13718/2022

Civil Ord. Sec. 5 No. 13718 Year 2022

President: BRUSCHETTA ERNESTINO LUIGI

Rapporteur: ENRICO MANZON

Publication date: 02/05/2022

ORDER

on the appeal registered under No 1000/2015 R.G. brought by Agenzia delle Entrate, in the person of its Director pro tempore, with an address for service in Rome at Via dei Portoghesi 12, at the Avvocatura Generale dello Stato, which represents and defends it;

applicant -

against

Vincenzo Zucchi spa, in the person of its legal representative pro tempore, represented and defended by Alessandro Giovannini and Valerio Cioni, lawyers, with an address for service in Rome at the latter's Chambers at Via degli Scipioni 268/a;

- cross-claimant/applicant -

against the judgment of the Regional Tax Commission of Lombardy No 2644/36/2014, filed on 21 May 2014.

Hearing the report delivered in the Council Chamber on 9 February 2022 by Enrico Manzon, consigliere.

Noted that:

In the judgment under appeal, the Lombardy Regional Tax Commission partially upheld the appeal lodged by the local tax office of the Agenzia delle Entrate against judgment no. 16/24/13 of the Milan Provincial Tax Commission, which had upheld the appeal of Vincenzo Zucchi spa against the notices of assessment for Il.DO. and VAT 2006.

The CTR, in the part that is relevant here, observed in particular:

-that the recovery for undue deduction of a bad debt loss (claim no. 1, debtor Telaio srl) was to be considered unfounded, since it was based on valid management considerations (benefits from the continuation of the business relationship with the debtor);

-that the recovery for undue deduction of costs recharged by the subsidiary Basitalia leasing (claim no. 2 connected to claim no. 3 IRAP and no. 1 VAT, compensation for acquisition of the availability of commercial premises) should also be considered unfounded, since they were inherent costs;

-that, on the other hand, the recovery for failure to account for interest income on a loan to the French subsidiary Descamps should be considered to be cancelled, since the alleged infringement of transfer pricing legislation (finding No 3) exists;

that, similarly and for the same legal reason, the recovery relating to the sale of goods to foreign subsidiaries (France, Spain, Switzerland, Germany and Greece; finding no. 4) should be considered well-founded, since the counter-evidence provided by the taxpayer company was not adequate;

-that, on the other hand, the recovery for undue deduction of costs for the purchase of goods and services from suppliers residing in non-EU countries included in the black list was unfounded, since the taxpayer company had adequately counter-evidenced the actual existence of the supplies (relief no. 5 IRES/IRAP, no. 1 VAT);

-that the claim for undue deduction of VAT in connection with the staging of trade fairs (in Germany and France) was well-founded, since it was a "nonterritorial" service under Article 7(4)(b) of Presidential Decree No 633/1972, in the version applicable at the time (claim No 2 VAT);

-that the claim for undue deduction of the cost of employing Dechamps' staff was also well founded, since the legislation in force ratione temporis excluded it (claim No 1 IRAP);

-that the claim for undue deduction of the cost of employment of Manlio Zucchi was also well founded, since the taxpayer company had not adequately proved the contractual relationship for tax purposes (claim no. 2 IRAP);

-lastly, that the taxpayer's defence concerning the inapplicability of the penalties due to objective uncertainty as to the interpretation of the infringed rules could not be upheld, since it was a generic and in any event unfounded objection.

The Revenue Agency appealed against the decision on five grounds.

In a subsequent appeal, which must however be considered as incidental, the judgment was also challenged by the taxpayer company on four grounds.

Considered that

By the first, third and fourth grounds, the appellant tax agency - pursuant to Article 360(1)(4) of the Code of Civil Procedure - complains that the judgment under appeal is invalid on account of a defect in the grounds (apparent grounds) in relation to the rulings relating to the recovery for undue deduction of losses on credits, costs that are not inherent and relating to operators residing in countries on the black list referred to in the decree of 22 March 2022.

The objections, which must be examined together on account of their connection, are unfounded.

It should be reiterated that "the reasoning is only apparent, and the judgment is void because affected by "errar in procedure", when, although graphically existing, does not make, however, perceivable the basis of the decision, because it contains arguments objectively unable to make known the reasoning followed by the judge for the formation of his conviction, not being able to leave the interpreter the task of supplementing it with the most varied, hypothetical conjectures" (Cass, Sez. U, Sentence no. 22232 of 03/11/2016, Rv. 641526 - 01).

However, the reasoning of the contested judgment does not fall within the invalidating paradigms indicated in the above-mentioned, well-established and agreeable case law.

