CEDU and tax audits: new scenarios for taxpayer rights in the Italgomme Case

The European Court of Human Rights issued a judgment on 6 February 2025 in the case of Italgomme Pneumatici S.r.l. and Others v Italy (application no. 36617/18). The court found a conflict between the Italian legal framework on tax audits and Article 8 of the European Convention on Human Rights (ECHR). Article 8 protects the right to respect for private life and home – a concept that includes business and professional premises when these constitute the seat of a business activity.

According to the court, the Italian legal framework gives the tax authorities investigative powers whose breadth and pervasiveness are not balanced by adequate judicial safeguards, neither before access is granted nor when the audit activity is completed.

The ECHR identified three key aspects of the Italian tax audit rules that need structural reform:

 

Lack of prior judicial review of tax inspections

Current legislation allows the tax authorities to access business premises without prior authorization from a judicial authority, unlike in cases involving access to private homes. The ECHR pointed out that that this approach doesn't provide an adequate balance between the power of assessment and the taxpayer’s rights, as the decision to carry out an inspection is based solely on administrative authorisation, without a judicial review.

 

Absence of effective post-audit control

The taxpayer doesn't have any tools to immediately challenge the legitimacy of a tax audit, other than appealing against any subsequent tax assessment before the judge. The court noticed that not having an immediate protection mechanism puts the taxpayer at risk of being subject to illegal or disproportionate audits, without the chance to get an injunction.

 

Disproportionate and extensive measures by the tax authorities

The judgment highlighted that Italian tax audits can involve acquiring huge amounts of data and documents, without adequate delimitation of the scope of the investigation. The court held that a tax inspection cannot result in the indiscriminate collection of information, but must be limited to what is strictly necessary for the ongoing assessment.

The ECHR judgment could represent a turning point in the Italian tax audit system, prompting the legislator to revise the legal framework to ensure a better balance between the prerogatives of the tax authorities and the fundamental rights of taxpayers.

At the same time, businesses involved in ongoing proceedings will need to carefully assess the impact of the ECHR ruling on their procedural position. They should consider the possibility of raising objections to the admissibility of evidence obtained in breach of procedural safeguards or reformulate their defence strategies in light of the principles established by the court.

Pending any legislative or judicial developments, it's essential that companies closely monitor the effects of the ruling, adopting a strategic approach in managing tax audits to prevent potential critical issues and ensure effective protection of their rights during litigation.