(updating to add govt has not yet found measures to compensate shortfall)
ROME (AFX) - A ruling by the European court of justice rejecting Italy's existing regime for value added taxation of company cars will cost the government 'several billion' euros in refunds, said deputy economy minister Vincenzo Visco.
The ruling is 'no joke', he said during a press conference, adding that the government is not yet able to calculate its exact impact yet.
The court rejected legislation introduced 27 years ago limiting the reimbursement of VAT on company cars whose use is not strictly limited to corporate activities.
According to Il Sole 24 Ore, the government may have to refund 10 bln eur in VAT for payments made since 2003.
Visco was speaking after a cabinet meeting which issued a decree set a Dec 15 deadline to apply for a refund.
The minister added that the government will be able to quantity the refunds once the applications are received.
The government has not yet identified measures to compensate the impact of the refunds on the public purse, Visco said.
Italy has pledged to cut its public deficit to 2.8 pct of GDP in 2007 from 4.1 pct in 2005, to respect the EU stability and growth pact's limit of 3 pct deficit.
The government is also awaiting a European court of justice ruling on the legitimacy of the regional corporate tax IRAP.
Visco said he is confident of a favourable ruling by the court after the tax was authorised by the European commission.
philip.webster@afxnews.com pw/jlw/pw/cml COPYRIGHT Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
© 2006 AFX News
