Presentation delivered at the Summers School in European Environmental Taxation,University of Naples «Federico II». My gratitude goes to Professor Roberta Alfano for her kind invitation and to Professor Fabrizio Amatucci for chairing the session.

1. Energy Taxation: the European
Framework and the Italian Strategy
Marco Greggi, University of Ferrara
Summer School in European Environmental Taxation
University of Naples «Federico II»

2. Outline of the Presentation
1. Energy Taxation: making sense of a policy strategy;
2. Excise duties: the Italian case and the European framework;
3. Trading with Energy: charging VAT and territoriality;
4. Sources of energy: territory and beyond;
• New Italian Exclusive Economic Zone from June 9th 2021;
5. Energy and the PNRR.
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3. Addressing the Scenario
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Income
tax
Value
added Tax
Excise
Duties

4. Income Taxation
• Latest development (2020 – 2021) coherent with the Masterplan
“Industry 4.0” now (Transition 4.0);
• Overhaul of the supply chains and production systems in Italy (and
beyond);
• Legal tool used: tax credit for corporate tax purposes (Act n.187 passed in
2020, Article 1, § 1059):
• New machinery (6% - 20%);
• R&D in Green (6% - 12%);
• Credit to be used to offset tax liability only;
• Capping applies.
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5. Transition 4.0 (in a Nutshell)
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Credit: Spectral Engines GmbH

6. Any ground for “State Aid” ?
• Article 107 TFEU:
• Not the case as the measures enacted are not selective, nor create
relevant distortion to the market, nor trigger the European
constraints in the matter (Italian Tax office Ruling 157/01);
• European Commission – decision C(2018)1661 final:
• Necessity to have the measure as such, cases of cumulative application with
others (such as “Earthquake recovery plans”) to be scrutinized on different
grounds.
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7. Preliminary Findings
(Income Tax)
• Energy taxation for income tax purposes is not ruled coherently with a
long run agenda setting conditions for the promotion in the
framework of a sound financial sustainability;
• Evidence of this:
1. Measures renewed on yearly basis;
2. Tax credit used;
3. Lack of coordination with other incentives;
4. Confusion with other policies promoted (IoT, for example);
5. …
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8. Value added Taxation
and Energy
• Energy (actually, most of it) is considered as a good for VAT purposes,
although not tangible (the only exception to the VAT scheme under
directive 2006/112/EC:
• Article 14: ‘Supply of goods’ shall mean the transfer of the right to dispose of
tangible property as owner.
• (…)
• Article 15: Electricity, gas, heat, refrigeration and the like shall be treated as
tangible property.
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9. Why so Relevant ?
• Qualification of the asset as a ‘game changer’ in terms of:
• Territoriality;
• Moment in which the transaction occurs;
• Rate to be charged;
• Possibility to use special VAT regimes;
• …
• Problems on the table:
1. How can we qualify energy for VAT purposes ?
2. Literal interpretation ? Purposive interpretation ?
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10. Real-life Case
• Italian Supreme Court decision on October 10th 2019, n. 25492;
• Purchase of Co2 Emission trading certificate by an Italian Company
from a French one;
• Strategy of the taxpayer:
• VAT charged in reverse with a 10% (discounted) rate;
• Why ? The certificate in ancillary to the production of energy, therefore
qualifies fort the same rate;
• Reaction of the Office:
• No such ancillary nature occurs;
• Rate should be 20% (ratione temporis).
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11. Conclusion
• No connection exists in cases like these;
• Emission Certificate has been introduced under Article 3, directive
2003/87/EC implemented in Italy as the right to produce 1 Ton of Co2;
• They are not bonds and they have no value until the are traded;
• Legal nature unclear: arguably intangibles (financial instruments) and treated
as such;
• Therefore:
• They are to be taxed as services;
• They are not ancillary to the good (energy) they are traded for.
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12. Preliminary findings (VAT)
1. VAT system is more robust as to taxation of energy and coherent in
this respect if compared to income taxes;
2. Incentives are granted via discounted rates, where applicable;
3. Energy is normally considered as a good and treated accordingly.
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13. Excise Duties
• Single-stage tax charged on production (or consumption) of selected
goods;
• Their application and adjustment is suitable for tax strategies inspired
by Pigou (or, in some respect, Thaler);
• Article 113 TFEU demands their harmonization in the Union has to
grant the proper functioning of the market;
• Priority to oil (and derivatives), alcoholic beverages and tobacco;
• First directive (framework) 1992/12/EEC.
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14. Excise System in Italy
• Second phase of harmonization, with a specific focus on energy
(2003/96/EC);
• Necessity to grant a minimum level of taxation in the continent and
act consistently wit the Kyoto Protocol;
• Nature of Excises: Excises are taxes on consumption, not on the sale /
production, hence the moment in which they are actually charged should be
as close as possible to the final consumer (CJEU C-355/14 June 2nd 2016);
• Italy largely compliant with the European model (T.U.A. -legislative
decree- October 1995, n. 504);
• Significant leeway: audit, litigation, fines application.
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15. Preliminary finding
(Excise Duties)
• Excises duties as the most suitable legal tool to enact energy taxation
policies, due to the fast reaction of the market;
• Yet some critical aspects seems to emerge in the daily application,
these might include:
• Necessity to deal with cumulative application (with VAT);
• Necessity for a more effective policy of incentives and duties reduction;
• Urgency to make sense of over-arching EU principles applicable irrespective
of directives’ loopholes (proportionality in charging fines, rule of reason).
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16. The Agenda for the
Years to come
• PNRR and Energy taxation:
• Focus on Hydrogen, infrastructure, storage facilities, and sustainable mobility;
• Action M2C2 (page 127) set the guidelines in this respect:
• Hydrogen management and disposal with a specific excise to be charged / adjusted ?
• Need to consider Lithium shortage for the production of batteries;
• Number of issues going beyond the understanding … of the tax lawyer.
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17. The Status Quo
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18. The New Italian
Exclusive Zone
• The expansion of the Exclusive
Economic Zone and the possible
consequences on the sources of
energy (200 miles off the coast);
• Final approval on June 9th 2021 by
the Italian Senate;
• The Zone is consistent with the
UN Convention of Montego Bay
of December 10th 1982.
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Source: Limes 2021

19. Thanks for your attention.
marco.greggi@unife.it
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