1. Foreword: Extraordinary solidarity tax surcharge

Article 37 of Law Decree No. 21 of March 21, 2022, as amended by Law Decree No. 50 of May 17, 2022 and converted, with amendments, by Law No. 51 of May 20, 2022 (Ukraine Decree) introduces a one-time “extraordinary solidarity tax” surcharge to be paid by producers, importers and resellers of electricity, gas and petroleum products, for activities carried out in Italy (Contribution).

The Contribution applies to any increase of more than 10 percent (and €5 million) in net sales reported for periodic value-added tax (VAT) settlements (LIPE) from October 1, 2021 to April 30 2022, compared with the balance of the same transactions reported from October 1, 2020 to April 30, 2021. The amount of the Contribution amounts to 25 percent on such increase for that period.

The Contribution is not deductible for corporate income tax and regional tax on business activities purposes.

For the purposes of collection, assessment and related litigation in respect of the Contribution, the provisions on VAT apply, with the respective differences having been considered.

2. Fulfilments (hints)

With the provision of June 17, 2022, the Director of the Italian Revenue Agency, upon consultation of ARERA (Regulatory Authority for Energy, Networks and Environment), defined the fulfilments, including reporting ones, relating to the Contribution.

The measure establishes the following obligations to pay the Contribution, among others:

• 40 percent, in the form of an advance payment, which was due on June 30 2022 and
• the remaining 60 percent, by November 30, 2022.

Resolution No. 29/E of 20 June 2022 established the appropriate tax codes, and the Italian Revenue Agency provided clarifications in its Circular No. 22/E of June 23, 2022.

3. Critical aspects and possible unconstitutionality

Since being enacted, Article 37 of the Ukrainian Decree has raised a number of questions regarding how it should be interpreted—especially how the Contribution should be applied and whether or not it complies with constitutional principles.

With regard to constitutional principles, when considering the nature of the Contribution as a “tax,” doubts arise with reference to its compatibility with the principles of reasonableness and proportionality. Thus, it could be found in violation of Article 3 (principle of equality) and Article 53 (ability to pay) of the Constitution.

These principles are the same ones that, in 2015, led the Italian Constitutional Court to declare unconstitutional the so-called “Robin Hood Tax,” which consisted, as is well known, in a tax surcharge on oil and energy operators (cf. Judgment No. 10 of 11 February 2015).

One of the many critical issues the Contribution raises is how to determine the tax base, which in fact could be (or rather, is) influenced by tax components that do not fall within the definition of profit in the economic or civil law sense (such as, for example, excise duties, which fall within the base of active transactions for VAT purposes because, if there is an increase in the quantities sold, the greater excise duty collected generates an increase in the taxable base of the Contribution) or which do fall with the base of active transactions but have nothing to do with the production and resale of energy, gas or oil (such as, for example, income from the sale of securities or shareholdings).  

4. Conclusions

If you think your company might be impacted by the Contribution, it is essential to analyze whether Article 37 in fact does apply to your situation as well if there are grounds to challenge its legitimacy and we recommend checking with a legal advisor that can provide assistance taking into account the specificities that characterizes each taxpaying company (and therefore giving appropriate prominence to the critical issues arising with reference to the relevant tax base).

Our team, including sector specialists and tax litigators, is standing by should you wish to know more about the steps to be taken to protect your interests.