Edited by Carlo Romano and Maurizio Foti
On August 29th, 2023, Law no. 111 of August 9th, 2023, enabling Government decrees for the tax reform, came into effect. To date almost all the draft enabled decrees have been approved by the Council of Ministers (CdM) and the majority of which are already published in the Official Journal and even already entered in force.
One of the main legislative decrees is that of December 30, 2023, no. 219, published in the Official Journal on January 3, 2024, related to the reform of the Statute of Taxpayer’s Rights (i.e. Law no. 212/2000, hereinafter also the “Statute”).
One of the main innovations concerns the new Article 6-bis of the Statute, governing the right to be heard in advance, with a new general scope (except for a number of cases that will be specifically exempted by means of a ministerial decree to be issued. Indeed, the right to be heard in advance should now apply to all taxes, without further differential treatments (to the detriment of the taxpayer) between harmonized and non-harmonized taxes (as known, the Supreme Court doctrine held the existence of a general right to be heard in advance only in VAT cases) and between on-site inspections or desk investigations (as known, a settled case-law of the Supreme Court excluded the occurrence of the right to be heard in advance within desk investigations leveraging on a merely literal interpretation of the law).
Pursuant to the provisions of the new Art. 6-bis, protecting (under penalty of annulment)the new right to be heard towards the Tax Authorities, in advance of the deed assessing a tax deficiency or imposing tax penalties, the Tax Authorities would be compelled to notify the taxpayer with draft of the tax (or penalty) claim against which the taxpayer would be able to object provide within the following 60 days (during which no deed of assessment can be issued). If this deadline expires beyond the ordinary statute of limitations or there are less than 120 days between the said deadline and the expiration of the statute of limitations, the same statute of limitations would then be extended by 120 days under the draft rules.
The new right to be heard in advance is completed by the provisions of the draft legislative decree on assessment and biennial preventive agreement – whose text was definitively approved by the CdM on 25.1.2024 and, therefore, is soon to be published in the Official Journal. Those further legal provisions would inter alia amend the Legislative Decree no. 218/1997 on ‘assessment with consent’ (i.e. pre-litigation tax settlements) and out-of-court settlements .
Reading this draft decree, the generalized right to be heard in advance will lead also to the repeal of Art. 5-ter of Legislative Decree no. 218/1997, which currently set out a partial and sectorial process , where the Italian Tax Authorities are bound by Art. 5-ter and compelled to hear the taxpayer in advance by means of a formal invitation to appear before the officers only in case no prior final tax audit is delivered to the taxpayer (i.e. no prior on-site tax inspections have been carried out) .
Furthermore, under the current draft of Art. 6-bis the Italian Tax Authorities would then be compelled to invite the taxpayer, while notifying the draft claim, to submit a request for pre-litigation settlement (under the rules on ‘assessment with consent’) within the following 30 days.
Therefore, following the notification of the outline of the tax claim, the taxpayer may:
- either object within 60 days or
- submit a request for pre-litigation settlement within 30 days.
Under the former case, still a pre-litigation settlement may be reached provided that the relevant conditions apply; where, instead, the taxpayer aims at solely object against the draft claim, still a request for pre-litigation settlement may be filed within 15 days following the service of the deed of assessment (in lieu of the current 60-day deadline) and the deadline for appealing before Court would then be extended by 30 days. This would lead to shorten the timing of the pre-litigation settlements that are started after the service of a deed of assessment, which would need to be entered into in way less than 90 days, as provided for by the current laws.
Under case no. 2 above, the submission of the request for pre-litigation settlement based on the draft tax claim will instead preclude the taxpayer from accessing further pre-litigation settlement process after the service of the deed of assessment (in line with the current legal framework) and, therefore, where no settlement is reached, the taxpayer may only appeal to the Tax Court.
As said, the taxpayer would still be entitled to submit a request for pre-litigation settlement within 60 days following the notification of a deed of assessment (but also following a deed of refund recapture) where the right to be heard in advance is not applicable; this possibility will also be foreseen for deeds of assessment not preceded by a final tax audit report under the new Article 5-quater of legislative decree no. 218/1997, which will restore the opportunity to settle the tax dispute already at the level of the conclusion of the tax inspection (despite unconditionally or conditioned only to the removal of self-evident errors, such as calculation errors) within 30 days following the delivery of the said report, with the benefit of reduced tax penalties.
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