ECJ Rules Against Italy On Tax Reimbursments

by Ulrika Lomas, Tax-News.com, Brussels

10 December 2003

The European Court of Justice has ordered the Italian government to amend legislation in the country’s tax code on the reimbursement of customs duties on the grounds that the rules unreasonably restrict a taxpayer’s rights to claim refunds.

According to a law passed by the Italian government in 1990, supported by the country’s Supreme Court, a taxpayer is entitled to reimbursement of tax which is subsequently declared incompatible with EU law – provided this tax has not been passed on to a third party such as a customer.

However, the ECJ said in Tuesday’s ruling that “the reasoning of the Supreme Court is based on the notion that indirect taxes are normally passed along the sales chain by economic operators. Such a premise constitutes a simple presumption which is not admissible.”

Moreover, the ECJ agreed with the Commission’s view that it was wrong for the Italian authorities to place the burden of proof entirely on the taxpayer, who would have to produce detailed accounts in many instances to claim reimbursement of tax.

The court said that “such an interpretation of the 1990 provision renders the reimbursement of undue taxes practically impossible or excessively difficult and is contrary to Community law.”

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