F1 drivers facing tax clampdown by Italian authorities

The Italian tax authority is tightening the enforcement of its own regulations and is attempting to retroactively collect taxes from Formula 1 drivers who competed in grands prix on Italian soil in recent years. 

A few days ago, Bologna-based newspaper Il Resto del Carlino reported that the Bologna branch of the Guardia di Finanza (Italian Financial Police) had begun investigating F1 teams and drivers. 

Specifically, they are looking into whether taxes were properly paid on income generated during races held on Italian soil. The situation appears poised to cause significant legal complications for both teams and athletes. 

According to Italian tax laws, foreign athletes participating in sporting events within Italy are required to pay tax on the income earned there. The practical enforcement of this provision has been inconsistent; consequently, an Italian lawyer, identified by the paper as Alessandro Mei, recently requested a thorough investigation into the tax compliance of foreign athletes. 

While this theoretically affects athletes across all sports, F1 has become the focal point due to its popularity and the high salaries of its drivers. 

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Investigations and consequences?

According to RacingNews365's sources, the Guardia di Finanza recently launched an investigation into all current and recent F1 drivers, even though tax payments had not previously been requested from the drivers or their teams. 

The tax authority has contacted drivers by letter, requesting that they submit tax returns for the 2025 tax year and contact the authorities, either personally or through a representative, to discuss further steps. 

Sources indicate that the Italians also intend to hold F1 personnel accountable retroactively. Where legally possible, they aim to settle unpaid taxes going back to multiple years.

Information obtained by RN365 suggests that the Italian tax authority intends to audit the relevant income of those involved in surprising depth. To gain an accurate picture of earnings, they reportedly want access to driver and sponsorship contracts.

For some drivers, this unexpectedly strict crackdown could have shocking consequences: if the amount of unpaid tax exceeds €50,000, it is considered a criminal offence for individuals and substantial fines may be imposed on top of the back taxes. 

Furthermore, substantial fines may be imposed on top of the back taxes. 

In recent years, F1 has raced at three venues in Italy: Monza (home of the Italian Grand Prix), Imola (host of the Emilia-Romagna Grand Prix), and Mugello, which hosted the Tuscan Grand Prix during the 2020 pandemic season. 

The Court of Auditors reportedly mandated investigations in all three provinces, prompting the Guardia di Finanza to initiate the process.

The tax collection of the non-resident athletes was a topic before in Italy; in 2020, it was discussed in parliament, although there were no serious consequences.

A similar tax system for non-resident athletes is used, for example, by Australia, the UK, and the United States.