In fact, the tax appeal court has briefly but clearly illustrated the reasons for which it affirmed the unfoundedness of the claims at issue, so that the correlative argumentation must certainly be considered above the "constitutional minimum" (see Sez. U, 80S3/2014).

In any event, it should also be reiterated that "The improper exercise of the power of appreciation of non-legal evidence by the trial judge does not give rise to any defect denounceable with the appeal to the Court of Cassation, since it does not fall within the paradigm of art. 360, paragraph 1, no. 5, c.p.c. (which gives prominence to the omission of the power of appreciation of non-legal evidence). (which gives prominence to the failure to examine a historical fact, main or secondary, the existence of which is apparent from the text of the judgment or from the procedural documents, has been the subject of discussion between the parties and is decisive for the judgment), nor in that of the preceding no. 4, which - through art. 132, no. 4, c.p.c. - gives prominence only to anomalous motivation. - which - by means of Article 132(4) of the Code of Civil Procedure - only highlights the motivational anomaly that turns into a constitutionally relevant breach of the law" (Court of Cassation, no. 11892 of 10/06/2016, Rv. 640194 - 01).

With the second ground the appellant tax agency - ex art. 360, first paragraph, no. 3, cod. proc. civ.- complains about the violation/false application of articles 2704, cod. c:v., 109, paragraphs 1-5 of Presidential Decree 917/86, since the CTR stated that the claim relating to the undue deduction of costs charged by the subsidiary Basitalia Leasing S.p.A. for compensation deriving from the use of a shop located in Trieste was unfounded, making use in particular of an unauthenticated private contract which could not be opposed to it precisely because of the provision of the aforementioned provision of the code.

The complaint is well-founded.

The tax appeal court based its decision on the decision point in question essentially on the use of a document that was unquestionably unregistered, therefore devoid of a certain date, and not even signed by the taxpayer company.

As regards the first aspect, it is clear that Article 2704, paragraph 1, of the Italian Civil Code has been infringed, since it is documentary evidence that cannot be relied upon by the tax office precisely because of the lack of the "certainty" requirements provided for by such legislative provision (see Section 5, Sentence no. 7636 of 31 March 2006, Rv. 588675 - 01).

In addition, the failure of the taxpayer company to sign the contract also makes the correlative contractual obligation uncertain and, in the final analysis, invalidates the judgment of the Lombardy Regional Tax Court in so far as it entails a misapplication of Article 109(1) of Presidential Decree 917/1985, with particular regard to the "certainty/determinability" of the negative income component in question.

By its fifth ground of appeal, the appellant tax agency - pursuant to Article 360(1)(3) of the Code of Civil Procedure - alleges infringement of Article 80 of the Constitution, Article 2697 of the Civil Code and Article 110(10) to (11) of Presidential Decree 917/1986, since the CTR ruled that the claim relating to the deduction of costs from transactions with economic operators located in countries on the black list was unfounded.

The complaint is inadmissible.

It must be noted that the ratio decidendi of the decision in question is substantially different from that indicated by the main appellant, given that the appellate tax judge affirmed the unfoundedness of the tax recovery primarily on the basis of the documentary evidence produced by the taxpayer company from the stage of the end-of-procedure discussion, from which it derived the conviction that the costs in question were actually incurred against the real services of the non-EU counterparties.

It follows that the question relating to the applicability of the double taxation convention between Italy and Hong Kong is essentially irrelevant.

By its first ground of appeal - pursuant to Article 360(1)(4) of the Code of Civil Procedure - the cross-appellant complains that the judgment under appeal is null and void for breach of Article 112 of the Code of Civil Procedure, since the CTR failed to rule on its preliminary objection of illegality of the contested notices of assessment for breach of Article 12(7) of Law No 212/2000.

In particular, the taxpayer complains that the tax assessment notices did not take any account in their reasoning of its counter-arguments to the tax assessment report.

The complaint is unfounded.

It should be reiterated that:

-In the light of the principles of procedural economy and reasonable duration of the trial as constitutionalised in Article 111, second paragraph, of the Italian Constitution, as well as a constitutionally oriented reading of the current art. 384 of the Code of Civil Procedure, inspired by these principles, once the case is heard, it is not possible to make a decision. inspired by these principles, once the failure to rule on a ground of appeal has been verified, the Court of Cassation may omit the cassation with reference of the contested sentence and decide the case on the merits when the question of law posed by the said ground is unfounded, so that the ruling to be made confirms the operative part of the sentence of appeal (determining the futility of returning the case to the merits), provided that the question does not require further factual investigation" (Court of Cassation, no. 2313 of 01/02/2010). no. 2313 of 01/02/2010; ex pluribus conf. Cass. no. 16171 of 28/06/2017; Cass. no. 9693 of 19/04/2018);

-In the matter of income tax and value added tax, a notice of assessment is valid if it does not mention the taxpayer's observations pursuant to Article 12, paragraph 7, of I. no. 212 of 2000, since the taxpayer's comments are not mentioned. No. 212 of 2000 is valid, since, on the one hand, nullity applies only to those irregularities for which it is expressly provided for by law or which result in the infringement of specific rights or guarantees to such an extent as to prevent the production of any effect and, on the other hand, the Administration is obliged to assess such observations, but not to explain such assessment in the tax assessment notice" (Court of Cassation No. 8378 of 31/03/2017).

