The recent interlocutory order 24935/2026 from the Italian Supreme Court raises the question of whether the higher Compensazioni IVA threshold can affect penalties that were calculated under the former ceiling.
Court sends the case back for a possible referral to the United Sections
The tax chamber identified an internal conflict in its jurisprudence and returned the file to the First President. The President must decide whether to forward the appeal to the United Sections, which could deliver a definitive ruling on the retroactive effect of the new limit.
In the original dispute, the Revenue Agency had challenged a company for using 1.848.473 euros of VAT credits in 2014. At that time, article 34 of law 388/2000 set the annual ceiling at 700 000 euros. The excess of 1.148.473 euros was reclaimed together with sanctions.
The Regional Tax Court of Campania observed that the credits were legitimate, merely exceeding the statutory ceiling. It therefore left the tax amount unrecovered but kept the penalties in place.
In the meantime, the plafond has risen to 2 million euros. The taxpayer argues that it should also apply to the sanctions, because the same compensation would now fall within the permitted range.
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In practice, the question hinges on whether it erases the violation that occurred under the old rule, or whether the violation remains because the conduct was illegal at the time it was performed.
From a broader viewpoint, the issue reflects a tension in tax law between legal certainty and fairness.
Competing judicial interpretations
One line of reasoning treats the excess as equivalent to an unpaid tax, but insists that the favor rei should apply to pending cases. Under this view, the sanction would be recalculated based on the current ceiling.
A second approach characterizes the increase as an abolitio criminis, meaning the conduct becomes lawful and the penalty should be void.
A third perspective holds that it does not nullify the earlier breach. It sees the change as a simple succession of statutes without retroactive effect, leaving the original sanction intact.
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At present, the Supreme Court has not issued a final judgment. The interlocutory order merely tasks the First President with evaluating whether the appeal merits escalation to the United Sections.
For practitioners, the pending decision is immediately relevant. Ongoing disputes over excess VAT compensation may need to be re‑examined in light of the possible retroactive impact of the higher ceiling, influencing defensive strategies and the contestation of penalties.
The issue remains unsettled.
The case remains open, and no definitive ruling on the retroactive application of the new ceiling has been made yet.
