By Maurizio Pavia, Francesco Pizzo, Piera Penna, Magda Serriello, Federica De Luca, Annalisa Di Ruzza

Tax Section

A new ruling on the tax treatment of derivative instruments

In June, the Italian Revenue Agency published a ruling on the deductibility of commodity derivatives entered into by a company operating in the energy production and trading sector. The ruling provides several interesting points for consideration.

In summary, the Revenue Agency recognized, for IRES (corporate income tax) purposes, the deductibility of negative fair value adjustments arising from energy commodity derivatives, even where the transactions were not undertaken for hedging purposes but rather with the objective of maximizing margins.

The Revenue Agency clarified that the assessment of tax relevance is not automatic and must be carried out on a case-by-case basis, taking into account the characteristics of the instrument, the taxpayer’s business activities, and the needs that the derivative is intended to satisfy in relation to those activities. Among the relevant factors, the Agency places particular emphasis on evidence that the derivative also serves a market risk management purpose inherent in the business, even where formal hedge accounting documentation is absent and the contract remains “speculative” from both an accounting and tax perspective. The Agency further considers it significant that the derivative activity is performed within the corporate function responsible for maximizing the overall economic result of energy procurement, production, dispatching, and sales activities, as well as for analyzing and monitoring commodity prices.

Commodity derivatives entered into for hedging purposes.

The Italian Supreme Court rules that negative differentials are irrelevant for IRAP purposes

With judgment No. 18954 of 10 June 2026, the Italian Supreme Court (Corte di Cassazione) addressed the IRAP treatment of negative differentials arising from swap contracts on crude oil and petroleum products entered into by a company engaged in the trading of energy commodities. The dispute originated from a tax audit relating to the 2007 tax period, which resulted in the assessment of substantial higher amounts of IRAP, together with penalties and interest.

The company—an adopter of Italian Accounting Standards—had recorded the negative differentials among operating income and expenses, arguing that the derivatives were intended to hedge the risk associated with fluctuations in the prices of the commodities traded. The Tax Office, on the other hand, maintained that, in the absence of physical delivery of the commodities, the contracts had to be classified as financial transactions, with the related differentials recognized under item C) of the income statement, and therefore excluded from the IRAP taxable base.

The taxpayer’s appeal was upheld at first instance, and the Regional Tax Court confirmed that decision on appeal. The Revenue Agency subsequently filed an appeal before the Supreme Court.

The Supreme Court upheld the Revenue Agency’s appeal, holding that the negative differential arising from a financial swap contract retains the nature of a financial expense, even when entered into for hedging purposes, and must therefore be classified under item C) of Article 2425 of the Italian Civil Code. As a consequence, it is excluded from the calculation of the IRAP net production value pursuant to Article 5(1) of Legislative Decree No. 446/1997. The Court therefore set aside the lower court’s judgment and, ruling on the merits, dismissed the company’s original appeal.

Although the judgment is noteworthy, it is worth recalling that the dispute concerned a tax year governed by a regulatory and accounting framework that is not fully comparable with the current one, particularly because it was before the introduction of OIC 32 and the subsequent updates to other Italian accounting standards.

The Italian Supreme Court on the classification of agricultural land for registration tax purposes

With Order No. 20757 of 18 June 2026, the Italian Supreme Court examined the classification, for registration tax purposes, of agricultural land included in the transfer of a business unit relating to a fuel distribution facility.

The dispute arose from the tax treatment of a parcel of land on which the construction of a fuel distribution station had been authorized. The Revenue Agency classified the land as agricultural rather than buildable.

The Court reaffirmed that the buildable nature of an area must be assessed exclusively on the basis of the general urban planning instrument adopted by the municipality, pursuant to Article 36(2) of Decree-Law No. 223/2006. In the case under review, the land was classified under the municipal master plan (PRG) as an agricultural area.

According to the Court, the existence of authorizations, building permits, and other approvals required for the construction of a fuel distribution station does not alter the land-use designation of the property. The possibility of constructing a fuel station on agricultural land merely constitutes an adaptation permitted under sector-specific legislation and does not amount to a zoning amendment.

