**4. The "right to be heard" in tax proceedings as a general principle of European law**

**3. The "right to be heard" in tax proceedings in Italian Supreme** 

The Italian Supreme Court (ISC) has enhanced the "right to be heard", since the decision 29

With the decision n. 19667 and n. 19668 of 18 September 2014, the ISC reiterated the existence of the "right to be heard" even if tax laws have not at provided this right, as occurred in the case of the registration of a mortgage according to art. 77 D.P.R. n. 602 of 1973 to guarantee tax credits. A further step forward in the definition of the problem came from the ordinance of ISC n. 527

However, precisely with regard to the checks carried out at office of the tax authority, the subsequent sentence of ISC, Joint Sections, 9 December 2015, n. 24823, has changed its orientation. The ISC, which reaches conclusions diametrically opposed to the previous decision n. 19667/2014, after a long excursus of the previous jurisprudence of the same Court, affirms that the guarantees provided by the art. 12, paragraph 7, of the law n. 212/2000 operate only in the presence of tax audits carried out where the taxpayer takes its activity and not in other cases. This is because there is a number of legislative provisions that prescribe the "right to be heard" in different times, but there is not an express legislative provision that provide in

The Court's thesis is not to be shared. This is because the widespread presence of norms that provide the "right to be heard" leads us to believe, where we proceed with an interpretation oriented by the art. 3 and 97 of the Constitution, that exists a general principle and that the plurality of provisions is linked to the need to provide different methods of contradictory

Furthermore, cannot be shared the Supreme Court's argument that the "right to be heard," which derives from the European legal system, is applicable only in the case of an investiga-

In fact, the tax assessment notice, which concludes the proceeding, is normally based on facts that regard at the same time a tax claim both as VAT (harmonized tax) and as IRPEF (or IRES) and IRAP (taxes not harmonized). In the case of non-compliance with the principle of the "right to be heard", in presence of the same facts, would be issued in the same tax assessment

Furthermore, cannot be shared the Supreme Court's argument that the "right to be heard," if not provided by law, is allowed only if, in accordance with the jurisprudence of the Court of Justice, it is shown that, in the absence of such irregularities, the tax procedure could be

This last statement raises a lot of perplexity, considering that the outcome of a dispute, according to the principle of legal certainty, cannot be entrusted to an assessment, inevitably

of 14 January 2015, concerning the checks carried out at the office of the tax authority.

general the obligation of the "right to be heard" in every tax procedure.

procedure in relation to the specific tax assessment method adopted [10].

**Court case law**

130 Public Management and Administration

July 2013, n. 18184, Joint Sections [9].

tion concerning the taxes harmonized.

concluded with a different result [11].

procedure a partial, rather than total, judgment of the act.

The supremacy of European law (EU), through the European Court of Justice (ECJ), has influenced the exercise of national tax sovereignty within the European Union [12].

The supremacy of EU law is the key to understanding how taxation has evolved within the European Union from a purely national to a supranational dimension [13].

The impact of ECJ case law on Italian taxation reveals a fairly extreme picture of the critical issues that arise in such a context.

The impact of ECJ case law on administrative tax practice within the framework of tax auditing and collection procedures involves aspects that can also be relevant from the perspective of ensuring the protection of human rights [14].

From the perspective of ECJ case law, the principles of proportionality and suitability may be invoked to prevent unreasonable inspections, or the payment of guarantees that would not be needed to protect the interest of the tax authorities (based on the line of reasoning developed by the ECJ in de Lasteyrie (C-9/02) 11 March 2004).

Likewise, the ECJ regards the auditatur et altera pars principle as a general principle of EU law, which gives taxpayers the "right to be heard" before a tax measure affects their personal sphere (Case C-349/07, Sopropé (18 December 2008, Para. 36).

Similarly, following ECJ case law, the duty of cooperation on the part of tax authorities should require them to reopen a final administrative tax act based on misinterpretation of (or a conflict with) EU law when this is allowed under national procedural law and the person directly affected has, in a timely manner, filed a complaint against such an act (Case C-453/00, Kühne & Heitz (13 January 2004, Para. 28).

