Permanent Establishment in the digital economy era: tax frontiers and criminal implications – An article by Andrea Puccio and Elena Prasedi on NT+ Diritto

The regulatory framework of tax law has been revolutionized by the rise of digitalization. The traditional concept of permanent establishment now faces challenges posed by multinational digital enterprises, which operate in virtual and dematerialized environments beyond physical borders. This evolving landscape led to a significant revision of both national and international tax rules concerning income generated by foreign-based companies, with significant repercussions in the field of criminal tax law.

In an article published on NT+ Diritto by Il Sole 24 Ore, Andrea Puccio and Elena Prasedi analyze the implications of an increasingly digitalized economy on tax regulation, focusing on the concept of a “significant and continuous economic presence”—now incorporated into the Italian Income Tax Code (TUIR). They highlight how this notion marks a paradigm shift, allowing the attribution of tax relevance to purely digital presences lacking identifiable physical structures, whilst shedding light on the associated risks and potential criminal liability.

This regulatory framework requires non-resident companies to implement effective compliance strategies to mitigate the risk of criminal charges, such as failure to report income.

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