Gtres
Gtres

With its recent judgement 6882/2019, the Sezioni unite della Cassazione (Joint Session of the Court of Cassation in Italy) stated that is was lawful for a landlord to place a clause in an Italian lease agreement stating that the taxes and duties relating to the rented property should be borne by the tenant.

In announcing this judgement, the Court intervened on the subject after the pronouncements of 1985, numbers 5 and 6445.

The court case in question concerned a non-residential rental contract in which there was a specific clause stated that "during the entire duration of the contract, the tenant shall bear all taxes, duties and charges relating to the leased property and this contract, and consequently shall indemnify the landlord in respect of the same; the landlord shall be required to pay taxes, duties and charges relating to his income".

The clause was challenged by the tenant. It was claimed that the clause aimed to pass on to him "the tax burden relating to the ICI and the IMU", even though it was the owner who should have been obliged to pay these taxes and therefore the contract was clearly in conflict with the principle stated in Article 53 of the Italian Constitution of the contribution to public expenditure because of his ability to pay and with Article 79 of Law 392/1978.

The tenant's challenge was rejected by the Florence Court of Appeals and the Supreme Court has already issued an interim order (28437/2017), according to which this agreement does not represent a transfer of the tax obligation from the landlord to the tenant, but a "mere integration" of the rent due.

By judgement 6882/2019, the Cassazione referred to the two judgments of 1985, number 5 and number 6445, but concerning direct taxes.

Judgement 5/1985 declared void in general terms a clause that "passes on to another person (...) the burden of their tax," while judgement 6445/1985 clarified that this does not apply when the tax has been paid by the taxpayer and the clause has the function of supplementing the "price" of the negotiated service, whereby in practice the tenant refunds the landlord-taxpayer for the same amount as the tax they have paid.

With its ruling, the Joint Session made it clear that, as far as the ICI-IMU property tax is concerned, the transfer of responsibility from lessor to lessee is not prohibited by any specific rule (unlike other taxes in Italy such as stamp duty and direct taxes). It follows that the principle set out in judgement 6445/1985 must still be considered valid and the clause must be understood as "making a refund" or "making a different form of payment" to be paid by the tenant to their landlord.

From the original Italian article: Affitto, l’inquilino può rimborsare l’Imu al posto del locatore (Il sole 24 ore)