Judgment Italgomme Pneumatici S.r.l. v. Italy - Italy must bring its legislation and practice into line with the Court’s findings on tax-related inspections and audits of business

issued by the Registrar of the Court   ECHR 034 (2025)   06.02.2025   Italy must bring its legislation and practice into line with the Court’s findings on   tax-related inspections and audits of business premises   In today’s Chamber judgment1 in the case of Italgomme Pneumatici S.r.l. v. Italy (application   no. 36617/18 and 12 other applications) the European Court of Human Rights held, unanimously,   that there had been:   a violation of Article 8 (right to respect for home and correspondence) of the European Convention   on Human Rights.   The case concerned access to and the inspection of business premises, registered offices or premises   used for professional activities. The inspections involved the examination, copying and seizure (in   some cases) of accounting records, company books, invoices and other mandatory   accounting-related documents, as well as several different types of documents relevant for tax   assessment purposes. This was carried out by officers or agents from the Revenue Police (Guardia di   Finanza)  a militarised police force under the Ministry of Economy and Finance  or from the Tax   Authority (Agenzia delle Entrate) in order to assess the applicants’ compliance with their tax   obligations.   The Court found in particular that, even though there was a general legal basis in Italian law for the   measures in question, that law did not meet the “quality of law” requirement of Article 8 of the   Convention. Even taking into account the wide discretion that States held in this respect, the Court   considered that the national legal framework gave the domestic authorities unlimited leeway as   regards the scope of the measures and the way in which they could be implemented. Moreover, it   did not provide sufficient procedural safeguards, as the legality, necessity and proportionality of the   measures were not subject to sufficient review. All in all, it had not provided the applicants with the   minimum degree of protection to which they were entitled under the Convention.   Under Article 46 (binding force and enforcement of judgments) the Court found that general   measures at national level were required. It called upon Italy to bring its legislation and practice   into line with the Court’s findings in this case.   Principal facts   The 13 applicants are all legal entities, except for Mr Terrenzio, an Italian national who lodged his   application on behalf of a company of which he is the sole proprietor (ditta individuale).   On various dates between 2018 and 2022, the applicants’ business premises, registered offices or   premises used for professional activities were accessed by officers or agents of the Revenue Police   or the Tax Authority in order to assess their compliance with their tax obligations. The authorisations   to carry out the inspections were issued by the local head of either the Tax Authority or the Revenue   Police in line with presidential decrees.   The applicants and their representatives were asked to produce accounting records, company books,   invoices and other mandatory accounting documents, as well as several different types of   1. Under Articles 43 and 44 of the Convention, this Chamber judgment is not final. During the three-month period following its delivery,   any party may request that the case be referred to the Grand Chamber of the Court. If such a request is made, a panel of five judges   considers whether the case deserves further examination. In that event, the Grand Chamber will hear the case and deliver a final   judgment. If the referral request is refused, the Chamber judgment will become final on that day.   Once a judgment becomes final, it is transmitted to the Committee of Ministers of the Council of Europe for supervision of its execution.   Further information about the execution process can be found here: www.coe.int/t/dghl/monitoring/execution.   documents relevant for tax assessment purposes relating to the years under audit. The requests did   not concern only records and books which the applicants were legally obliged to keep, but also other   off-the-book records (scritture extracontabili) in their possession, such as ones relating to   transactions, assets or liabilities. They were informed that the officers or agents carrying out the   audits were bound by professional secrecy as regards the information acquired, and that the audits   were subject to the guarantees and safeguards provided for by Law no. 212 of 27 July 2000. They   were further informed that if they refused to produce the documents requested, they would be   prevented from relying on them as evidence in their favour in any subsequent administrative and   judicial proceedings and the Tax Authority would be allowed to assess how many transactions had   taken place and how much income had been received by resorting to presumptions (presunzioni   semplici) based on other data and items available to the authorities.   The applicants complied with the domestic authorities’ requests, by letting the officers and agents   carry out the audits and producing the documents requested. Those documents were copied if they   were in electronic format and in some cases they were seized; in other cases, they were left with the   applicants, but sealed and stored and kept at the tax and police authorities’ disposal in order to be   examined further.   