As a result, the land retains its agricultural classification even when intended to host a duly authorized fuel distribution facility.

Accordingly, transfers for consideration involving such land remain subject to the tax regime applicable to agricultural land, including, where relevant, the 15% registration tax rate provided for by Article 1(3) of the Tariff attached to Presidential Decree No. 131/1986. The ruling is particularly relevant for transactions involving the transfer of real estate or business units that include agricultural land subject to authorizations for infrastructure projects or specific commercial activities.

The Italian Supreme Court on the “Single Agricultural Unit” Tax Relief

Forfeiture of the benefit where agricultural land is leased within the ten-year commitment period

With Order No. 15583 of 21 May 2026, the Italian Supreme Court held that the tax relief available for the acquisition of agricultural land intended to form a “single agricultural unit” (“compendio unico”) ceases to apply where the purchaser leases out, even only partially, the land benefiting from the relief within the ten-year period following the acquisition. According to the Court, granting the land for use to third parties is incompatible with the commitment undertaken by the beneficiary to personally cultivate or directly manage the property and therefore results in the forfeiture of the tax benefit.

The taxpayer had acquired agricultural land in 2009, benefiting from the tax regime provided for the establishment of a single agricultural unit pursuant to Article 5-bis of Legislative Decree No. 228/2001. Subsequently, two cadastral parcels were leased to third parties.

The Italian Revenue Agency therefore recovered the registration, mortgage, and cadastral taxes at the ordinary rates, taking the view that the taxpayer had breached the commitment to directly manage the land and to maintain the single agricultural unit for the ten-year period required by law. The Second-Level Tax Court ruled in favor of the taxpayer, placing emphasis on the fact that the property had substantially remained a single unit and within the family sphere. The Revenue Agency then appealed to the Supreme Court, which fully upheld the Agency’s appeal and overturned the judgment that had been favorable to the taxpayer.

In particular, the Court held that:

• the tax relief is conditional upon the purchaser’s personal commitment to cultivate or directly manage the single agricultural unit for at least ten years;
• the direct availability and management of the land is an essential requirement for the application of the benefit;
• granting the land under a lease agreement constitutes a form of disposal that is incompatible with the commitment undertaken by the beneficiary;
• the recovery of taxes at the ordinary rates applies at least with respect to the portion of the single agricultural unit affected by the transfer of use rights.

Excise duty on lubricant oils: the actual recipient is decisive in intra-EU transactions 

With Judgement No. 9523/2026, the Italian Supreme Court (i.e., Corte di Cassazione) revisited the issue of identifying the subject liable for payment of the consumption tax (imposta di consumo) on lubricant oils of EU origin. The case concerned intra-EU purchase transactions carried out through triangulation, in which the appellant company claimed to be merely a second-tier purchaser, while other Italian companies allegedly acted as the promoters of the transactions. 

The Supreme Court, however, gave weight to the findings arising from the CMR transport documentation, which showed that the actual recipient of the intra-EU movement of the lubricant oils was the appellant company. On the basis of this element, the first release for consumption within national territory — and, consequently, the obligation to pay the consumption tax on the basis of the Article 61, paragraph 1, letter b-2), of the Italian Excise Duty Law (TUA) — was attributed to that company.

The ruling confirms that, in complex commercial chains, identifying the taxpayer of the consumption tax cannot depend solely on the contractual structure of the transaction or the formal sequence of invoices. Rather, the tax treatment of the intra-EU purchase must be reconciled with the factual circumstances of the goods’ movement and receipt. In practical terms, operators in the lubricant oil sector must therefore pay particular attention to the consistency between contracts, invoices, transport documents and accounting records, since any discrepancies may affect the attribution of the obligation to pay the consumption tax. 

Legal section

Renewable energy PPAs: GSE public consultation on the new mechanism concluded 

The GSE has launched a public consultation to collect contributions on the implementation of the new mechanism for promoting Power Purchase Agreements (“PPAs”) as set out in Article 4 of the Utility Bills Decree (Decreto Bollette). The deadline for submitting contributions, initially set for 30 June 2026, has subsequently been extended to 8 July 2026.  

