Observatory › Assessment and tax litigation › Shareholder loans and the presumption of unrecorded revenue

Shareholder loans and the presumption of unrecorded revenue

A shareholder’s payment does not by itself explain the increase in company funds: absent proof of its title and origin, the Italian Tax Office may treat it as unrecorded revenue. How to build the evidence before the money moves.

Article 46(1) of Presidential Decree no. 917 of 22 December 1986 (the Italian Income Tax Code) provides that sums paid to commercial companies by their shareholders are deemed loans unless the financial statements show that the payment was made on another basis. Under Article 45(2), this triggers a presumption of interest income for the shareholder, computed at the statutory rate where no rate is agreed in writing. That classification, however, does not prove where the funds came from.

Bank audits and the burden of proof

In an audit, what is challenged is not the classification of the loan but the origin of the funds: Article 32(1)(2) of Presidential Decree 600/1973 makes bank movements usable as evidence, and assessment practice extends this to the personal accounts of shareholders in closely held companies. Absent proof of the payment’s title and origin, unexplained deposits into the company’s accounts are treated as revenue under the statutory presumption of Article 32(1)(2), which does not require the presumption to be serious, precise and consistent; for other evidence Article 39(1)(d) still applies. Article 7(5-bis) of Legislative Decree 546/1992 places the burden of proving the alleged violations on the tax authorities; the Corte di cassazione (Italian Supreme Court) holds that the rule has not affected statutory presumptions, which still place the burden of rebuttal on the taxpayer (Cass., sez. V, ord. 27 October 2022, no. 31878).

In practice: the directors formalise the loan before the money is paid (a shareholders’ resolution or an instrument with a certified date stating amount, interest rate or interest-free status, and maturity) and the shareholder pays by bank transfer from their own account. A draft assessment can be answered within the minimum sixty days allowed by Article 6-bis of Law 212/2000, attaching bank statements and proof of the origin of the funds.

• Presidential Decree 917/1986 (Italian Income Tax Code), Art. 46(1) and Art. 45(2): presumption of loan and of interest.
• Presidential Decree 600/1973, Art. 32(1)(2) and Art. 39(1)(d): bank audits and analytical-inductive assessment.
• Legislative Decree 546/1992, Art. 7(5-bis) (introduced by Law 130/2022, Art. 6): burden of proof in tax litigation.
• Law 212/2000, Art. 6-bis (introduced by Legislative Decree 219/2023): mandatory pre-assessment dialogue, at least sixty days.