Ivo Taricco

By preventing, in cases of serious fraud in relation to VAT, the imposition of effective and dissuasive penalties because the overall limitation period is too brief, Italian law is liable to affect the financial interests of the European Union.

In such a case, the Italian court must if need be disapply the overall limitation system in question.

The Court concluded that :

A national rule in relation to limitation periods for criminal offences (...) which provided (...) that the interruption of criminal proceedings concerning serious fraud in relation to value added tax had the effect of extending the limitation period by only a quarter of its initial duration — is liable to have an adverse effect on fulfilment of the Member States’ obligations under Article 325(1) and (2) TFEU if that national rule prevents the imposition of effective and dissuasive penalties in a significant number of cases of serious fraud affecting the financial interests of the European Union, or provides for longer limitation periods in respect of cases of fraud affecting the financial interests of the Member State concerned than in respect of those affecting the financial interests of the European Union, which it is for the national court to verify. The national court must give full effect to Article 325(1) and (2) TFEU, if need be by disapplying the provisions of national law the effect of which would be to prevent the Member State concerned from fulfilling its obligations under Article 325(1) and (2) TFEU.

After this judgment, the Italian Constitutional Court has referred further questions to the Court of Justice.