In 2012, the taxpayer company (in liquidation, subsequently struck off the companies’register in 2013) applied to the tax Office for a refund of VAT paid in previous years, claiming that it had been non-operational for the first two years and that, for the year 2010, it was exempt from the operationality test applicable to non-operational companies, due to the absence of tangible fixed assets (following the demolition of the building in which the business activity was to be carried out). 

The Tax Authority denied the refund, pursuant to art. 17 of Leg. Dec. n. 241/1997, classifying the company as non-operational, due to the absence of supplies of goods or services. 

The Authority therefore disallowed the VAT credit pursuant to art. 30 of Law n. 724/1994, according to which, where for three consecutive tax periods a non-operational company or entity does not carry out transactions relevant for VAT purposes... the excess credit may no longer be carried forward to offset VAT payable in subsequent tax periods. 

The company challenged the assessment before the Provincial Tax Court (CTP), which upheld the appeal, holding that: a) the subsequent liquidation status had removed the condition of being a shell company; and b) art. 30 could not apply in the present case, since the operationality test, not passed in 2008 and 2...