Refund of Provincial Surcharges on Excise Duties: Extended Prescription Terms and Extraordinary legitimacy

published on 11 December 2024 | reading time approx. 3 minutes

With judgment no. 21154 of July 29, 2024, and order no. 24203 of September 9, 2024, the Italian Supreme Court, Tax Section, has finally ruled on the long-standing issue regarding the refund of provincial surcharges on excise duties for electricity.

The disputes brought before the Court (one in favor of the taxpayer and the other one in favor of the tax authorities) concerned tacit denials by the Customs and Monopolies Agency (“ADM”) to refund the provincial surcharges applied in violation of Directive 2008/118/EC. These surcharges had been paid by two separate companies to the same supplier, which was under a debt restructuring procedure. Both parties challenged the decisions in lower courts, questioning the extraordinary legitimacy to directly claim the refund from the Tax Administration (recognized in one case but denied in the other) and the application of a ten-year statute barred period for filing the refund claim (another issue subject to conflicting rulings).

In the first argument, the rulings of the lower courts were appealed for either affirming or denying that the requesting company held extraordinary legitimacy to act directly against the Tax Adminitration without having first pursued all the remedies available against the electricity supplier.

The Supreme Court clarified that, under the EU law, Member States are obligated to refund taxes and duties unlawfully collected according to the procedural rules of each state, provided these comply with the principles of equivalence and effectiveness. It reiterated that when refund is impossible or excessively difficult, the EU principle of effective protection requires that the end consumer must be able to directly claim the refund from the State.

This applies regardless of the supplier's financial condition (in this case, being under a debt restructuring procedure), as the undue payment of surcharges by way of recourse to the supplier automatically entitles the end consumer to seek the refund from the tax authority (within the statute barred period) under the principle of effectiveness. This entitlement forms the basis for acting against the ADM for unjust enrichment.

The application of this principle expands the traditional case law, which granted extraordinary legitimacy to end consumers only in cases where the supplier's financial condition posed excessive difficulty.

A second argument was spent to appeal the lower court rulings for having ruled in a diverging way on the applicable time limits: one applied a two-year statute barred period for filing the refund claims, while the other restricted this limit to suppliers, rejecting the ADM's claim that it should also extend to consumers.

According to the Supreme Court, claims for unjust enrichment filed by consumers against ADM are not subject to the two-year statute barred period under Article 14(2) of the Consolidated Excise Act. Instead, the standard ten-year statute barred period under Article 2033 of the Italian Civil Code applies, providing broader protection for end consumers and fully aligning with the EU principle of effectiveness..

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