A taxpayer who paid more than what was actually and effectively owed is entitled to reimbursement of value added tax.
This is the conclusion reached by the Regional Tax Commission of Lombardy in ruling no. 587/2017 in which it confirmed the decision of the court of first instance. In the case at hand, a company issued an invoice for a substantial amount, for the sale of a complex asset to another company, applying VAT at 20%.
The seller collected the relative VAT and subsequently paid it to the tax authorities. The purchasing company presented its VAT returns which showed it had a VAT credit; it proceeded to request reimbursement from the Revenue Department, which was however denied.
The tax authorities claimed that the VAT rate applied to the invoice was higher than the correct rate and therefore denied reimbursement, arguing that this part of the tax in question had been unduly deducted.
At this point, the seller, who had acquired VAT credit from the original customer, presented a specific request to obtain reimbursement of the tax paid in excess to the Revenue Department on the assumption that VAT had been made non-deductible for the purchaser. However, the request for reimbursement was rejected by the authorities, which claimed that the time limit of two years after the payment was made had passed, as envisaged under article 21 of Legislative Decree 546/1992.
The refusal of reimbursement was appealed against by the original seller, who first of all highlighted that the two-year limit for the request for reimbursement should not be made to run, as claimed by the tax authorities, from when the tax was paid, but from when the authorities had stated that the purchaser was not entitled to deduct the tax. This was what was actually envisaged by the last part of the aforementioned Art. 21, a fact that the authority, both in the refusal of reimbursement and in its entry of appearance, seemed to have “forgotten”.
The claimant also pointed out that non-repayment of the tax would have entailed undue earnings for the Revenue Department (Art. 2041 of the Civil Code), since the latter, on one hand, had made the VAT non-deductible for the purchaser, and on the other had collected and entirely withheld the excess paid by the seller. The judges at first instance accepted the taxpayer’s arguments, and ruled that the tax should be reimbursed. The department therefore brought an appeal to reiterate its case in relation to the deadline for the request for reimbursement. Division 18 of the Milan Regional Tax Commission, which heard the case, adopted the conclusions of the judges at first instance, confirming that the right to reimbursement had been promptly asserted by the taxpayer within two years running from the moment in which the related premise had arisen, that is to say from the moment when the revenue department had made the VAT charged to the purchaser non-deductible.
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