Commentary on Judgment No. 22139 of 2024: Depreciation and Ownership of Assets

The recent judgment No. 22139 of August 6, 2024, issued by the Court of Cassation, addresses a crucial issue in the field of taxation and depreciation of costs related to tangible and intangible fixed assets. The decision intervenes in a dispute concerning the depreciability of the construction costs of a building used by a taxpayer company, highlighting the importance of asset ownership for tax purposes.

The Principle of Depreciability

According to the judgment, costs related to fixed assets can only be depreciated if they concern assets that enter the entrepreneur's patrimony by way of ownership or other real right of enjoyment. The Court clarified that assets owned by third parties cannot be subject to depreciation. This principle is based on Article 102, paragraph 1, of Presidential Decree No. 917 of December 22, 1986, which establishes the rules for determining business income.

• Tangible and intangible fixed assets: definition and relevance
• Depreciability: necessary conditions
• Ownership and real right of enjoyment: what it means in tax terms

The Specific Case

Tangible or intangible fixed assets - Depreciability of related costs - Conditions - Assets owned by third parties - Exclusion - Case law. In terms of direct taxes, costs related to tangible or intangible fixed assets are depreciable if they concern consumable assets that enter the entrepreneur's patrimony by way of ownership or other real right of enjoyment, but not if they concern assets owned by third parties. (In this case, the Supreme Court quashed the appealed judgment, as it had deemed the construction costs of the building used as the taxpayer company's headquarters depreciable, without considering that, as it was built on municipal land, in the absence of a building permit or the acquisition of the surface right, the building had never entered its patrimony, by virtue of the principle of accession).

In the specific case, the Court annulled the decision of the Messina Regional Tax Commission, which had erroneously considered the construction costs of a building located on municipal land as depreciable. The lack of a building permit or a surface right prevented the building from becoming part of the taxpayer company's patrimony. This example clarifies how the principle of accession plays a fundamental role in determining ownership and, consequently, in the possibility of depreciating costs.

Conclusions

Judgment No. 22139 of 2024 underscores the importance of understanding tax regulations regarding the depreciation of fixed asset costs. It is essential for companies to verify asset ownership before considering costs as depreciable. This is not only to comply with Italian tax regulations but also to avoid penalties and future issues with the tax administration. Clarity and understanding of tax rules are indispensable for effective and compliant business management.