PPAs, i.e. long-term contracts for the sale and purchase of electricity from renewable sources, are identified by the GSE as instruments capable of promoting the stabilisation of energy costs, investment planning, the decarbonisation of consumption and the development of new renewable capacity.  

This initiative is a preliminary step towards the drafting of the GSE’s future Operational Rules, which will be submitted for approval to the Ministry of the Environment and Energy Security (“MASE”). 

The consultation covers, amongst other things, the eligibility requirements for counterparties, the operation of the PPA Board, support activities for contract negotiation, and the procedures for the GSE’s intervention as guarantor of last resort in the event of default by one of the contracting parties.  

Once the consultation has closed, particular attention will be focused on the GSE’s future Operational Rules – to be submitted for approval by MASE, in consultation with the Ministry of Economy and Finance – which will govern the practical operation of the system, the role of Acquirente Unico S.p.A. and the guarantee mechanisms provided to support PPAs.  

A clearly defined framework for the PPA mechanism should help to encourage wider adoption of long-term contracts in the Italian renewable energy market.  

BPA for hard-to-abate customers

The Carburanti-ter Decree postpones the application of the new rules introduced by the Utility Bills Decree 

Under Law No. 113 of 25 June 2026, converting the so-called Carburanti-ter Decree (Decree-Law No. 63 of 30 April 2026), the legislature has amended the framework governing Biomethane Purchase Agreements (“BPA”) intended for end customers operating in industrial sectors that are difficult to decarbonise (so-called ‘hard-to-abate’ sectors).  

The amendment does not affect the substantive content of the provisions introduced by Article 11 of the Utility Bills Decree (Decreto Bollette) but postpones their effective date. In particular, Article 1, paragraph 4-quater, of the conversion act replaces the reference to the ‘thirtieth’ day with that to the ‘one hundred and twentieth’ day, postponing the date from which the new rules for the contracts in question take effect (namely 17 August 2026).  

The provision also stipulates that the effects already produced in respect of contracts signed prior to the entry into force of the conversion act remain unaffected. 

This amendment constitutes a transitional and operational measure which, on the one hand, allows operators a longer period to adapt to the new regulatory framework without altering its substantive structure and, on the other hand, clearly establishes that previous BPA contracts signed before the new regime came into force do not require any adjustment. 

The Constitutional Court upholds the ban on ground-mounted photovoltaic systems on agricultural land 

With Judgment No. 127/2026, the Constitutional Court ruled that the challenges to the constitutionality of the ban on installing ground-mounted photovoltaic systems in areas classified as agricultural were without merit. 

The Court confirms the constitutional legitimacy of the national regulations, recognizing that the energy transition and the principle of maximizing the use of renewable energy must be pursued through a reasonable balance between the promotion of renewable sources, environmental protection, and the preservation of agricultural land, without giving absolute priority to any of the interests involved. 

According to the Constitutional Court, the challenged regulation represents a legislative choice that is neither unreasonable nor disproportionate, aimed at preserving the agricultural use of the land without absolutely precluding the development of renewable energy. The ban applies, in fact, to installations with ground-mounted modules, while the possibility of using technological solutions compatible with the continuity of agricultural activity—such as agrivoltaic systems with appropriately elevated modules (as defined in Article 11-bis, paragraph 2, of Legislative Decree No. 190 of 2024)—remains intact. 

The ruling also reaffirms that the land-use classification of a plot constitutes an objective and stable criterion for determining the agricultural suitability of areas, regardless of their current use or any state of degradation. The protection granted by the legislature applies not only to agricultural products of particular value, but to the entire national agricultural heritage and its potential productive use. 

