To subtract businesses and taxpayers from roulette of the abuse of law, i.e. to give certainty on what is fiscally legitimate to do to reduce the tax burden and what instead constitutes an illicit tax saving, the draft enabling law for the tax reform contains a specific provision, the Article 5, which aims to dictate a general definition of conduct prohibited for tax purposes, although not precluded by specific tax provisions.
The aim of the intervention is to rebalance the relationship between the anti-avoidance tool of abuse of law, increasingly used by the tax authorities and jurisprudence, and legal certainty, undermined by the administrative practice of syndicating ex post the choices of taxpayers on the basis of guidelines not known at the time when the operations subject to control were decided and carried out.
Since it is a rule of legislative delegation, it limits itself to dictating the general principles of the implementing provisions that the Government will have to adopt subsequently. However, it rather precisely defines the abuse of law and the methods of application of the institute, also because it is inspired by a Recommendation of the European Commission of 2012 on "aggressive" tax planning, with which the European States were invited to adopt a standard general anti-avoidance in the field of direct taxes, applicable to both national and transnational relations.
The delegation contained in the tax reform bill provides for a general definition of abuse of law, applicable throughout the tax system, as "distorted use of legal instruments suitable for obtaining tax savings, even if such conduct is not in conflict with any specific provision.
As a counterpart to this principle, however, the legitimacy of the choice between alternative tax regimes expressly provided for by the tax system is also sanctioned, which, therefore, in the abstract is not questioned. The rule establishes that the operation or series of operations carried out by the taxpayer must be justified by non-marginal non-tax reasons, clarifying that valid non-tax reasons are also those which do not necessarily produce immediate profitability, but respond to needs of an organizational or determine a structural and functional improvement of the taxpayer's company.
What is not allowed by the new general rule on the abuse of rights, therefore, is that the purpose of obtaining tax advantages is the prevailing cause of the operation implemented. The principle recalls that of the anti-avoidance legislation introduced in the 90s for extraordinary transactions, which would be absorbed by the new, more general rule on the abuse of rights.
To protect taxpayers and application procedures, there are special provisions on the probation regime. The financial administration is responsible for demonstrating the abusive design and any methods of manipulation and functional alteration of the legal instruments used as well as their non-compliance with a normal market logic. On the other hand, the taxpayer bears the burden of demonstrating the existence of valid non-fiscal reasons that justify recourse to the legal instruments used.
The delegation rule also provides that the abusive conduct must always be formally and punctually identified in the tax assessment documents, under penalty of nullity. And that at every stage of the tax assessment procedure the hearing and the right to defense must be guaranteed.
The tax reform bill has already been approved by the House and is currently being examined by the Senate Finance Committee, which plans to conclude its examination within the week.