In application of such well-established case law, it must be held that, since this is an unfounded objection, given that the tax agency had no obligation to "reinforce the grounds" of the tax assessment, with specific regard to the end-of-procedure defence submissions made by the taxpayer company, even though the alleged defect of activity may, in theory be found, the judgment under appeal should not be quashed in part.

By its second and third pleas in law, the cross-appellant - pursuant to Article 360(1)(3) of the Code of Civil Procedure - alleges infringement of Articles 110(7) and 9(3) of Presidential Decree No 917/1986, in so far as the CTR held, respectively, that the tax recoveries relating to the contested transfer pricing for interest income on the loan to the foreign subsidiary Descamps and on sales of goods to other foreign subsidiaries were well-founded.

In particular, the taxpayer argues that the above-mentioned rules on intercompany transactions are not applicable when, as in the present case, the option for the "worldwide consolidation" has been exercised pursuant to Article 130 et seq. of Presidential Decree 917/1986.

The complaints, which must be examined together on the basis of their connection, are unfounded.

First of all, it is necessary to identify the legislative provisions of strict reference to the specific case, in the version in force ratione temporis, and therefore:

-Article. Article 110, paragraph 7, of Presidential Decree 917/1986, which provides: "The components of income deriving from transactions with companies not resident in the territory of the State, which directly or indirectly control the company, are controlled by it or are controlled by the same company that controls the company, are valued on the basis of the normal value of the goods sold, the services rendered and the goods and services received, determined in accordance with paragraph 2, if it results in an increase in income; The same provision shall also apply if a reduction of income is derived therefrom, but only in consequence of agreements concluded with the competent authorities of the foreign States following special "mutual agreement procedures" provided for in international conventions against double taxation on income. This provision also applies to goods sold and services rendered by companies not resident in the territory of the State on behalf of which the enterprise is engaged in the sale and placement of raw materials or merchandise or the manufacture or processing of products;

-Article 9, paragraph 3, Presidential Decree 917/1986 which provides that "Normal value, except as provided in paragraph 4 for the goods referred to therein, shall mean the average price or consideration charged for goods and services of the same or similar kind, in conditions of free competition and at the same stage of marketing, at the time and place where the goods or services were acquired or rendered and, failing that, at the nearest time and place. For the determination of the open market value, reference shall be made, as far as possible, to the price lists or tariffs of the person who supplied the goods or services and, failing that, to the price lists and tariffs of the chambers of commerce and to the professional tariffs, taking into account customary discounts. In the case of goods and services subject to price regulation, reference shall be made to the provisions in force;

Art. 131, Presidential Decree 917/1986 which provides "The exercise of the option allows income and losses produced by the non-resident subsidiaries referred to in Article 133 to be attributed to the controlling entity regardless of distribution for the portion corresponding to the share in profits of the same controlling entity and of the resident subsidiaries referred to in paragraph 2, taking into account the multiplication determined by the chain of control. Where the investment in a non-resident subsidiary is wholly or partly held through one or more resident subsidiaries, for the validity of the option under Article 130 it is necessary for the parent company and each of these resident subsidiaries to exercise the option under Section II. In this case, the share of income of the non-resident subsidiary to be included in the tax base of the group corresponds to/the sum of the shares of each resident company referred to in this paragraph. 3. The apportionment referred to in paragraph 1 shall take place in the taxable period of the parent company and of the subsidiaries referred to in paragraph 2 current at the end of the financial year of the non-resident company. Where the latter company is not required to prepare annual financial statements, the attribution shall take place on the last day of the period to which the voluntary financial statements referred to in Article 132, paragraph 2, refer. 4. For the purposes of paragraph 3, the share in profits at the end of the financial year of the non-resident company or, if greater, at the date of approval or audit of the relative financial statements, shall be taken into account. 5. The obligations for payment of the balance and of the advance shall be the responsibility of the counterparty. The advance payment due is determined on the basis of the tax relating to the preceding period, net of deductions and tax credits and withholding taxes, as indicated in the income tax return filed in accordance with Article 130. For the first tax year the advance payment due by the parent company shall be determined on the basis of the tax, net of deductions, tax credits and withholding taxes, corresponding to the algebraic sum of the taxable amounts relating to the preceding period, as indicated in the tax returns filed for that period by the resident companies taken individually. In any event, the provisions of Article 4 of Decree-Law No 69 of 2 March 1989, converted, with amendments, into Law No 154 of 27 April 1989, shall apply".

