Energy, partial rejection by the Consulta for the tax on extra-profits

The inclusion of excise duties in the basis for calculating the extraordinary tax on the extra-profits of energy companies introduced by the Draghi government in 2022 is illegitimate. This was decided by the Constitutional Court in its ruling 111/2024 filed yesterday, Wednesday 26 June (editor Luca Antonini), establishing a principle by virtue of which the State's financial emergencies cannot justify everything, because 'the necessary balancing of interests between the financial needs of the community and the protection of the taxpayer's reasons cannot systematically be resolved in favour of the former'.

Under scrutiny by the law judges was Article 37 of Decree-Law 21 of 2022, which introduced an extraordinary tax on the so-called 'extra profits' of energy companies generated by the flare-up in raw material costs after the Russian invasion of Ukraine. The problem stems from the fact that companies' profits are normally measured by the tax base of IRES, the corporate tax, which, however, is calculated on balance sheets and therefore only arrives the year after the year in which the profits were made. But the government was in a hurry to collect the proceeds of the extraordinary tax to finance anti-inflationary measures and to generate a 'virtuous' circle in which the taxpayers favoured by the price run, i.e. the energy companies, would help the generality of Italians instead penalised by inflation. In order to achieve this, the tax base was calculated on the VAT balance, i.e. the difference between active and passive invoices, which is shown in near real time.

The very exceptionality of the moment leads the Court to promote this mechanism, but not in its entirety. Because the inclusion in the account of excise duties, which enter into the credit balances but are then obviously paid back to the State, 'exceeds the limits of reasonableness'. This quota paid by companies must therefore be returned, at a cost to the state that initial estimates put at around 150 million.

But the heart of the ruling lies in the principle that the financial emergency cannot justify every state claim, because the balance between the needs of the public budget and that of the taxpayer must be effective. From this perspective, the pronouncement is also crucial in the eyes of investors, both Italian and especially foreign, who can base their operational choices on the knowledge that even in Italy 'there is a judge in Berlin' who can protect them from unreasonable tax demands. Even if in this case the judge is in Rome.