Flat-rate tax for business tenants: the Public Prosecutor’s Office opens the door to a flat tax before the Joint Divisions

The final decision on whether to apply the flat-rate tax when the tenant is a business. On Tuesday 7 July, the public hearing took place before the Joint Divisions of the Court of Cassation. It was an extensive hearing, lasting over an hour, and was the first of the morning. Now only the final step remains, namely the decision of the judges of the Court of Cassation, expected in the coming days: during the hearing, the Attorney General’s Office took a stance “in favour of the taxpayer”, as it had already done before the Fifth Section of the Court of Cassation, in the proceedings that subsequently led to the case being referred to the Joint Divisions (by interlocutory order 30016/2025).

The Public Prosecutor’s main argument is the same as that put forward by the private party, namely that the provision establishing the flat-rate tax (Legislative Decree 23/2011, Article 3) does not require any specific requirements on the part of the tenant: if the tenancy is residential, the landlord may opt for the flat-rate tax, provided they are not acting as a business operator. This is a significant development, and ties in with the three previous judgements in favour of the flat-rate tax (12395/2024, 12076 and 12079 of 2025), although it does not prejudge the final decision, which remains open to all possible outcomes.

At the public hearing, the State Legal Service, without submitting any further written submissions, reiterated its arguments in favour of the tax authorities: the flat-rate tax would apply only to tenancies between individuals, not least because the purpose of the legislation is to encourage the letting of properties onto the market of accommodation intended for residential letting.

The taxpayer’s counsel highlighted the “ultra petita” nature of the order which referred the matter to the Joint Divisions, given that the original case concerned a flat let to a university so that it could make it available to its staff and research fellows.

It should be noted that this issue concerns cases where properties are let by companies that enter into tenancy agreements to meet the housing needs of their employees. This is a specific situation which, according to certain rulings by the Court of Cassation, warrants protection. Several judgements have, in fact, clarified that the flat-rate tax regime cannot be denied if the other party is a VAT number which enters into the agreement to meet the housing needs of one of its employees. On this point, however, the Italian Revenue Agency has consistently expressed an unyielding stance, supported also by the Ministry of the Economy. Indeed, the Ministry of the Economy and Finance (MEF), in a response to a parliamentary question dated 26 March 2025, explained that case law on the matter is not yet clear-cut.