Prepared by Carlo Romano, Marco Longobardi, Rubina Fagioli and Anastasia Pompili
The Italian Supreme Court, with the judgement no. 16302, lodged on 28 April 2022, has ruled for the first time in a case regarding the administrative liability of entities (Legislative Decree no. 231/2001) arising from the allegation of tax offenses (Legislative Decree no. 74/2000) in the context of a dispute concerning the fraudulent declaration using invoices or other non-existent documentation.
The appealed decision
The Judicial Review Court of Milan, by order dated July 19th, 2021, confirmed the preventive seizure decree issued by the Judge for the Preliminary Investigations (GIP) against the Company in application of Articles 5, lett. a), 6 lett. a) and 25-quinquiesdecies of Legislative Decree No. 231/2001, assuming that the tax-evasion scheme (use subjectively nonexistent transactions) for the undue deduction of VAT had been proven. The Company appealed to the Supreme Court alleging, inter alia, the violation of Article 2, para. 1 and Article 1, para. 1, lett. b) of Legislative Decree no. 74/2000 and Articles 1704, 1705 and 2602 and ff. of the Civil Code (which should have been taken into account for the application of Article 2 of the Legislative Decree no. 74/2000), highlighting that the order had failed to take into consideration the evidence illustrated in the re-examination proceeding. Thus, according to the Company the appealed order was illegitimate because it did not comply with the provision of Article 12-bis of Legislative Decree 74/2000 or because of the erroneous application of the above mentioned Article 12-bis, due to the absence of profit and <the relevance of the tax debt to be protected with the preventive seizure for the confiscation.
The decision of the Supreme Court
With the judgement at stake, the Supreme Court has assessed that the order issued by the Judicial Review Court of Milan was adequately motivated with regards to the precautionary measures. Thus, considering the VAT deduction deriving from the use of subjectively nonexistent transactions illegitimate, the Court dismissed the appeal of the Company and ordered it to pay the judicial expenses. The indicative measures gathered were consider sufficient for the purposes of the tax crime of Article 2 of Legislative Decree no. 74/2000, and thus for the subsequent liability of the company according to the Legislative Decree no. 231/2001.
The Supreme Court decision, notwithstanding it has been issued for the sole purposes of the legitimate application of the precautionary measures for the confiscation, represents the first judgment which has ruled about the administrative liability of the entities deriving from tax crimes. Thus, it should be considered an “alert” for the entities (including Italian branches of foreign companies) to draft or update – before committing a crime – and effective Management and Organization Management (MOG) in order to avoid incurring administrative penalties under Legislative Decree no. 231/2001. Therefore, it is advisable that the entities, when drafting and updating the MPG and in the internal training, refer to consultants specialized in tax criminal law in order to identify previously the risks applying procedures and controls in order to avoid, or at least limit, the application of penalties (such as the seizure, the prohibition to negotiate with the Public Administration, the exclusion from funding) as provided by Legislative Decree no. 231/2001.
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