In this direction we can also consider the case law of ECJ 12 February 2015 (C-662/13) and the case law 3 July 2014 (C-129/13 and C-130/13) Kamino International Logistics BV and Datema Hellmann Worldwide Logistics BV.

However, the jurisprudence cited above added a provision which could give rise to ambiguity, stating that the national court, having the obligation to ensure the full effectiveness of Union law, in assessing the consequences of an infringement of the right of the defense, in particular "the right to be heard", can consider that such infringement leads to the annulment of the final decision taken at the end of the administrative procedure only if, in the absence of such irregularity, that procedure could have led to a different result.

In this way the Court has opened to an interpretation that diminishes the same value of contradictory procedure, evaluating it on the proof that the result of the administrative procedure would have been different.

oppose to that transfer of information it is not recognized and even the opportunity to expose

The Involvement of the Taxpayer in the Public Administration Decision

http://dx.doi.org/10.5772/intechopen.74866

133

The protection of the taxpayer in the exchange of information is therefore subject to rules of

The subject may therefore oppose the procedure by maintaining that it is illegitimate only if one of the countries involved in the exchange established precise provisions on this. In some jurisdictions, like in the Italian one, the protection of the rights of the taxpayer appears subordinate to the appeal of the subject against an act emanated to him. In case the inquiry concerns information requested by another administration, the lack of administrative or judicial tools available for the taxpayer seems to make it impossible for any action to protect the injury of

On 22 October 2013, the Court of Justice of the European Union (ECJ) issued an important judgment in the case of Sabou v. The Czech Republic (Case C-276/12) concerning the application of the right of defense in the context of tax information exchange procedures. This was the first decision where the ECJ addresses the protection of the taxpayer's right of defense in the framework of international mutual assistance procedures in tax matters. In this regard, the ECJ adopted a twofold approach, considering both the provisions of the former Directive (the

So, the problem is the fact that tax authorities are not bound to confer on taxpayers the "right to be heard" during the information-gathering stage, which includes both actions undertaken

Therefore, it could be said that the right of defense, considered a general principle of EU law and also laid down in art. 41 of the Charter of Fundamental Rights of the European Union (EU Charter), does not oblige the requested state to inform the taxpayer about the existence of a request for information concerning him, the data-gathering process or the transmission of the

Notwithstanding this, the ECJ established a kind of twofold "balancing mechanism" from the point of view of the taxpayer's rights of defense: firstly, the "right to be heard" (as a general principle of EU law) should be granted before any decision is adopted at the end of the administrative proceedings by the tax authorities of the requesting Member State and, secondly, the affected taxpayer should be able to challenge, in accordance with its domestic rules and procedures, the accuracy and probative value of the information provided by the requested state in the context of tax proceedings within the requesting Member State where

The Sabou decision shows that the fundamental right of defense of taxpayers affected by an exchange-of-information procedure in the requesting state (usually the country of the taxpayer's residence) is linked to the administrative and/or judicial proceedings implemented by the tax authorities of the requested state in order to gather the information. However, and despite such "interconnection", it must be clear that the rights of the taxpayer affected by the request for information in the requested state are independent of those which can be conceded by the

previous one n. 77/799/EEC) and the fundamental "right to be heard".

in the requesting state and those carried out by the requested Member State.

national law on the exercise of the instructing powers by the financial administration.

its reasons in the course of investigation.

information to the requesting state.

such information is used.

requesting state.

his rights.

However, even the European treaties provide the "right to be heard" [15].

In particular, art. 6 of the Treaty on the Functioning of the European Union undoubtedly guarantees substantial rights of the person. And so also art. 6 of the European Convention on Human Rights, which until now has found peaceful application in the protection of domicile and correspondence and in the application of sanctions, although not yet in the matter of taxes.

In the same way art. 41 of the European Charter of Fundamental Rights, which has the same legal value as the European treaties, establishes the right to good administration.
