Italian Stability Law: determination of the income of photovoltaic installations

Italy’s 2016 Stability Law has provided important updates regarding the determination of the cadastral income from photovoltaic installations.

Since 1 January 2016, determination of the cadastral income from buildings with a special and specific destination, to be recorded under group D and E cadastral categories (including photovoltaic installations), is carried out by means of a direct estimate. The estimate factors in soil and the constructions and elements structurally connected with them that enhance quality and usefulness, within the limits of ordinary appreciation.

The same direct estimate excludes machinery, devices, equipment and other functional systems to the specific manufacturing process. The effect of the above would seem to lead to a solution to the controversial issue of the IMU property tax on the so-called "bolted" installations, ie. those installations consisting of machinery secured to the ground in a non-structural manner.

The previous legislation thus provided that, for instrumental property belonging to D and E categories, the cadastral income be determined through a process of direct estimation. The 2015 Stability Law, also recalling the clarifications provided by circular no. 6/2012 of the Territorial Agency, had confirmed that these properties were subject to a detailed technical evaluation of the building and plant components, with the consequence that the determination of the cadastral estimate of the property had to include also the plants and machinery that are part thereof (albeit not structurally connected to the same).

The Territorial Agency had clarified that "in order to assess which installation should be included or not in the cadastral estimate, reference must be made not only to the criterion of essentiality thereof to the economic purpose of the real estate unit, but also as to whether the same is fixed, ie. stable (including over time), in relation to the structural components of the real estate unit".

This has led to a number of practice and case-law interpretations, whose prevailing solution has been that the determination of the cadastral income of the properties should also include the technical assessment of the machinery and installations.

The Supreme Court of Cassation, with judgment no. 3166 of February 2015, recalling the provisions contained in the 2015 Stability Law then confirmed that the estimate must comprise all those machines and plant components that "provide the real estate unit with operational and income autonomy".

Revisions in the 2016 Stability Law

The 2016 Stability Law has revised the procedures for determining the cadastral income of real estate units consisting of multiple elements, some of which are only "functional" to the production process by providing the following, in summary:

  • on the one hand, the “direct estimate" criterion is confirmed for the purposes of determining the cadastral income of the properties with special destination under group D
  • on the other hand it should be noted that, for the purpose of the calculation of this value, account must be taken of the "soil and constructions, as well as the elements structurally connected with them that enhance the quality and usefulness thereof, within the limits of the ordinary appreciation" while, account must not be taken (criterion explained for the first time at the regulatory level), of "machinery, devices, equipment and other facilities, functional to the specific production process".

Although it remains uncertain whether the photovoltaic installations should be regarded as movable or immovable property, what would appear to be established is the method of cadastral registration, which must not take account of the "machinery, devices, equipment and other facilities".

Furthermore, regarding photovoltaic installations already recorded in the cadastral register, the 2016 Stability Law in paragraph 22 identifies a process through which the holders of the photovoltaic installations already recorded may obtain a review of the allocated rental income. Therefore, they will be entitled to submit "update documents" for the recalculation of the cadastral income of the properties already recorded in respect of the criteria referred to in paragraph 21.

Therefore it seems possible to file such "update documents" taking into account the criteria introduced by the new law. Where such documents are presented by 15 June 2016, the recalculation would take effect as from 1 January 2016, and this would allow a reduction in IMU and TASI taxes already from the first payment scheduled for June 2016.

The Stability Law also provides for the allocation of certain sums to be divided among the individual Municipalities, by way of offsetting the lesser tax revenue resulting from the application of the new rules.

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