Flashback on ECJ Cases C-174/07 (Commission vs. Italy) – Italy failed to fulfill its obligations by extending the amnesty provisions to the year 2002

On December 11, 2008, the ECJ issued its decision in the case

Context: Failure of State – Article 10 EC – Directive 2006/112/EC – Sixth VAT Directive – Obligations under domestic regime – Control of taxable transactions – Amnesty

Article in the EU VAT Directive

Article 2 and 22 of the Sicths VAT Directive.

Article 2(1) and (2) of the Sixth Directive provided:

The following are subject to value added tax [(hereinafter “VAT”):
- 1. deliveries of goods and services, carried out for consideration within the country by a taxable person acting as such;
- 2. imports of goods.”

Article 22 of the Sixth Directive provided:

4. Every taxable person must submit a declaration within a time limit to be fixed by the Member States […]

5. Any taxable person must pay the net amount of VAT when submitting the periodic declaration. However, Member States may set another deadline for payment of this amount or charge installments.

8. […] Member States have the option of providing for other obligations which they consider necessary to ensure the accurate collection of the tax and to avoid fraud.

Italian Law

Article 9 of Law No 289/2002 concerns ‘Automatic settlement for previous years’. The taxable periods covered by said automatic settlement are the same as those referred to in Article 8 of Law No. 289/2002.

Under the terms of Circular No. 12/2003 of the Agenzia delle Entrate – Direzione centrale normativa e contentioso (Tax Agency – General Directorate of Regulation and Litigation), of February 21, 2003, the declaration for the purposes of this automatic payment, provided for in Article 9 of Law No. 289/2002, has the purpose, unlike the additional VAT declaration provided for in Article 8 of the same law, not the declaration of taxable amounts additional, but the presentation of data making it possible to determine the amounts to be paid for the purposes of obtaining the benefit of amnesty.

According to Article 9(10)(b) and (c) of that law, automatic payment for VAT purposes entails, for the taxpayer concerned, the extinction of administrative tax sanctions, the exclusion of application of criminal sanctions for certain tax and non-tax offenses linked to the previous ones, as well as exclusion from any tax audit.

Under Article 9(14) of Law No 289/2002, certain categories of taxable persons are excluded from the benefit of that automatic payment.

Law No. 350/2003

Article 2(44) of Law No 350/2003 provides in particular:

“The provisions of Articles 7, 8 and 9 of Law No. 289/2002 also apply, according to the same terms and conditions respectively described therein, to the current tax period on December 31, 2002, for which the declarations were presented on October 31, 2003 at the latest, with payment made on March 16, 2004 at the latest and in accordance with the following additional provisions:

Facts & Questions

The Italian Republic extended the tax amnesty provided for in articles 8 and 9 of Law No. 289 to the year 2002 by article 2, paragraph 44, of Law No. 350. This provided a general and undifferentiated waiver of the verification of taxable transactions carried out during the period of taxation relating to the year 2002.
The Commission has sent a formal notice to the Italian Republic regarding the application of articles 8 and 9 of law no. 289/2002 to the tax period relating to the year 2002, which is incompatible with certain Community regulations on VAT.
The Italian Republic contested the incompatibility, but after a reasoned opinion was sent by the Commission, it again contested the existence of such an incompatibility.
The Commission brought an action against the Italian Republic, and both parties presented arguments.
The Commission seeks to establish that the Italian Republic has failed to fulfill its obligations under Directive 2006/112, and it is admissible to establish a failure to comply with obligations originating from the initial version of a Community act that have been maintained by new provisions.

AG Opinion

None

Decision

1) By extending, by article 2, paragraph 44, of law n ° 350, concerning the provisions for the formation of the annual and multiannual budget of the State (finance law for 2004) [legge n. 350, disposizioni per la formazione del bilancio annuale e pluriennale dello Stato (legge finanziaria 2004)], from December 24, 2003, to the year 2002 the fiscal amnesty provided for in Articles 8 and 9 of Law No. 289, concerning the provisions for the formation of the annual and multiannual budget of the State (finance law for 2003) [legge n. 289, disposizioni per la formazione del bilancio annuale e pluriennale dello Stato (legge finanziaria 2003)], of December 27, 2002, and therefore providing for a general and undifferentiated waiver of the verification of taxable transactions carried out during the period of taxation relating to the year 2002,January 1 , 2007, Articles 2 and 22 of Sixth Council Directive 77/388 / EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes – Common system of taxes on added value: uniform base, as well as in Article 10 EC.

2. Orders the Italian Republic to pay the costs.

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