F1 drivers in Italy are being investigated as authorities believe some of their income has not been taxed where it was actually earned. It is not about where they live on paper, but where they work in reality.
Most Formula 1 drivers are officially based in low tax countries, and this is completely legal. This is a loophole that many racing drivers have taken advantage of. The problems begin when they race at the Italian circuits of Monza, Imola and Mugello. Incidents there are now being used as a basis for calculating what portion of a driver's global earnings should be taxed locally. The income generated by those events is linked to the work they do on Italian soil. Italian authorities now argue that a portion of that income should be declared and taxed locally.
So they have turned the tax pressure on Formula 1 drivers in Italy into a full-scale investigation, and its scope is broader than before. Authorities are not just looking at individual cases, but are systematically reviewing how drivers have been taxed on income associated with races organized in the country over a number of years.
Italy looking for years of F1 income
It's certainly not just a straightforward check or routine paperwork. The Italian financial police are going back to the 2020-2024 season, asking for all the paperwork: contracts, sponsorship deals and even pay statements to get a clear picture of how much drivers really earned while doing their job in Italy. They're tearing it to pieces, looking at everything from race win money to appearance fees, even pieces of sponsorship deals tied to racing in the Italian Grand Prix.
And the consequences can go beyond money. If the amount they are being asked to repay exceeds €50,000 it could actually become a full criminal case under Italian law, carrying large fines and even, at least in theory, a prison sentence of up to five years. Given the large amounts of money involved per season for drivers, it would not take much for the sums to add up, which is why this investigation holds real legal importance.
It has been reported that all drivers are receiving official letters demanding that they hand over all their tax filings. This confirms that the process is active and targeted, and not just a generic warning for the game. They're not just looking at drivers. The teams are also involved in a case of not deducting proper taxes on payments for work done in Italy. If all this is true, teams may also face financial risks of their own.
At the same time, Italy has also tightened its tax system to make it less attractive for people considering moving there, raising the annual fixed payment on foreign income to €300,000. More importantly, the scheme does not only cover income earned within Italy. Any salary paid by an Italian team like Scuderia Ferrari is taxed under standard rates, which can reach up to 43 percent. This also limits the leverage for high-profile moves like Lewis Hamilton joining the team.
The situation is straightforward in theory but messy in reality. Drivers have long structured their finances, often legally, in many countries, but Italy is now testing it.
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