Legal development

The tax justice reform

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    The reform of the tax litigation system (the Tax Reform) has been approved and, in line with the purposes established in the Italy's recovery and resilience plan (the PNRR), aims to introduce a specialised judiciary and new procedural institutes in the tax justice system, thereby speeding up trial times and ensuring a reduction in tax litigation in the Corte di Cassazione. Indeed, as clarified by the Italian Ministry of Economy and Finance and by the Italian Ministry of Justice, the main purpose is to increase the country's competitiveness, by attracting foreign investors and making tax justice compliant with the principle of due process.

    The bill approved by Parliament on 9 August 2022 (the Bill), which is in the process of being published in the Official Gazette,1  reforms the tax litigation system by amending Legislative Decrees Nos. 545 and 546 of 31 December 1992 (Decree 545 and Decree 546, respectively).

    Decree 545, which deals with the functioning of tax courts, now contemplates professional tax judges and regulates their career and admission; whereas Decree 546 contains amendments in relation to tax litigation proceedings.


    The new professional judges introduced by Article 1 of the Bill must have a degree in law or economics, are required to sit a public exam and attend a compulsory training process and will be dedicated full-time to serve as such in tax courts.2

    The tax courts of first and second instance, formerly Commissioni tributarie provinciali and Commissioni tributarie regionali, will be renamed Corti di giustizia tributaria di primo grado and Corti di giustizia tributaria di secondo grado to mark their renewed mission and higher degree of independence. According to new article 4-bis of Decree 545, the Corti di giustizia tributaria of first instance will operate in monocratic composition3  when dealing with tax disputes with a value of up to €3,000, 4 for appeals served as of 1 January 2023.

    Finally, a new chamber of the Supreme Court will be dedicated exclusively to tax cases in response to the ever increasing complexity of tax matters.


    The Tax Reform finally allows the introduction of witness evidence in tax litigation proceedings, provided that:

    • such evidence is considered necessary by the judge in reaching the decision of the case (whether or not the parties support this decision);5
    • the evidence does not concern circumstances that have already been ascertained by public officials; and
    • the deposition must be offered in writing.


    The Tax Reform, amending Decree 546, expressly regulates the burden of proof. The new provision emphasises that the Italian tax authorities (the ITAs) have to provide evidence at trial in support of their tax claim, e.g. if the tax authorities are challenging the deductibility of costs, the burden to demonstrate the inherence of such costs to the business activity should not be automatically shifted on the taxpayer6.

    The decision will be based on the evidence produced in court. A tax claim would be declared null and void in the following cases:

    • the claim is not supported by proof;
    • the evidence is contradictory;
    • the evidence is not sufficient to support the tax claim and the penalty charges.

    These new provisions are not aimed at amending those law provisions which allow the ITAs to raise tax claims on the basis of presumptions.

    When the litigation results from a taxpayer's filing of a refund request, the taxpayer must produce in court the evidence supporting the relevant claim.


    The procedure to suspend the effectiveness of a challenged tax claim has been amended in order to avoid that current slowness of such procedures prevents them to be effective.

    The new procedure contemplates that:

    • the hearing for the decision on the suspension request has to be scheduled for the first available chamber meeting occurring within 30 days from the filing of such suspension request; the court will communicate the date of the hearing to the parties at least 5 days in advance;
    • during such hearing, the court should limit its decision to the suspension request and cannot decide on the merits of the case.


    In order to reduce the number of tax litigation proceedings, a tax amnesty is available to extinguish qualifying disputes pending before the Supreme Court as at 15 July 2022, provided that the taxpayer won in at least one of the two previous instances (before the tax court of first instance and/or second instance). The amnesty would allow the taxpayer to extinguish the pending litigation through a payment of a discounted amount, as described below.

    The amnesty will not apply to disputes pending which concern:

    • the European Union's traditional own resources, 7 and import VAT;
    • sums due in relation to recovery of State aid.8

    Disputes still pending where the taxpayers succeeded in both of the previous instances can be settled provided that their value does not exceed €100,000; if the taxpayer succeeded in one instance, in order to access the amnesty, the value of the case cannot exceed €50,000. Disputes exceeding these thresholds would not qualify for the amnesty.

    Qualifying disputes for which the amnesty application would be timely filed will be settled upon payment of the amounts due (respectively, 5% or 20% of the value of the litigation depending on whether the taxpayer succeeded in one or two instances). Any payment already made during the course of the trial would reduce the amounts due for the amnesty.

    In order to apply for the amnesty, the relevant request should be filed and the payment (if any) made within 120 days from the entry into force of the Tax Reform.

    Secondary legislation will implement the amnesty proceeding.


    Although settlement procedures already exist in the tax trial, new incentives have been provided to the parties (and especially to ITA) to use them in order to reduce pending litigations.

    As a result of the Tax Reform, the defeated party is ordered to pay the costs of the trial when the court's decision is consistent with a settlement proposal that such party previously denied9 . When the denied party is the ITA, such unjustified refusal may also result in administrative liability for the ITA officer.


    Among the basic principles underlying the Tax Reform, one could certainly identify:

    • the pursuit of a better balance between the taxpayer and the ITA in the course of the dispute (through the introduction of the witness evidence, a burden of proof that does not favour the ITA and a faster procedure to suspend the effectiveness of tax claims during the trial);
    • a more contemporary judicial system able to produce quicker and more reliable decisions (through the introduction of new professional full-time judges, a new specialised chamber in the Supreme Court dedicated to tax matters and the reform of the tax courts of first and second instance);
    • a reduction of the pending tax litigations (through the tax amnesty and the incentives to the parties to settle the case).

    Although many suggestions coming from scholars and practitioners have not been upheld, the new rules seem to go in the right direction and may certainly contribute to improve the quality and effectiveness of the tax litigation in Italy.

    Author: Michele Milanese, Partner


    1. Please note that as of today the text of the Bill approved by Parliament has not yet been published in the Official Gazette. The official text will be the one promulgated by the President of the Italian Republic, as published in the Official Gazette.

    2. Under the existing regime, "Commissioni tributarie" are composed by civil law and administrative law judges, employees of the public administration who served at least for 10 years, those who have been graduates in law or economics and commerce for at least two years and other qualified professional that met specific requirements provided by law.

    3. When the court in first instance can decide in monocratic composition, a single judge will examine and decide the case as opposed to three.

    4. Please note that monocratic composition does not apply if the value of the dispute is indeterminable.

    5. Indeed, according to article 257-bis of the Italian Civil Code procedure, the judge, having regard to the nature of the case and all other circumstances, with the agreement of the parties, may order the evidence by requesting the answer to the witness in the written form.

    6. The discipline of the burden of proof is already regulated by article 2697 of the Italian Civil Code, according to which any person who wants to claim a right in court has to prove that the facts constitute its foundation. As this principle was frequently frustrated in practice in the tax litigation, the aim of the rule is to reaffirm it and lead to a more balanced trial which would benefit taxpayers.

    7. According to article 2 of the UE Decision No. 2020/2053.

    8. According to article 16 of the UE Regulation No. 2015/1589.

    9. In certain circumstances, the above denial may even be punished with trial expenses increased by a further 50%.

    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.


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