parliament suggests that a significant €706.9 billion of the €1.3 trillion in uncollected taxes is considered “workable.” This implies that targeted recovery efforts could be effectively focused on this specific amount.

Private Sector Optimism

Intrum, another operator in the sector, suggests that private entities could potentially outperform the Revenue Agency in recovering these funds. They estimate that they could collect 10% of the most recent credits and 3-5% of older ones. While these percentages may seem modest, the sheer scale of the sums involved means that even these rates could translate into significant recoveries.

The Importance of Data Quality

However, before assigning a “price” to the credits within the warehouse, a meticulous cataloging process is essential. Antonio Munari,CEO of Amco,emphasized the critical role of data quality,stating:

the value of the wallets is determined by the quality of the data.
Antonio Munari, CEO of Amco

The more extensive the information available about the debtor – including thier identity, location, and professional background – the more effective the recovery efforts are likely to be.

Tax Credits: A Fast Overview

Tax credits offer a direct reduction in your tax liability [[3]]. Unlike deductions,which reduce your taxable income,credits reduce the actual amount of tax you owe,providing a dollar-for-dollar benefit. Some credits are even refundable, meaning you can receive a refund even if you don’t owe any taxes [[2]]. Common examples include the Earned Income Credit and the Child Tax Credit [[1]].