With respect to the tax administration's power of self-defence, the Italian Supreme Court of Cassation in its decision no. 18241 of 26th June 2023 declared null and void a self-defence refusal by the Italian Revenue Agency on the ground that it was in conflict with a previous final decision of the same Court.
The dispute in the present case originated from a denial on a tax refund of some amounts paid by the taxpayer as "IRAP" (Regional Tax on Productive Activities) for the fiscal years from 2000 to 2004: the taxpayer appealed against this decision, claiming that the conditions for the application of the tax were not met. The dispute had been closed with a decision of the Italian Supreme Court of Cassation in favour of the taxpayer.
Despite the Italian Supreme Court's decision, the Italian Revenue Agency served tax bills on the taxpayer claiming the payment of the IRAP amounts for the above-mentioned fiscal years. The taxpayer did not appeal against such tax bills, but still proceeded to file a self-defence relief application, which was denied by the Office.
The taxpayer then appealed even against the self-defence refusal and the appeal was rejected both at first and second instance. The Supreme Court, on the other hand, upheld the appeal: therefore, the refusal and the claim contained in the tax bills were cancelled.
The Supreme Court's decision clarifies, "(...) In the case of a previous Court decision, the taxable or executory act that would be contrary to the rule judicially and irretrievably affirmed would be null and void (...)", and again "(...) it would be unreasonable that, notwithstanding a decision ordering the Irap reimbursement paid in relation to certain fiscal years by a taxpayer who could not be subject to that tax for those periods, that taxpayer could be compelled to pay that tax (by an enforcement act)".
An important issue (almost, a turning point) is that of the appealability of the self-defence refusal measure; in fact, the Court pointed out that "such a measure, although not included in the list of acts that can be challenged under Art. 19 of Legislative Decree no. 546 of 1992, is to be considered appealable on the basis of the applicable law".
To date, the self-defence refusal is not formally included in the list of appealable acts, and the Italian Supreme Court of Cassation, in order to avoid the challenge of "definitive" tax acts, has always adopted a restrictive approach, allowing appeals only where the taxpayer is entitled to invoke reasons of general interest in addition to the infringement committed by the Office.
In this respect, it should be noted that the draft enabling act for tax reform approved by the Italian Council of Ministers (Chamber of Deputies Act no. 1038 submitted on 23th March 2023) allows the appealability of the refusal or silence also in the event the tax act has become final, if it is affected by evident mistakes.
Originally published 14 July 2023.
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