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The New Tax Rules on Accounting Error Corrections

published on 9 March 2026 | reading time approx. 7 minutes

Legislative Decree no. 192 of 18 December 2025 once again addresses the tax treatment of accounting error corrections, a matter that has already been the subject of repeated regulatory interventions in recent years, first with Decree Law 73/2022 and then, upon conversion thereof, with Law 197/2022.

The new rules apply to corrections made in financial statements for financial years beginning on or after 1 January 2025. They introduce significant restrictions on the scope and timing of application of the so-called 'simplified procedure' for correcting errors, which allows income and expense items recorded in the financial statements in the financial year in which the correction is made to be attributed tax relevance, without the need to file a supplementary tax return for the tax period in which the error was made.

The concept of accounting error and differences with respect to changes in estimates - accounting treatment

The concepts of accounting errors and changes in estimates are defined by Italian accounting standard OIC 29. An error is defined as an incorrect qualitative and/or quantitative representation of financial statement data and/or of the information disclosed in the notes to the financial statements (§ 10). An error arises from the improper application or non-application of an accounting principle if, at the time it is made, the information and data necessary for its correct application were available. Errors may be mathematical in nature or may result from misinterpretation of facts or negligence in gathering the information required for proper accounting treatment (§ 44).

Commentators have noted that the definition of accounting error set out in OIC 29 is substantially aligned with that contained in IAS 8.

Errors must be distinguished from changes in estimates, which are subject to different accounting rules. OIC 29 clarifies that estimates are the processes used to determine reasonably reliable amounts for assets, liabilities, income and expenses (§ 9, 34). Changes in estimates form part of the ordinary financial reporting process and arise from additional information that becomes available over time regarding the assumptions or facts on which the original estimate was based (§ 33, 34).

In short, an accounting error occurs where it is subsequently discovered that information already available at the time was incorrectly used in preparing the financial statements. By contrast, subsequent revisions of estimates that were correctly made on the basis of the information available at the time do not constitute errors

How to record errors in accounts

OIC 29 also regulates the accounting treatment of errors, distinguishing between material and immaterial errors. Material errors are those which, individually or together with other errors, could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements, whereas immaterial errors do not have such effect.

The accounting treatment is as follows:

The correction of immaterial errors relating to prior financial years is recognized in the income statement for the year in which the error is identified. The standard does not provide specific guidance on the classification of gains or losses arising from such corrections. In the absence of an explicit provision, the prevailing view is that the relevant income and expense items should be recognized in the income statement line item consistent with the nature of the original error;
The correction of material errors relating to prior financial years is recognized in the opening balance of equity for the year in which the error is identified. The adjustment is generally recorded in retained earnings, unless it is more appropriate to allocate it to another component of equity.

As regards the timing of recognition, the standard provides that an error must be corrected in the financial year in which it is identified and in which the information necessary for its proper accounting treatment becomes available.

Tax treatment: current regulations

Legislative Decree 192/2025 (Corrective Decree) has once again amended the tax treatment of accounting error corrections, with effect from corrections recorded in financial statements for financial years beginning on or after 1 January 2025.

In particular, Article 4 of the Corrective Decree decisively intervenes in the tax regulations governing the correction of errors through:

the deletion of the fourth and fifth sentences of the first paragraph of Article 83 of the Consolidated Law on Income Tax and the addition of paragraph 1-ter;
the amendment of Articles 5, 6 and 7 of Legislative Decree 446/1997 (Regional Tax Decree).

In light of the changes carried out, the current tax regime applicable to the correction of accounting errors is structured as follows.

Firstly, from a tax perspective there are two procedures for correcting errors: the 'simplified' procedure and the 'ordinary' procedure, i.e. based on the submission of supplementary tax returns.

The simplified procedure allows taxpayers to attribute tax relevance to income and expense items recorded in the income statement in the financial year in which the correction is made, without the need to submit a supplementary tax return for the tax period in which the error was made.

Access to the simplified procedure is subject to compliance with subjective, objective and temporal requirements, in particular:

the taxpayer must submit the financial statements for statutory audit (subjective requirement);
the errors being corrected must be 'other than those recorded in the financial statements as material' (objective requirement);
the error must be corrected 'by the date of approval of the financial statements for the financial year following that in which the relevant assets or income items were incorrectly recorded or should have been recorded and, in any case, by the date of commencement of access, inspections, audits or other administrative assessment activities of which the aforementioned parties have been formally notified' (temporal requirement).

The new rules continue to apply for Regional Tax purposes, but, with regard to this tax, an additional specific case of exclusion has been introduced. The tax relevance of corrective items applies for Regional Tax purposes only if the value of production is positive in both tax periods concerned (the tax period in which the error was made and the subsequent tax period in which the error is corrected). The legislator's intention is to prevent taxpayers from engaging in arbitrage by reducing the tax base of a positive tax period and correcting errors relating to a year in which the value of production was negative.

Some clarifications on this matter have been provided in the explanatory report to Legislative Decree 192/2025 which:

with regard to the objective scope, clarifies that the regulation does not concern 'those accounting representations that objectively constitute part of more complex transactions of a simulated or fraudulent nature';
with regard to the temporal scope of application, specifies that communications relating to amounts due pursuant to Articles 36-bis and 36-ter of Presidential Decree 600/73 and 54-bis of Presidential Decree 633/72 (the so-called 'automated checks of tax returns') are excluded from the scope of assessment activities;
highlights that tax recognition of the correction of an accounting error "does not result in penalties".

The ordinary procedure, on the other hand, is based on the submission of supplementary tax returns and is applicable in cases where the above requirements are not met.

As clarified by Revenue Agency Circular no. 31 of 24 September 2013, the components identified following correction of accounting errors resulting from failure to allocate costs or revenues to the correct financial year cannot be immediately relevant for tax purposes as they do not meet the necessary conditions.

Therefore, where the time limits for the expiry of the power of assessment established by Article 43 of Presidential Decree 600/73 have not yet expired, the taxpayer is required to submit a supplementary return to correct the year in which the error was made.

Differences with respect to the previous legislation

As the regulations in question have been subject to amendments in recent years, the table below highlights the main differences between the simplified procedure under the current regime, as amended by Legislative Decree 192/2025, and the previous regime, governed by Decree Law 73/2022 and, upon conversion thereof, by Law 197/2022.

Description	Previous regulations Decree Law 73/2022 and Law 197/2022	Current regulations Legislative Decree 192/2025	Extension or Restriction
Reference financial years	2022, 2023 and 2024	2025 and subsequent	n/a
Subjective scope	Only entities subject to enhanced derivation that submit their financial statements for statutory audit	The requirement for reinforced derivation no longer applies. It is sufficient for the financial statements to be subject to statutory audit	Extension
Temporal scope	Possible for all tax periods still 'open' for the purposes of supplementary tax returns	The correction must be made within the financial year following that in which the error occurred and, in any case, before the tax authorities carry out their assessment	Restriction
Objective scope	The simplified procedure is applicable to both material and non-material errors	Limited to "non-material" errors only (recorded in the income statement); for "material " errors (recorded in the balance sheet), the ordinary procedure based on supplementary tax returns must be adopted	Restriction
Regional Tax conditions	Tax relevance of the automatic correction for items that make up the Regional Tax base	Tax relevance of the correction only if the value of production is positive both in the year of the error and in the year of the correction	Restriction