Italy unlocks tax dispute resolution mechanism

By Francesca Amaddeo, Lecturer-Researcher, Tax Law Competence Centre (SUPSI), Manno, Switzerland

On 16 December, the Italian Revenue Agency released regulations clarifying the tax dispute resolution mechanism’s procedural aspects as required by Directive EU 2017/1852.

Tax dispute resolution has already been implemented in Italy by means of Legislative Decree n. 49/2020. Notwithstanding, it was stuck waiting for the administrative act.

Some highlights

The mandatory implementation of a tax dispute resolution process represents a step forward in easing international taxation issues.

The EU directive and the Italian rules grant taxpayers the right to require Italy to commence a mutual agreement procedure with the involved tax authorities on pending double tax disputes derived from the application of a double taxation convention.

Both the Italian Revenue Agency and the other tax administration must accept or deny the request within six months. If accepted, the deadline for reaching an agreement is two years.

The taxpayer has the right to access the tax dispute resolution mechanism if the taxpayer’s application has been refused by one or both countries, if a national court has ruled in favor of the applicant, or if the mutual agreement process fails. In such circumstances, the tax administrations involved are asked to set up an advisory commission.

Six months after the advisory opinion, the tax authorities must reach an agreement for resolving the issue.

Guidance by the Italian regulation

Italy’s administrative regulation clarifies some procedural aspects of the above.

It provides more detail on how taxpayers can contact the Italian tax authorities to discuss the case before filing the mutual agreement procedure request.

In this second phase, the taxpayer must provide a series of documents listed by the regulations. In the annexes, there are some facsimiles ready to use.

The provisions specify the procedures and the timing to be followed by both the taxpayer and the competent authorities.

This is a remarkable achievement in tax cooperation. On the one hand, it provides for cooperation between taxpayers and tax authorities, on the other hand, cooperation between tax authorities involved.

Tax certainty in international taxation seems to be closer than ever.

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Francesca Amaddeo

Lecturer-researcher at Tax Law Competence Centre, Department of Business Economics, Health and Social Care, University of Applied Science and Arts of Southern Switzerland (SUPSI)

Dr. Francesca Amaddeo, PhD in European law and national legal systems, is an Italian lawyer that works as Lecturer-researcher at the Tax Law Competence Centre, Department of Business Economics, Health and Social Care, University of Applied Science and Arts of Southern Switzerland (SUPSI).

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