In ruling No. 34419 filed on December 11, 2023, the United Sections of the Supreme Court ruled on the issue of non-existent and non-entitled credits, putting an end to the jurisprudential contrast regarding the correct rules to be applied.
In this regard, they ruled that on the subject of the taxpayer's offsetting of credits or tax surpluses, the Tax Authority's assessment action is subject to the longer eight-year time limit set forth in Article 27, paragraph 16, Decree Law no. 185/2008, when the credit used is non-existent, a condition that is fulfilled when the following requirements are met jointly:
a) the credit, in whole or in part, is the result of an artificial representation or lacks the constituent prerequisites or when it has arisen, it is already extinguished at the time of its use;
b) the non-existence is not verifiable with automated controls. In other cases, the credit must be considered as not due and the ordinary time limit for assessment activity applies.
Concerning the notions of non-existent and non-entitled credit there had long been a strong jurisprudential contrast.
According to a first and older orientation, there would be no difference between the two notions. In fact, it was argued that Art. 27, Paragraph 16 of Law No. 2/2009 "does not intend to elevate the non-existence of the credit to a category distinct from the non-entitlement, but only intends to ensure an adequate margin of time for the sometimes complex verifications concerning the generating element of the tax credit".
This orientation is contrasted with that of the twin rulings Cass. No. 34444 and No. 34445 of 2021, which highlight the novelty represented by Art. 13, paragraph 5 of Legislative Decree No. 471/1997, according to which in the same positive definition of non-existent credit "can be found the confirmation of the dignity of the distinction of the two categories in question, already on the basis of the previous regulatory framework concerning the collection of unduly used tax credits." In this regard, the Court pointed out that the notion of non-existent credit is anchored to a "non-real," "untrue" dimension, i.e., lacking phenomenally appreciable justifying elements, and not also to connotations of fraudulence.
According to the United Sections, the second reported orientation must be given precedence, dwelling on:
(a) the distinguishing features between non-existent and undue credit;
(b) the different legal regime and the prerequisites that condition applicability.
With reference to the first aspect, the Court enhances the textual datum of Article 13 of Legislative Decree No. 471/1997, which defines non-existent credit as credit "in relation to which the constitutive presupposition is missing, in whole or in part, and whose nonexistence cannot be ascertained by means of the controls referred to in Articles 36-bis and 36-ter of Presidential Decree No. 600/1973 and Article 54-bis of Presidential Decree No. 633/1972."
Thus, the requirements for nonexistence are outlined as:
1) lack of the constitutive prerequisite and
2) non-disprovability through so-called automated controls.
On the other hand, non-entitled credit is a tax surplus or credit used in excess of the amount due or in violation of the manner in which it was used. This is a residual category, which includes all cases that cannot be traced back to non-existent credit.
The Supreme Court specifies that the distinction between non-existent credit and non-entitled credit has a structural character and draws its legal rationale from the overall tax system: nonexistence has an objective nature while non-entitlement has a dynamic nature anchored to the presupposition of the existence of the credit.
As for the different legal regime, the United Sections refer to the regulations set forth in Article 27, paragraph 16 of Decree Law No. 185/2008 with reference to the eight-year time limit for the forfeiture of the power of assessment and Article 15 of Legislative Decree No. 158/2015 with reference to the definition of non-existent credit and credit not due, then reported in Article 13 of Legislative Decree No. 471/1997. Also different is the criminal discipline provided by Art. 10-quater of Legislative Decree No. 74/2000, in terms of the penalty provided for the offsetting of non-existent credit and non-entitled credit.
For the sake of completeness, the Supreme Court specifies that in the case of the use of a credit that is later extinguished, a new use of the same integrates the case of non-existent credit (thus not being able to be considered as a credit not entitled), precisely because the constitutive prerequisites of the same credit have disappeared.