The first two legislative provisions contain the discipline of the so-called transfer pricing, the third one that of the effects for the option for the so-called worldwide consolidation.

It is rather evident that these are autonomous legal provisions, which in their literalness do not contain direct elements of connection/coordination.

This leads to the systematic hermeneutical solution that, in the case of intra-group sales of goods or services, taxation at "normal value" is not affected by the establishment of the so-called unified tax group, or, even better, that the unification of the income statement of the companies belonging to a group opting for the (worldwide) consolidation, according to the logic of the algebraic sum of individual corporate income, is based on the prior - autonomous determination of the same according to the general rules.

Moreover, investigating the rationale of the domestic rules on transfer pricing, this Court has repeatedly ruled, with a clearly prevailing orientation, that it should not be found in anti-avoidance purposes, but in those of preventing distortion of free competition and preserving the tax power of the EU member states (ex pluribus, in this sense, see Cass., 1232/2021, 16948/2019, 9673/2018, 18392/2015).

This last case in particular is also well present in the case law of the Court of Justice of the EU (see judgment of 21 January 2010, C-311/08, Sociétè del Gestion Incfustrielle SA, paragraphs 60-64).

The judgment appealed against therefore appears to have correctly interpreted and applied Article 110(7) of Presidential Decree 917/1986 in relation to both of the claims at issue, expressly adhering to the case law of the Court of Justice and the European Union.

Concluding on the decision points under examination, it is appropriate to formulate the following principle of law:

"The rules on transfer pricing under Article 110, paragraph 7, in relation to Article 9, paragraph 3, Presidential Decree 917/1986 and the "worldwide consolidation" under 130, ss., Presidential Decree 917/1986 are distinct and autonomous, so that they do not interfere with each other and must be applied separately, since the effects of the option for group taxation are limited by the specific provision of Article 131 of the same TU.

By the fourth plea in law, the cross-appellant - pursuant to Article 360(1)(3) of the Code of Civil Procedure - complains of breach of Article 6(2) of Legislative Decree No 472/1997, Article 8 of Legislative Decree No 546/1992 and Article 10(3) of Law No 212/2000, since the CTR rejected its plea in law relating to the inapplicability of the penalty treatment on account of 'objective legislative uncertainty'.

The complaint is inadmissible and in any case unfounded.

First of all, as regards the inadmissibility of the appeal, it should be noted that the criticism is completely lacking in specificity, as it is not clear in respect of which rules and in what terms there is the alleged "uncertainty".

Consequently, again with regard to the admissibility of the complaint, it should be noted that it relates to the merits of the appeal decision, which does not fall within the scope of this case.

In any event, it should be reiterated that: "With regard to administrative penalties for breaches of tax rules, there is objective legal uncertainty, a cause of exemption of the taxpayer from administrative tax liability under Article 10 of I. No 212 of 2000 and Article 8 of Legislative Decree No 546 of 1992, when it is found that the taxpayer is not liable to pay the tax. 546 of 1992, when there is a condition of unavoidable uncertainty as to the content, object and addressees of the tax rule, referring not to a generic taxpayer, nor to those taxpayers who, due to their professional expertise, are capable of a qualified normative interpretation, nor to the Financial Office, but to the judge, the only subject of the legal system with the power-duty to ascertain the reasonableness of a given interpretation" (among the many, for all, see. Sez. 5 - , Order No. 3108 of 01/02/2019, Rv. 652716 - 01).

And, as said, the condition indicated in that case law has not even been illustrated by the cross-appellant in the present case.

In conclusion, upholding the second plea in the main appeal, rejecting all the other pleas in the main appeal and the cross-appeal, the judgment under appeal should be set aside in relation to the upheld plea, and the judgment should be referred back to the CTR for reconsideration and also for the costs of these proceedings.

PQM

The Court upholds the second plea in the main appeal, rejects all the other pleas in the main appeal and the cross-appeal, sets aside the judgment under appeal in relation to the accepted plea and refers the case back to the Lombardy Regional Tax Commission, with a different composition, also as regards the costs of the present proceedings.

Pursuant to Article 13(1c) of Presidential Decree No 115 of 2002, the appellant declares that the procedural requirements exist for the payment by the cross-appellant of the further amount of the unified contribution equal to that provided for the cross-appeal pursuant to Article 13(1a), if due.

So decided in Rome, 9 February 2022.