News - tax cases

Against the odds

The European Court of Justice has recently most unusually gone against an Advocate General's opinion in a case concerning VAT and turnover taxes. The principal facts were that Banca Popolare di Cremona brought an action before the Commissione Tributaria Provinciale di Cremona against the decision of Agenzia Entrate Ufficio Cremona refusing to reimburse the regional tax on productive activities (IRAP) paid in 1998 and 1999.
The case was referred to the European Court of Justice for a ruling on the compatibility of IRAP with the Sixth Directive and in particular with the prohibition on the introduction or maintenance by Member States of taxes which are in the nature of turnover taxes.
The European Court confirmed that VAT was introduced by the EU to establish a common market whose characteristics are similar to those of a domestic market without tax differences liable to distort...