Lease for non-residential use: when the translation of the tax burdens relating to the property is not null and void
The contractual clause which places on the lessee the burden of paying all the taxes, duties and charges relating to the leased asset is legitimate if the payment is a supplement to the total rent owed to the lessor.
This is the opinion expressed by the Joined Chambers of the Italian Court of Cassation, in the recent judgement n. 6882/2019, regarding the validity of the clause of a commercial lease contract which attributed to the lessee the burden of taking on any tax, duty and charge relating to the leased asset, so releasing and holding harmless the lessor, required to pay only income taxes.
The case was brought to the Court’s attention by the lessee (a company using the property as an office), who took legal action against the lessor in order to obtain the repayment of the amounts paid due to the contractual clause mentioned above, deducing its nullity as it was aimed at transferring the burden related to ICI and IMU on a subject other than the one required by law to suffer the relative patrimonial sacrifice, in contrast with the principles set out by art. 53 of the Constitution, according to which people are required to contribute to public expenses on account of their actual ability to contribute.
According to the remitting Chamber, it was necessary to clarify whether, beyond the hypotheses in which there are express taxes’ translation prohibition, the art. 53 of the Constitution (considered a mandatory rule) may constitute a general limit to private negotiating autonomy in order to identify the person subject to the tax, preventing the parties from neutralizing, on a contractual basis, the effects of their effective capacity to contribute.
In the decision under discussion, the Supreme Court has adopted the same argumentative principles stated in other precedents on the matter:
– confirming the centrality assumed by the tax duty in our constitutional system;
– underlining how private autonomy cannot contravene the criterion of the progressive nature of taxation (article 53 of the Constitution);
– noting that in the current constitutional tax system the tax obligation must be fulfilled objectively in a complete way, and also exclusively by the subject required to do so by law;
– highlighting, in the end, that a tax translation agreement is null and void only when, due to its effect, the tax is not paid by the recipient of the income, and not in the different hypothesis in which the contractual clause with which the translation is agreed upon has, as its object, not directly the tax burden but a sum equal to the tax, integrating the price of the contractual performance (in this case, the rental fee).
It is on these assumptions that the Italian Court of Cassation therefore rejected the lessee’s appeal, interpreting the clause in question in the light of the previous negotiations between the parties and the practical interest they intended to achieve, concluding that, in this case, they wanted to determine the rent in two different components, one consisting of the actual fee, the other as a supplementary component of the latter, constituted by the agreement to translate upon the lessee the tax charges relating to the asset leased.