Amateur sports associations (Asd) enjoy significant tax benefits, but must demonstrate the substantial requirements through accounting checks. In particular, the traceability of payments is essential.
What are the consequences if these associations fail to provide adequate documentation?
Sentence no. 13790 of the Court of Cassation of 20 May last clarified this crucial aspect.
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Importance of documentation for ASDs
According to Law No. 398/1991, amateur sports associations must maintain detailed documentation that includes membership books, summary register, copies of invoices and documentation relating to costs and expenses.
If an ASD fails to produce these documents, it risks losing the tax benefits granted.
This was the case of an ASD that was unable to provide the necessary documentation, leading the Revenue Agency to issue a notice of assessment and to disavow the tax benefits provided for by article 148 of the Tuir and by law no. 398/1991.
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The case
The Revenue Agency has raised several objections against an amateur sports association (ASD), culminating in a notice of assessment that revoked the tax benefits provided for by Law No. 398/1991 and Article 148 of the Consolidated Law on Income Tax. The main objections concern the failure to establish, maintain and exhibit the accounting documentation necessary to demonstrate the substantial requirements for the tax benefits. Specifically, the ASD has not produced the membership books, the summary register of the activities carried out, copies of the invoices issued and the documentation relating to costs and expenses incurred.
This lack of documentation led the Revenue Agency to conclude that the ASD did not comply with the accounting obligations necessary to ensure the traceability of payments. Traceability is an essential requirement to demonstrate that the association operates on a non-profit basis, an indispensable condition for benefiting from the preferential tax regime. The Agency found that the ASD did not exhibit the invoices and all the accounting documentation relating to the reference year, making it impossible to verify the destination and legitimacy of the expenses.
A further critical point highlighted by the Agency concerns the item “expenses for various reimbursements” for an amount of 65,748 euros, for which the ASD did not provide any documentary justification. This deficiency strengthened the Agency’s argument that the ASD did not comply with the requirements for the preferential regime. Following the self-regulation act, the ascertained revenues were reduced from 172 thousand to 132 thousand euros, but this did not change the substance of the disputes.
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The ruling of the Court of Cassation
The Court of Cassation confirmed the need for traceability of payments and correct accounting documentation to maintain tax benefits.
In the case examined, the ASD had not adequately documented the expenses for “various reimbursements” for a amount of 65,748 eurosThe Court reiterated that the lack of this documentation entails the forfeiture of the preferential regime.
Furthermore, the ruling emphasized that the absence of profit-making purpose must be verifiable through accounting evidence such as invoices, receipts and slips.
The Court of Cassation rejected the appeal of the ASD, considering the objections relating to the alleged violation of the traceability obligation to be unfounded. The decision of the CTR, which had confirmed the assessment of the Revenue Agency, was considered correct.
The Court stated that the loss of tax relief, when linked to failure to comply with substantive requirements, does not constitute a sanction. Consequently, the abolition of the forfeiture provided for by Law No. 158/2015 does not have retroactive effect and does not apply to previous cases.
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Conclusion
The ruling of the Court of Cassation clarifies that amateur sports associations must be able to demonstrate the substantial requirements required by law no. 398/1991 through adequate accounting documentation. The lack of such documentation entails the forfeiture of tax benefits.
ASDs must therefore pay particular attention to the traceability of payments and the conservation of all necessary accounting documents to avoid problems with the Revenue Agency.
