This article was written by Tommaso Ebhardt and first appeared
on the Bloomberg Website
Police fanned out across Milan in late January halting more than 350 vehicles, mostly luxury SUVs and Porsches.
At checkpoints, including one adjacent to the fashionable Corso Como, the police got the driver’s license and registration, which they passed on to the national tax agency. The tax authorities will use the data to check if the cars’ owners had declared enough income -- and of course paid the right amount of income taxes -- to justify their lifestyles.
It was at least the fifth raid targeting wealthy Italians since a Dec. 30 sweep at the posh Cortina d’Ampezzo ski resort, where 251 high-end cars were stopped, including Ferrari and Lamborghini supercars, Bloomberg Businessweek reports in its Feb. 13 issue. Rome, Portofino on the Italian Riviera and Florence have also been targeted.
“I’ve been stopped three times in the last few weeks by authorities because I’m driving a luxury SUV,” says Andrea, a Range Rover owner and entrepreneur in Italy’s wealthy northeast. “It seems like the McCarthy era in America. You’re guilty by suspicion.”
The 43-year-old, who declined to give his last name for fear of attracting the attention of Italy’s tax agency, now plans to sell the SUV he bought last May. He expects to get at most 40,000 euros ($52,400) for a car that cost him more than 100,000 euros. “Dealers are full of luxury cars. No one wants to buy them now,” the businessman said.
Italian authorities are applying to luxury-car owners the same logic they displayed more than a year ago, when tax agents started tracking down the owners of yachts berthed in Italy’s harbors to see if they were current on their tax payments.
In the raid in Cortina D’Ampezzo, tax agents found that 42 luxury car owners had declared income of less than 30,000 euros for 2010 and 2009. Another 19 luxury cars were owned by businesses which posted a loss in the previous year. The sweep in Florence discovered a builder with no tax record who was driving a Mercedes with his wife who was receiving social assistance. Tax officials also found a German owner of a BMW X5 SUV with no declared income, according to the website of the tax agency’s Florence office.
This is serious stuff for the government, which estimates that tax evasion costs the country about 120 billion euros a year in lost revenue.
“The ownership of a luxury car highlights a level of spending and a standard of living that are often not reconcilable with the income declared by the owner,” said Carmelo Piancaldini, a manager in the inspections unit of Agenzia delle Entrate, Italy’s tax authority. “If one is transparent with the tax agency and buys a luxury car, he doesn’t have to worry.”
For Ferrari, which earns higher profit margins than any other Fiat unit, it’s not the end of the world. There’s plenty of demand outside Italy for the company’s sports cars.
“Italy isn’t a concern for Ferrari as it sells its cars abroad,” Marchionne said last month in Detroit. Relying on Italy would be a problem, because “demand is not there -- austerity is impacting everywhere in the country.”
Prime Minister Monti’s new luxury vehicle tax targets owners of cars whose engines have more than 251 horsepower. The tax may raise about 165 million euros this year, according to Unrae, Italy’s association of foreign carmakers.
“It’s hard to imagine that any other European country having luxury car producers contributing significantly to employment would have introduced a tax” on supercars, says Maserati CEO Harald Wester.