Non-deductible provisions for the incineration plant

By contrast, the previous rulings by the Provincial Tax Commission (CTP) and the Regional Tax Commission (CTR) in favour of the company had found that the costs in question formed part of a specific obligation to remediate the site, imposed on the plant operator under point E.10 of the integrated environmental authorisation, and had been quantified by the taxpayer on the basis of a technical report drawn up by an expert in the field.

Consequently, the case in question was comparable to that examined by Resolution No. 52 of 2 June 1998 concerning the “closure and post-closure costs of landfill sites”, in which the proportional allocation of such costs across the financial years in which waste disposal activities were carried out was deemed correct.

In the view of the Court of Cassation, however, the Commission erred in citing Resolution No. 52/98 in support of its decision because, first and foremost, does not constitute a source of law, but rather a document setting out administrative practice which is not binding on the taxpayer, on subordinate authorities, on the issuing authority itself and, a fortiori, on the court. Furthermore, from another perspective, it relates to a different set of facts from those at issue in the present case, concerning the costs of restoring an area used as a landfill site.

In that case, given the limited and pre-determined overall waste disposal capacity, such costs constitute a certain liability in the financial year and can be objectively determined in terms of amount by means of a report drawn up by experts in the field; they may therefore be allocated across the financial years in which the activity is carried out in proportion to the percentage of the landfill’s capacity that has been utilised.

By contrast, the dispute examined by the Court of Cassation concerns provisions for environmental remediation costs that are intended to be incurred only in the event of the permanent closure of an incineration plant and which, by their very nature, cannot be apportioned in proportion to the percentage of the site on which the plant stands that has been filled in.

What can one say? First of all, it should be pointed out that any commentary on the order would require a review of the documentation, which is, of course, missing. However, the Supreme Court’s order is not entirely convincing in its refusal to treat the case in question in the same way as Resolution No. 52/98: nevertheless, it would appear that the cost is by no means certain.

This would thus call into question the certainty that the resolution had instilled in market participants: obviously, as the Court of Cassation states, resolutions are not sources of law, but in practice they serve to supplement them.

Finally, the order runs counter to the aim of reducing the dual system of accounting and tax values, which is the objective of the tax reform.