Assets of a trust attacked by the Tax Authority
The Court of Cassation, with Ordinance no. 14201/20, has once again ruled on the claims made by the Italian Tax Authority against professional’s assets included in a trust.
In the present case, the taxpayer had challenged the notice of mortgage registration issued by Equitalia, claiming that a trust had been set up on the assets covered by that registration.
The Regional Tax Court of Lombardy had considered mortgage registration eligible, as it referred to Irpef, Irap, VAT and taxable transactions on current accounts, prepaid cards and savings deposits inherent to the professional activity of the taxpayer, whose income was intended to support the family.
Faced with this ruling, the taxpayer recurred to the Court of Cassation, citing the nature of the resources used to meet the needs of the family as the main reason.
The patrimonial fund, defined by art. 167 of the Civil Code, may be set up by one or both spouses, allocating certain assets, real estate or movable property registered in public registers or debt securities, to meet the needs of the family.
According to the provisions of art. 170 of the Italian Civil Code, creditors are not allowed to enforce the debt on the assets of the fund when the debt has been contracted for “purposes unrelated to the needs of the family” and the proceeding creditor is aware of this condition.
On this point, an increasingly restrictive interpretation of ‘purposes unrelated to the needs of the family’ seems to be established in case-law. In particular, the Supreme Court has stated that even a debt of a tax nature, arising from the exercise of an entrepreneurial, professional, or working activity, can satisfy, albeit indirectly, the needs of the family. Debts incurred in the performance of an economic activity are, in fact, likely to increase the income and improve the standard of living of the family, thus legitimizing the creditor to act enforceably on the assets included in the fund.
Faced with this interpretation, the taxpayer attempted to demonstrate that the family’s needs were met through income other than income from their professional activity. The extraneousness of the tax debts to the “needs of the family” constituted, therefore, an impediment to the execution on binded assets.
However, this challenge was irrelevant to the Supreme Court, given that “the existence of other income which cannot be concealed does not in itself demonstrate that the tax debt is to be considered to be incurred for purposes unrelated to the needs of the family, having regard to the event giving rise to the obligation and irrespective of the nature of the obligation“.