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IRAP - JUDGEMENT OF THE EUROPEAN COURT - NO REFUND

With the judgments of the Court (Grand Chamber) of 3 October 2006, and 'practically wrote an end to the now long-standing problem of duplication IRAP with VAT.

The Sixth EU VAT Directive, art. Article 33 No 1, places a ban on the levying of other domestic taxes which can be characterized as turnover taxes, and more 'precisely means, without prejudice to other Community provisions, particularly those provided by existing Community provisions on the general arrangements for the holding, movement and monitoring of products subject to excise duty, the provisions of this Directive shall not prevent a Member State from maintaining or introducing taxes on insurance contracts, taxes on betting and gambling, excise duties, stamp duties and, more? generally, any taxes, duties or charges which can not be characterized as turnover tax, PROVIDED 'However, such taxes, duties and charges do not, in trade between Member States, a formality' associated with the passage of a border.

has' argued that IRAP was contrary to this directive, as though it is calculated by a method different from that used for VAT, levied on the value net proceeds from the activity? productive, and more? exactly the net value added to the product by the manufacturer, so that 'the IRAP would be VAT.

has 'also claimed that the amount of IRAP collected at various stages of the cycle, from production to consumer input, and' equal to the rate of IRAP applied to the selling price of goods and services charged for home use .

derimere To that question, and the European Court 'was then asked the following question: If the art. 33 of the Sixth Directive must be interpreted in the sense that it prohibits a charge to IRAP of the net value of production deriving from the regular activities of a 'self organized the production of or trade in goods or the provision of services.

Among the many and 'raised the following exception, which appears to have tipped the balance in favor of the Italian Ministry: it must first be noted that, while VAT and' charged at each stage at the time of marketing and its amount and 'proportional to the price of goods or services provided, IRAP and' instead of a tax calculated on net production value of the company during a certain period. Its tax base and 'in fact the difference is that, depending on income, including the production value and costs of production, as defined by Italian legislation. It includes elements as changes in inventories, amortization and depreciation, which have no direct relationship with the supply of goods or services as such. IRAP should not be considered proportional to the price of goods or services provided.

For Italian taxpayers, with this ruling effectively clears up all hope of a refund for the IRAP paid in the past.