The Lazio Regional Administrative Court has dismissed an appeal filed by Italian Tobacco Manufacturing and Manifattura Italiana Tabacco, confirming the legality of Italy’s excise duty calculation on cigarettes. The decision concludes a six-year dispute with the Customs and Monopolies Agency and denies compensation claims filed by smaller domestic producers.
Dispute Over Minimum Tax Burden and Market Competition
The litigation originated from an administrative challenge against a January 13, 2020 measure that established the calculation method for the Minimum Tax Burden (Onere Fiscale Minimo, or OFM) on retail cigarette prices. The appellant companies argued that the calculation rules favored dominant industry operators—who control roughly 90% of the market—and distorted competition for smaller manufacturers.
During proceedings, the plaintiffs filed supplementary petitions challenging subsequent administrative measures that reinforced the initial calculation mechanism.
Judicial Findings on Damages and Administrative Powers
The Regional Administrative Court previously referred the constitutionality of the tax provisions to Italy’s Constitutional Court on two separate occasions. Both referrals resulted in the Constitutional Court declaring the challenges inadmissible.
Following those decisions, the tobacco manufacturers sought financial damages. The administrative court rejected the claim, stating that the tax authority acted strictly within the legal framework:
“The legitimacy of the Administration’s actions, which, in application of the current regulatory framework, determined the amount of the charges due without any exercise of discretion, as the present case constitutes the exercise of a binding administrative power.”
The court clarified that state liability for damages requires proof of unlawful conduct and administrative fault. Because the agency correctly enforced existing, binding legislation, no basis for compensation exists.
