Country-specific updates: Italy

Italian Supreme Court, Judgement no. 35915 of 22 November 2021

A sale made under a sale and leaseback agreement does not constitute a supply of goods for VAT purposes as it should be considered as a whole single transaction having financing purpose every time (i) it does not result in the physical transfer of the tangible asset entailing the purchaser-supplier to act as the owner of the asset itself, (ii) it only satisfies the company's real cash-flow needs and, as such, (iii) it has no tax avoidance purpose.

DLA comment:

In accordance with ECJ’s case law principle (see ECJ, case C-201/1827 Mydibel SA v Belgian State), the Italian Supreme Court reaffirmed that once the above mentioned requirements have been verified, the sale and leaseback qualifies as a single transaction having financing purpose subject to VAT exempt regime. Therefore, such transaction does not give rise to VAT recoverability. The same conclusions have already been stated by the Italian Supreme Court with judgment no. 18439/2021 and 11023/2021. The approach held by the EJC and recalled by the Italian Supreme Court clashes with the “two-steps transaction” formal approach held by the Italian Tax Authority in the past (i.e. Ministerial Circular dated 26 May 2000, no. 20/42441), where leaseback was split in (a) sale of asset followed by (b) a supply of service.

Italian Supreme Court, Decision no. 33313 of 11 November 2021

Due to conflicting case law and doctrinal opinions, the Italian Supreme Court decided to entrust to the United Chambers of the Italian Supreme Court to clarify whether the “note of debt recognition” (nota di riconoscimento di debito) might fall under the concept of “deposit in case of use” (deposito in caso d’uso) and therefore whether it should be taxable  for registration tax purpose.

DLA comment:

While waiting for the Italian Supreme Court United Chambers judgement, with reference to the first question of law, it seems correct to conclude that a “note of debt recognition” should not be included in the concept of “deposit in case of use” in order to avoid that such taxation hinders the demand for justice.

Therefore, with reference to the second question of law, it seems correct to conclude that a note of debt recognition should not be taxable for registration tax purpose.