Rome: Italy’s constitutional court must decide whether a 2023 windfall tax on energy firms is lawful, an administrative tribunal ruled on Tuesday, in a decision that could have significant repercussions for Rome’s strained public finances.
Last year the Treasury raised almost 3.5 billion euros ($3.8 billion) from some 7,000 producers and sellers of electricity, gas and petrol products which benefited from the surge in oil and gas prices seen in 2022, people familiar with the matter said.
The administrative court in the central Lazio region said in a statement it had found claims of constitutional illegitimacy raised by the affected companies to be potentially valid and asked the supreme court to rule on the matter.
If the constitutional court rules against the government it would limit the scope to impose similar taxes in future or, in a worst case scenario for public finances, force highly indebted Italy to reimburse the sums collected.
The levy had a rate equal to 50% of the part of 2022 corporate income which was at least 10% higher than the average income reported between 2018 and 2021.
In seeking a ruling from the constitutional court, whose timing is still to be decided, the administrative judge said the tax had hit firms outside European regulations that set principles for emergency energy measures, including windfall taxes.
Moreover, the Italian companies affected could not deduct the levy from other corporate taxes and this could imply an illegitimate form of double taxation, the statement said.