Two recent judgements deal with the issue in two different cases: the Court of Santa Maria Capua Vetere (17 February 2016) allows a partial payment of VAT, contrary to precedents of the Supreme Court and of the Constitutional Court, while the Court of Appeals of Bologna (24 December 2015) confirms that the VAT refund claim’s satisfaction depends on the value of the related assets

The case

In the case considered by the Court of Santa Maria Capua Vetere, a company, after filing a concordato preventivo proposal including full payment of VAT and withholding tax, presented an alternative plan that providing for partial payment of secured creditors up to the value of the related assets and, therefore, of 54.83% for income taxes downgrading VAT and subsequent ranking claims to unsecured claims.

In the case examined by the Court of Appeals of Bologna, the debtor considered that the conditions to rank VAT refund claims as secured claims were not met due to the company's stock having an unidentifiable origin, not related to specific unpaid invoices, and therefore downgraded these to unsecured claims, without filing an expert report as required by Art. 160, second paragraph, IBL. The confirmation order order of the Court was appealed according to Art. 183 IBL.

The issue

The issues addressed by the two decisions concern the reduction of VAT claim in two very different situations: (i) in the case of the Court of Santa Maria Capua Vetere, the issue is whether VAT claim of the Italian Tax Agency can be reduced, considering that the special tax settlement regime set forth in Art. 182-­‐ter IBL allows only a deferred payment; (ii) in the case of Court of Appeals of Bologna, instead, the VAT refund claim arises in favour of the supplier of goods and services who paid VAT with respect to supplied goods or services, which he has the right to be repaid by the beneficiary of the same supplies (the lien can be enforced exclusively on the assets related to the supplies and can be downgraded to an unsecured claim according to general rules in Art. 160, second paragraph, lBL) .

The decision of the Court

The Court of Santa Maria Capua Vetere allowed the concordato proposal with reduction of the Italian Tax Agency’s claim for VAT. According to the Court, the special tax settlement regime set forth in Art. 182-­‐ter IBL is not mandatory and there is no constraint in this regard to abide to European Community law. The Court considered that the VAT claim reduction in concordato does not result in a general and unqualified waiver by the tax authorities to seek payment of taxes, but only in a partial and conditional waiver consistent with the EU Commission Recommendation to Member States of 12 March 2014, aimed at eliminating the obstacles to the effective restructuring of viable companies in financial distress. In this case, considering the alternative of bankruptcy liquidation, the VAT claim would obtain a lower satisfaction than that offered in concordato, since assets available would not be sufficient to satisfy all secured creditors.

The Court of Appeals of Bologna confirmed that the concordato preventivo proposal may downgrade the VAT refund claim, according to the general provisions and conditions provided by Art. 160, second paragraph, IBL. In the specific case, since the debtor’s assets could not be specifically related to the specific invoices from which the VAT refund claim arose, the Court allowed the claim to be considered as an unsecured claim, although the debtor did not provide the sworn expert report required by law in order to confirm that the liquidation value of the related assets is lower than the amount of the claim.


The case submitted to the Court of Appeals of Bologna was considered in the Supreme Court decision No. 24970/2013 In that case the Supreme Court confirmed its own precedents according to which the VAT refund claim must be considered as a secured claim pursuant to Art. 2758, second paragraph, ICC and to Art. 2778, No. 7, ICC and, as such, must be fully satisfied even if the specific assets on which the lien can be enforced are missing, unless the debtor proposes that it be only paid in part according to Art. 160, second paragraph, IBL.

The issue is much different from that of the VAT claim reduction which has instead been addressed by the Court of Santa Maria Capua Vetere. The Court's decision is in conflict with  precedents  of  the Supreme Court (Nos. 22931 and no. 22932/2011) according to which the special tax settlement regime set forth in Art. 182-­‐ter IBL is mandatory in the context of the concordato even if the debtor wishes to resort to general rules of Art. 160, second paragraph, IBL allowing reduction of secured claims, because it is a substantial and not a merely procedural rule. The Constitutional Court as well ruled (decision No. 225/2014) that European law, according to the interpretation provided by the  European  Court  of Justice, constrains Member States to ensure that VAT is paid in full and allows only a delayed payment. According to the Court of Santa Maria Capua Vetere -­‐ whose interpretation deserves to be shared -­‐ the principle of a "super-­‐secured" VAT claim conflicts -­‐  on one side -­‐  with the rules of insolvency law and in particular with those regarding the ranking of creditors and -­‐ on the other side -­‐ with the aims of Italian lawmakers in enacting the reforms of the last decade.

The decision of the local Court shows that the issue is still controversial and can not be considered as finally settled.

Finally, a further situation should be pointed out where the issue of VAT claim reduction may arise, relating to disputed VAT claims: in a case followed by our firm, the Court of Reggio Emilia (29 May 2014) and the Court of Appeals of Bologna (3 November 2014) did not allow a concordato proposal to settle pending proceedings before the special Tax Courts within the regime set forth in Art. 182-­‐ter IBL, refusing to make a distinction between "VAT to be ascertained" and "VAT to be collected". The matter is now before the Supreme Court, on the assumption that the substantial consolidation of the tax debt can only occur if the tax authorities are successful in litigation with the taxpayer, or if there is an agreed clear determination of the amount due according to the special tax settlement regime in concordato, followed by confirmation by the Court.