Tax-News.com: Italy May Have To Pay EUR120 Billion In Business Tax Refunds

Ulrika Lomas, writing for the 30 March 2005 Tax-News.com, with a dateline of Brussels, says:

The Italian government is facing the very real possibility of reimbursing taxpayers to the tune of EUR120 billion after the publication of a legal opinion by the advocate general of the European Court of Justice concerning the legality of a business levy.

The issue concerns a tax used to fund regional governments, known as Irap, which is levied mainly on small and medium-sized businesses. Advocate general Francis Jacobs has argued that it is too similar to the existing value added tax system, in contravention of the EU’s sixth directive...

Victory dances probably aren't called for just now, because for one thing Italy might yet find a way to wiggle out of this, and for another, Italy might not have the money to actually pay anybody (see article). But it is a nice step, I think, if the high mucky-mucks in Europe are actually willing to tell governments that they can't lay tax upon tax. If this does go through, Germany, France, Hungary and Lithuania are in the crosshairs, because they have similar taxes.