Complicity between unlawful agency temporary employment and fraudulent tax return through false invoices

The Cassation Court, in ruling no. 8809 of 4 March 2021, confirmed that an invoice bearing the performance of a provision of services for a contract which, de facto, conceals agency temporary employment, constitutes a document for inexistent transactions and amounts to the tax crime of false invoicing.

Facts of the case

The event was the result of a tax investigation of the Italian Treasury Police with order of an equivalent value confiscation as a precautionary measure against the representatives of a services company (the “Company”).  They were charged with alleged illegal temporary employment in favour of various enterprises (“Customers” or, individually “Customer”) for a time period of three yeas, concealed through the stipulation of contracts for services that turned out to be false.

To demonstrate the false nature of the contracts, circumstances were referred to such as: (i) indication of the personnel to be hired by the Customers that often were already their employees; (ii) permanent hiring of personnel in the production cycle; (iii) purchase or rental of equipment used to carry out the jobs under the Customers that took care of organising the jobs of employed personnel as well as (v) failure to undertake the enterprise risk by the Company.

Based on this, the assigned Court assumed the existence of a criminal conspiracy involving the issue and use of invoices considered legally inexistent along with unlawful interposition confirming the equivalent value confiscation against the Company representatives.

The Company objected to the ruling and appealed to the Court of Cassation.

The Supreme Court of Cassation’s ruling

According to the Court of Cassation, the concealment of the agency temporary employment emerged from the circumstance that the Company had limited itself to the mere administrative management of the workers’ positions, leaving the real organisation of the job performance up to the management of the various Customers.

Specifically, the Court of Cassation pointed out that the invoices issued by the Company in relation to the activities provided amount to liability for tax crimes because:

• they are relative to inexistent transactions and
• indicating a subject different than the one who had actually performed the service.

The Court of Cassation took the opportunity to reiterate that in job services the distinction between contract agreement and temporary employment is determined by three factors: (i) the ownership of the factors of production; (ii) organisation of means and (iii) actual undertaking of enterprise risk.

In the absence of these factors it amounts to supply of work services that, if performed by unauthorised subjects, is subject to the offence of illegal temporary employment as per art. 18 of Legislative Decree no. 276/2003.

Based on the above, the Court of Cassation, in confirming the preventive measure, decided there was complicity between the unlawful temporary employment and fraudulent return through false invoices issued by the Company.

Other related insights:

• Fraudulent supply of labour and its impact on models 231 
• The offence of false invoicing is included in the Decalogue of prerequisite offences