The Legislative Decree no. 504 dated December 30th, 1992 (hereinafter “the ICI Law”) has introduced in Italy, as from 1993, the local property tax (so-called in Italy “Imposta Comunale sugli Immobili (ICI)”) in order to affect buildings (both residential and industrial), construction areas and agricultural lands situated in Italy.
This tax is a real-bases tax and is calculated according to the result of the multiplication of the rate provided for the taxable income which is determined by peculiar calculation criteria, varying in accordance with the type of estate (buildings, construction areas and agricultural lands) and their classification in the Cadastral Register (building class A, B, C, D, E) or in the Land Register.
As provided for by Article 3 of the ICI Law, the taxable persons are only owners of buildings/lands and holders of real enjoyment rights on buildings/lands such as usufruct, use, housing, perpetual lease, right of common on the building itself, even though they are not resident or they have no registered office and/or perform no activities in Italy. Please note that the only exception to the above mentioned rule is represented by the leasing contract where the taxpayer is the lessee.
Every year each municipality (“Comune”) fixed the tax rate of the ICI through a special resolution. As provided for by Article 6 of the ICI Law, the tax rates must range between 4 and 7 per thousand.
In addition, each municipality can provide both for tax deductions and for tax reductions for the reason of special estate, uninhabitable buildings and for the so-called “main residence of individual persons” (the houses where the owner or the holder of another real right usually lives).
ICI ON AGRICULTURAL LANDS
Based on the rules provided for by Article 2135 and following of the Italian Civil Code, a land can be defined as agricultural if it is uses to carry out one of these activities: cultivation, farming, forestry, breeding and similar activities.
If a land is used for one of the above mentioned activities, it can be registered by its owner into the Land Registered with the classification of agricultural land (hereinafter “Land(s)”).
For an ICI point of view, taxable persons are only the Landowner(s) and the holder(s) of real enjoyment rights on the Land. It must be stressed that the tenant of the Land is never liable to ICI.
Moreover, the ICI taxable base is calculated according to the result of this multiplication provided for by Article 5, paragraph 7 of the ICI Law:
- Land income (“reddito dominicale”) x revaluation of agricultural lands (25%) x coefficient of agricultural lands (75%)
The ICI Law provides for tax reductions on Lands only in case of lands owned and managed directly by professional cultivators and agricultural entrepreneurs.
ICI ON PHOTOVOLTAIC PARKS
C.1 Premises
A photovoltaic park (hereinafter “Park(s)”) can be defined as a set of photovoltaic generators able to produce an elevated amount of power exploiting the solar energy.
Seeing the peculiar and recent nature of Parks, both the Cadastral Law and the ICI Law does not provide rules. However, the Territorial Office of the Italian Tax Authority (i.e. the competent Office for Cadastral and ICI matters) (hereinafter “Office”) has issued an official interpretation on the application of the ICI to Parks with Ruling no. 3 dated November 6th, 2008.
In this Ruling, the Office has extended the application of the ICI to Parks since these structures have to be classified, seeing their peculiar immovable and industrial nature, in the industrial buildings class of the Cadastral Register (D/1).
This official interpretation follows a precedent analysis carried out by the Office with Ruling no. 14 dated November 22nd, 2007, in which the application of the ICI was extended to Aeolian for the same reasons illustrated in Ruling no. 3/2008.
These Rulings were been harshly criticized by scholars and professionals.
In particular, Ruling no. 3/2008 was been criticized by the Photovoltaic Industrial Association (“Assosolare”) (hereinafter “the Association”) that, representing professionals, has clarifies that Parks should not be liable to pay ICI because in principle their structure has to be defined as movable and, in addition, they have to be classified under class E of the Cadastral Register (with it is not under the scope of ICI as provided for by Article 7 of the ICI Law) since the Photovoltaic Industry carries out an important element relevant for the citizenry.
In order to obtain the annulment of the interpretation of the Office, the Association has started in 2009 a litigation proceeding against the Office (the proceeding is now at preliminary stages).
The litigation proceeding could be based on the fact that the First Instance Tax Court of Bologna has recently overturned (Sentence no. 11/6/2009 dated 12nd January, 2009) Ruling no. 14/2007, stating that Aeolian parks are not liable to ICI because the Aeolian energy can be considered as an important element for the citizenry and, therefore, they must be classified under class E of the Cadastral Register.
C.2 Calculation of ICI
Anyhow, from an ICI point of view, at present taxpayers must follow the official interpretation of Ruling no. 3/2008.
Based on this assumption, taxable persons on ICI on Parks are, as provided for by the general rules of the ICI Law, only the owner(s) of the Park and the holder(s) of real enjoyment rights on the Park.
Unlike Lands, the taxable base on Parks can be calculated in two different ways because the Park should be not classified in the Cadastral Register as provided for by Article 5, paragraphs 2 and 3 of the ICI Law.
Thus, these are the two methods:
1. If the Park is registered in the Cadastral Register (class D/1), the taxable base is calculated according to the result of this multiplication:
- Cadastral income (“rendita catastale”) x revaluation of industrial buildings (5%) x coefficient of industrial buildings (50%)
2. If the Park is not registered in the Cadastral Register, the taxable base is calculated according to the result of this multiplication:
- Construction costs + Increasing costs x coefficient for industrial buildings not registered in the Cadastral Register (1.04% for 2008)
The ICI Law does not provide for tax deductions and tax reductions for ICI related to Parks.
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