Farah Ben Gamra
F1 drivers are being investigated in Italy because authorities believe part of their income has not been taxed where it was actually earned. It’s 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 that’s completely legal. It’s a loophole that’s been exploited by many a racing driver. The issue start when they race at the Italian circuits of Monza, Imola and Mugello. Events there are now being used as the basis to calculate what portion of a driver’s global earnings should have been taxed locally. The income generated from those events are tied to the work they do on Italian soil. Italian authorities now argue that a portion of that income should have been declared and taxed locally.
So he tax pressure on Formula 1 drivers in Italy has escalated into a full-scale investigation, and the scope is broader than it first appeared. Authorities are not just looking at isolated cases but systematically reviewing how drivers have been taxed on income linked to races held in the country over multiple years.
Italy is digging into years of F1 income
This definitely isn’t just a straightforward check or routine paperwork. Italian financial police are going back over the 2020–2024 seasons, asking for all the paperwork: contracts, sponsorship deals and even payment details to get a clear picture of just how much drivers actually earned while doing their jobs in Italy. They’re tearing it all apart piece by piece looking at everything from the money for winning a race, to appearance fees, even the bits of sponsorship deals linked to racing at the Italian Grands Prix.
And consequences can go beyond money. If the amount they’re being asked to pay out goes over €50,000 then it could actually end up being a full blown criminal case under Italian law, with big fines, and even, in at least in theory, prison sentences of up to five years. Given the huge amounts of money involved per season for the drivers, it wouldn’t take much for the amounts to escalate, which is why this investigation carries real legal weight.
It has been reported that all drivers receiving official letters demanding they hand over all their tax filings. That confirms the process is active and targeted, not just a general warning to the sport. It’s not just the drivers they’re looking at either. Teams are also in the frame for maybe not properly deducting the right tax on payments for work done in Italy. If that all holds true, teams could also face their own financial exposure.
At the same time, Italy has also tightened its tax system to make it less appealing to 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 43 percent. That limits the advantage even for high-profile moves such as Lewis Hamilton joining the team.
The situation is straightforward in principle but messy in reality. Drivers have long structured their finances across multiple countries, often legally, but Italy is now testing that.
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