The Firm has recently advised and represented a Client in a dispute concerning a payment notice for Municipal Tax on Advertising (“ICP”) pursuant to Italian Legislative Decree N. 507/1993, served by the tax collection agency of the locally competent Municipality. In particular, with regard to the rules provided by Italian Decree N. 507/1993 in relation to advertising through the use of vehicles, Article 13 of that decree provides the exemption from the tax depending on the surface occupied by the trademark and on the company details of the business performing the transport:
- with some precise and stringent limitations, for the companies producing goods and services which perform the transport of their own goods as a purely instrumental activity (Paragraph 4);
- without limitations to the surface covered by such indications, for companies engaged in the transport for hire and reward and with regard to the vehicles used for such activity (paragraph 4-bis).
In the case at hand, the Client and recipient of the aforementioned payment notice was a company operating in the field of the carriage of goods for hire and reward which, as such, deemed it could legitimately benefit from a total exemption from the tax referred to in art. 4-bis.
Despite these – already communicated and reiterated – circumstances, the tax collection agency served a notice of payment of ICP on the Client, without taking into any consideration the above derogation expressly laid down by the law.
The primary reason underlying the issue of the aforementioned payment notice, lies in the fact that, in the present case, the holder of the right of ownership of the means of transport was a business which was legally separate from the business which concretely performed the haulage and whose logo and whose company details were shown on the vehicles used for this purpose. In other words, the vehicles were owned by Company Alpha, but those same vehicles were displaying the company details and logo of Company Beta.
Despite the existence of a documented relation of corporate control between the two Companies Alpha and Beta, the tax collection agency requested the payment of the allegedly due ICP by applying a very restrictive interpretation of the exemption granted by the aforementioned paragraph 4-bis. Specifically, according to the initial approach of the tax collection agency, the applicability of this exemption should have been limited to the cases in which there was correspondence between the ownership of the means of transport (Company Alpha) and the trademark and company details shown on them (Company Beta).
Said approach was contested by the Client with the assistance of the Firm. It was in particular pointed out that the reason underlying the exemption for carriers is inconsistent with a purely literal interpretation of the rule, and that there are no discernible systematic reasons supporting this unjustifiably restrictive interpretation. To support these arguments, it was also pointed out that the measure through which the quoted paragraph 4-bis was introduced into the legal system was a legal provision (Law 27 February 2002 n. 16) concerning a number of tax reductions for road hauliers. Furthermore, the attention was drawn to the case-law according to which, for the purposes of the exemption laid down in paragraph 4-bis, it must be considered sufficient that:
- a) the vehicles are owned by and/or are available to a road haulage company;
- b) that they are actually used in road transport activities; and
- c) that the display of the logo and company details is referable to a road haulage company for hire and reward and thus not aimed at promoting the demand for goods and services produced by third parties.
As the deadline to challenge the notice of payment before the competent Commissione Tributaria Provinciale (Tax Court) approached, the tax collection agency requested the annulment of the notice under the self-protection system, fully accepting the arguments the Firm had submitted on behalf of the Client.
In light of the above, it would appear that, for the purposes of the application of the exemption set out in the above mentioned paragraph of Article 4-bis, it is legitimate to favour a substantialist interpretation that takes into account the need to guarantee the actual application of the benefit laid down by the law in favour of road haulage companies.
(Bologna Office – Alessandro Vacca – 0039(0)512750020)
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