Non-existing and undue tax credits: the psychological factor must also be taken into consideration

In its judgment no. 7615 of the last 3rd of March, the Italian Supreme Court - Criminal Division - clarified once again and, this time, hopefully, definitively, that there is a clear distinction between the two types of crime of the illegal compensation of tax debts with non-existent tax credits - under art. 10-quater, paragraph 2 of Legislative Decree 74/2000 - and the one concerning the use in compensation of credits which exist but are not due - pursuant to paragraph 1 of the same Article 10-quater of Legislative Decree 74/2000.

The judgment, which at a first sight may appear mundane, since, both from an administrative and a criminal point of view, the two situations are separately regulated by the law, with different penalty ranges and different deadlines for the verification, is, however, very significant, given that it contrasts with the Court's previous position, which was upheld until the end of 2021, and which stated that the distinction between the two situations was " logically and legally unfounded".

The judgment is also particularly relevant since it clearly distinguishes the two types of crimes also from the prospective of the proof required for the existence of the psychological element of the behaviour.

The Court, in fact, has clearly stated that "a credit cannot be both undue and not existing at the same time, because either it is not existing or it is not due", but has also highlighted that "the non-existence of the credit is in itself, unless contrary evidence is provided, an indicator of the taxpayer's determination and intention to balance his debts with an artificial credit, while, in case of compensation with undue credits, it is necessary to prove the taxpayer's acknowledgement that such credits should not be used".

According to the Supreme Court, therefore, when the taxpayer uses a non-existing credit (a situation which, as already mentioned, is sanctioned, also under criminal law, in a much stricter manner than the different hypothesis of the utilization of credits which are undue) his intention to fraud the tax system, by claiming in compensation something that is ontologically void of economic substance, is a certainty, unless there is contrary evidence, and does not require any particular investigation in order for the crime in question to be prosecuted (on condition that the punishment threshold is exceeded).

On the contrary, where the taxpayer uses in compensation (again for amounts exceeding the threshold of €50,000) credits which exist in the an, but which are unlawful in the quantum, or in the modus, the fraudulent awareness of their non eligibility must be demonstrated case by case and cannot be presumed.

The ruling is to be welcomed since it traces a line between the two different situations in question, which appear to be affected, as the legislator states, by a significant difference in behavioural disvalue, which legitimately allows the assumption, reversing the onus probandi on the taxpayer, of the existence of the psychological element in all those hypotheses which, by their nature, do not have any factual basis, and are therefore typically affected by fraud. However, more care and attention must be paid to those cases which are more commonly characterised by the presence of a mere error made by the taxpayer, which, if it exists and is not made consciously (i.e. intentionally), does not justify the criminal sanction.

The effects of such a distinction, concerning the psychological element of the behaviour, should not, moreover, be limited exclusively to the criminal sanction area, but may also be relevant from an administrative sanctioning point of view.

The idea behind the revision of the administrative tax sanctions system was, with all the necessary corrections, to "align the regulation of the (non-criminal) tax offence with the model of the criminal offence", therefore it seems clear that the principles set out in the judgment in comment should also be applied in the event of administrative sanctions, separately for the cases of compensation of non-existing or undue credits.

However, it is important to consider that, for the imposition of an administrative sanction, it is sufficient to adopt a negligent behaviour and that, therefore, the psychological element will be even more implicit in the case of radically non-existing credits.

Instead, with regard to the compensation with undue credits, for which the Supreme Court has required a case-by-case evaluation regarding the existence of the psychological element, there could be many situations in which the presence of such element could be excluded. In particular, there are relevant situations - see, for example, all the credits for Research & Development under Article 3 of Decree-Law No. 145/2013, but also the so-called "restructuring bonus", in the event of a credit transfer - in which the law requires the taxpayer to address a qualified expert in order to certify the existence of the credit and to verify the existence of the conditions required by law. Well, in such situations, it is clear that, even if it is later demonstrated that the taxpayer is not entitled to receive the tax credit, he should be exempted from responsibility due to the lack of the psychological element pursuant to art. 5 of Legislative Decree 472/1997.

Despite the fact that the most recent (and restrictive) position of the Court is to consider the mere ignorance about the existence of the necessary conditions not sufficient to exclude the liability of the author of the violation, being necessary, on the contrary, "that such ignorance is not culpable, i.e. not overcoming by the interested party with the use the ordinary diligence". It is evident that the involvement of a third party, professionally qualified, who is called to act as guarantor of the validity of the procedure, makes the taxpayer's behaviour totally (in)conscious and (in)voluntary.

Therefore, it is to be hoped that in all these circumstances, in which the taxpayer is de facto relegated to the role of a "marginal" or "mediated" actor in the procedure, not only criminal sanctions will not be applied due to the evident lack of fraudulent intent in the use of a credit which turned out to be (only) undue, but neither will administrative sanctions be applied, due to the lack of a behavior which can be qualified as conscious and voluntary.

Moreover, even if the taxpayer's conduct, which is limited to reporting in the tax return what has been certified by a professional advisor, were to be considered as a form of negligent behaviour, one of the exemptions provided for by Article 6 of Legislative Decree no. 472/1997 (error in fact and objective conditions of uncertainty) could always be applied, with the conseguence that the administrative sanction - on the extent of which it would be necessary, more generally, to reflect, in the light of the principle of proportionality of the sanctions, to which EU jurisprudence, with increasing frequency, reminds us to relate - would not be applied anyway.

Pubblished by: Avv. Iacopo Bissi

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