Italy MOF Posts Tax Court Judgement on Deducting Costs From Subjectively Non-Existent Transactions

The Italian Ministry of Economy and Finance Feb. 1 posted Tax Court Judgment No. 1446, clarifying the deductibility of costs arising from subjectively non-existent transactions. The taxpayer, a company, claimed a deduction for purchasing a machine from a supplier, which it then exported. The Revenue Agency found the transaction to be untraceable and lacking economic substance and disallowed the deduction. On appeal, the First Instance Tax Court of Turin found that: 1) costs deriving from objectively non-existent transactions can’t, in any case, be deducted; 2) for subjectively non-existent transactions, the underlying transaction may still have had concrete economic substance; 3) ...