An article by our associate Dott. Gianni Mario Colomboadministrative and tax expert, about a 50% reduction of the corporate income tax on real estate income for specific subject categories.


Gianni Mario Colombo, ratioquotidiano.it; November 8, 2019.

In response to an inquiry about property leasing, the Revenue Agency expresses their view on the scope of the provision on subjects mentioned in section 6 D.P.R. 601/1973.

Section 6 D.P.R 601/1973 establishes a 50% reduction of the corporate income tax rate for specific subject categories, deemed worthy of relief by the legislator.

In response to a taxpayer’s inquiry (reply n. 152/2018), on whether Association “Beta”, a public entity devoted to assisting orphan children, could take advantage of said provision with respect to property leasing revenues, the Revenue Agency clearly stated that “the disposition established by the examined section 6 is not applicable to property leasing incomes, as said leasing is not deemed to be in direct and instrumental connection with the activities that the legislator meant to facilitate”.

The pronouncement was borrowed from the Revenue Agency resolution 91/E/2005, regarding State-recognized religious entities. Said resolution established that a connection between activity and religious purpose is an essential condition for tax relief eligibility.

The Council of State supported that interpretation, stating that not only does the 50% reduction of corporate income tax depend on the fact that the entity belongs to one of the listed categories, but it is also objective.

Therefore, its fruition is subject to the performance of certain activities and limited to the taxable income produced by said activities.

In that regard, we should highlight the subjectivity of the aforementioned tax relief; Section 6 D.P.R 601/1973 is found in Chapter I – “Subjective tax reliefs”, while tax reliefs linked to certain activity sectors would be dealt with in the following chapters of said decree.

We should also consider that the precedent the Agency’s reply is built upon concerns a completely different case than the matter at hand, that is, entities such as nursing homes, private hospitals, etc., i.e. potentially profit-making associations.

By contrast, the case under discussion involved a public welfare association drawing property revenues, that is, incomes produced by real estate leasing, aimed at procuring the financial means necessary to perform their institutional activities.

It is undisputed that a non-profit entity’s leasing is considered patrimonial and not as a source of income.

As for taxing, property incomes are not active incomes (like corporate revenues), but instead passive incomes.

In that regard, we may simply quote their regulatory definition, found in Section 25 of TUIR: “property incomes are incomes related to properties and buildings located on the territory of the State”; while corporate revenues are defined in Section 55 as “deriving from the habitual, yet non-exclusive performance of the activities listed in Section 2195 of the Civil Code.”

There is a clear distinction between the two cases: in the first instance, the definition simply mentions the relation between incomes and properties; in the second instance, the revenues derive from the performance of corporate activities.

As stated above, regarding the matter at hand (institutional property leasing), no commercial activity is carried out.

Cahill-Caizzone & Associates is the Registered Trading name of Cahill Caizzone & Associates Limited, incorporated in Ireland, Reg. No.369596.