ITALY Law and Practice Contributed by: Marco Valdonio and Gabriella Cappelleri, Maisto e Associati
The tax assessment notice is issued by the competent IRA office after the above procedure is completed. In any event, the final assessment should not include additional elements to the Draft Assessment, but if the taxpayer has submitted observations to the Draft Assessment, the final assessment notice will have to consider them and, if applicable, motivate why they have not been accepted by the IRA if the claim is wholly or partially confirmed. Once the formal tax assessment notice is served to the taxpayer, the latter has the following options. • Within 15 days from the service date, to submit a formal settlement application to the competent office, which allows the taxpayer and the IRA to discuss the content of the tax assessment notice and to negotiate a reduction/withdrawal of the adjustments raised (note that such alternative is not available if a settlement phase has already taken place before the issue of the tax assessment notice); this application suspends the appeal dead - line by 30 days. In the case of a settlement, penal - ties, if any, are reduced to one third of the minimum applicable (to be calculated on the settled amount). If the negotiation fails, the taxpayer can still appeal before the competent First Instance Tax Court no later than the extended appeal deadline. • Within 60 days (or 90 days, where the above set - tlement application is submitted and the related negotiation fails) from the service date, to file an appeal against the tax assessment notice before the competent First Instance Tax Court. • To accept the claim and pay the relevant amounts within 60 days; in this case, the penalties are reduced to one third of the amount charged in the tax assessment notice. Before filing the appeal, the taxpayer can opt to pay one third of the penalties indicated in the tax assess - ment notice, if any, thus reducing the risk of negative litigation. However, if the taxpayer prevails in court, the penalties paid will not be reimbursed. Tax Litigation Procedure The First Instance Tax Court schedules a hearing; the taxpayer is entitled to file additional documentation and briefs before the court within certain time limits.
Pending the appeal, the taxpayer is still in a position to negotiate a settlement with the competent IRA office, which must be concluded within the date scheduled for the first hearing before the First Instance Tax Court. If the negotiation is successful, the penalties, if any, are reduced to 40% of the minimum applicable. The decision issued by the First Instance Tax Court may be appealed both by the IRA Office and by the taxpayer before the competent Second Instance Tax Court. Pending the second instance procedure, the taxpayer may further negotiate a settlement (if the negotiation is successful, the penalties, if any, are reduced to 50% of the minimum applicable). The decision issued by the Second Instance Tax Court may be appealed by both parties before the Supreme Court but only for reasons based on violation of legal provisions (ie, generally, factual circumstances, and amounts cannot be challenged). Starting from 2024, pending the Supreme Court litigation, the taxpayer may further negotiate a settlement (if the negotiation is successful, the penalties, if any, are reduced to 60% of the minimum applicable amounts). It is possible that the Supreme Court, rather than issuing a final judg - ment, will refer the case back to a different chamber of the tax court to the one that issued the decision (generally the Second Instance Tax Court), so that the litigation process can continue. Provisional Collection Pending Litigation The tax assessment notice containing a transfer pricing claim is enforceable (ie, the taxpayer has to pay on a provisional basis, as a rule, one third of the higher taxes assessed and interest pending tax litiga - tion within the appeal deadline, as possibly extended if a settlement application is filed). Under motivated and exceptional circumstances, the IRA can decide on provisional collection for the full amount of the assessment. If the taxpayer does not pay within the above-men - tioned deadline, after 30 days (or immediately after the deadline if the collection is at risk), the IRA will instruct the collection agent to start the collection procedure. After this 30-day period, a “grace” period of 180 days is in any case granted under law to all taxpayers. The “grace” period is not granted when the IRA Office claims that the collection is at risk and, in any case, is
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