Complaints, procedure and composition of the Court   Relying on Article 8 (right to respect for home and correspondence) taken alone and in conjunction   with Article 13 (right to an effective remedy), and on Article 6 § 1 (access to court), the applicants   complained of the excessively wide discretion that national legislation gave to the authorities for   such measures and of the lack of sufficient procedural safeguards capable of protecting them against   abuse or arbitrariness. They complained in particular that there had been no judicial or independent   review of the measures either before they came into force or afterwards.   The applications were lodged with the European Court of Human Rights between 18 July 2018 and   15 April 2022.   Judgment was given by a Chamber of seven judges, composed as follows:   Ivana Jelić (Montenegro), President,   Erik Wennerström (Sweden),   Alena Poláčková (Slovakia),   Georgios A. Serghides (Cyprus),   Raffaele Sabato (Italy),   Alain Chablais (Liechtenstein),   Artūrs Kučs (Latvia),   and also Ilse Freiwirth, Section Registrar.   Decision of the Court   Due to the similar subject matter of the applications, the Court examined them jointly in a single   judgment.   Article 8   The Court noted that, although the inspection visits did not equate to search and seizure operations,   taxpayers were nonetheless made to comply with them to prevent their tax assessments being   based on presumptions. Therefore, it considered that that constituted an interference with the   applicants’ right to respect for their “home” and “correspondence” within the meaning of Article 8   of the Convention.   2 After weighing up whether that interference was justified, the Court concluded that even if it could   be said that there was a general legal basis in Italian law for the measures in question, that law did   not meet the “quality of law” requirement of Article 8 of the Convention. Even taking into account   the wide discretion that States held in this respect, as well as the relatively mild nature of the   interference, and the taxation context, the Court considered that the national legal framework gave   the authorities unlimited leeway as regards the scope of the measures and the way in which they   could be implemented. For instance, in relation to business premises, no specific justification for   authorising the measures was required, and when the measures were implemented by officers of   the Revenue Police, no written authorisation was required at all. In addition, the Tax Authority’s and   the Revenue Police’s power to decide on the need for, number, length and scale of the inspections   and the information that was requested and then copied or seized was not regulated in the slightest.   The Court also found that the legal framework did not provide sufficient procedural safeguards, as   the legality, necessity and proportionality of the measures were not subject to sufficient review. The   remedies put forward by the Government  a complaint to the tax courts, a complaint to the civil   courts, and a complaint to the Taxpayer’s Guarantor  were not considered to be effective remedies.   Therefore, the Government’s preliminary objection that the applicants had not used all the legal   avenues available at national level was dismissed.   All in all, the legal framework did not provide the applicants with the minimum degree of protection   to which they were entitled under the Convention. The Court found that, in these circumstances, it   could not be said that the interference in question was “in accordance with the law” as required by   Article 8 § 2 of the Convention. There had, therefore, been a violation of that Article.   Article 6   As the Court had already dealt with the main legal questions raised by the case, it did not see a need   to examine the complaints raised in eight of the applications under this Article.   Article 46 (binding force and enforcement of judgments)   In the light of the violation found, the Court found it crucial that Italy adopt appropriate general   measures with a view to bringing its legislation and practice into line with the Court’s findings.   First, the domestic legal framework, if necessary by means of relevant administrative practice   directions, should clearly indicate the circumstances in which, and the conditions on which, the   authorities are allowed to access premises and carry out on-site audits and tax checks on business   premises and premises used for professional activities. Safeguards should be established to avoid   indiscriminate access, or at least to prevent the retention and use of irrelevant documents and   items. The taxpayer must have the right to be informed of the scope of the audit beforehand, or at   the very latest as it was starting, the reasons for it, his or her right to be assisted by a professional,   and the consequences of refusing to allow it to go ahead.   Secondly, the legal framework should clearly provide for an effective judicial review of a contested   measure, and in particular a review of the authorities’ compliance with the criteria, scope and   conditions justifying that measure. If a taxpayer believes that the persons carrying out an audit are   not acting in accordance with the law – a possibility already alluded to in section 13 of Law no. 212   of 27 July 2000 – some form of simplified interim and binding review should be available before the   audit is finalised.   Just satisfaction (Article 41)   The Court held that Italy was to pay each of the applicants 3,200 euros (EUR) in respect of   non-pecuniary damage. As no claims for costs and expense had been submitted, no award was made   in that respect.   3 The judgment is available only in English.   This press release is a document produced by the Registry. It does not bind the Court. Decisions,   judgments and further information about the Court can be found on www.echr.coe.int. 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