Open Season and Grid Connections: The New Capacity Allocation Model 

At the end of June 2026, the Ministry of the Environment and Energy Security (MASE) launched a consultation on the draft decree implementing Article 7(2) of Decree-Law No. 21 of 20 February 2026 (the so-called ‘Utility Bills Decree’). The measure introduces a new connection system for renewable energy installations and storage systems, with the aim of overcoming virtual grid saturation and making the allocation of available capacity more efficient. 

The main innovation lies in moving away from the ‘First Come, First Served’ model in favour of the ‘First Permitted, First Connected’ principle, which links the definitive allocation of capacity to the actual obtaining of the authorisation or enabling title. 

In particular: 

• capacity is not definitively allocated at the time of the connection request; 
  • priority is given to projects that obtain the authorisation; 
  • this reduces the phenomenon of capacity being tied up by initiatives that do not reach the implementation phase. 

A central element of the new system is the Open Season procedure, through which Terna will periodically publish the available capacity and the related connection solutions. 

As part of the procedure: 

• applicants will be able to select the technical solutions made available by Terna; 
• both connection points that are immediately available and those subject to the construction of new network infrastructure will be identified; 
• the Terra Portal will ensure transparency and traceability of information relating to connection requests and available capacity. 

The scheme distinguishes between the Connection Solution Attestation and the Grid Capacity Reservation. 

The Attestation allows the authorisation procedure to commence but does not confer any definitive right over the requested capacity. The allocation of capacity and the relevant connection point takes place only after the authorisation has been granted, in accordance with the ‘First Permitted, First Connected’ principle. 

Key Highlights of Regional Law No. 11 of 3 June 2026.

Provisions on the Development and Establishment of Data Centers 

The Regional Law No. 11/2026 introduced a comprehensive regulatory framework governing the establishment, expansion, and monitoring of data centers in the Lombardy Region. 

Entering into force on 20 June 2026, the law made Lombardy the first Italian region to adopt dedicated legislation specifically addressing the development of data centers within its territory. The new framework aims to support technological innovation and investment while ensuring that data center development is aligned with environmental sustainability, energy efficiency, and territorial planning objectives. 

In particular, Article 2 of Law No. 11/2026 sets out the key development, energy, and environmental priorities underpinning the regional regulatory framework. These priorities establish sustainability criteria and qualifying requirements that operators must satisfy when designing new data centers or expanding existing facilities. Compliance with these criteria constitutes a prerequisite for access to the incentive scheme established under the law. 

Among the main principles are the promotion of urban regeneration through the redevelopment of brownfield and underutilized sites, the use of carbon-neutral energy sources, the recovery and reuse of waste heat, the adoption of water-efficient cooling technologies, and the integration of projects with existing energy and infrastructure networks. 

Furthermore, the law empowers municipalities to introduce, through their urban planning instruments, additional incentive measures consistent with the sustainability objectives pursued by the regional framework. 

Article 5 of Law No. 11/2026 stipulates the urban planning classification applicable to data centers with reference to the electrical connection capacity required for their operation. Specifically, data centers with a connection capacity of 5 MW or more are classified as having productive (industrial) land use, while those with a connection capacity of up to 5 MW may be classified as either productive or tertiary (office) use. Regardless of this distinction, all data centers are treated as production facilities for the purposes of construction charges and the application of the relevant planning provisions. 

For operators, the new regulatory framework requires an integrated design approach that goes beyond the mere technical assessment of facilities and directs the planning phase towards achieving the energy and environmental priorities identified by the regional legislator. 

The preparation of the documentation required for the submission of a project involving a new development or the expansion of an existing facility – particularly the energy report – is therefore a substantive element of the authorization process rather than a mere formal requirement. The adoption, from the planning stage, of solutions based on Best Available Technologies (“BAT”) helps ensure a more efficient authorization process by reducing uncertainty and minimizing the risk of additional requirements or charges, including compensatory measures relating to land use that does not comply with the criteria established by the regional framework. 

Ultimately, the regional legislation offers operators a twofold advantage: on the one hand, greater clarity and predictability during the project preparation phase, thanks to the qualifying criteria specifically identified by the legislator; on the other hand, faster and more predictable interactions with the public administration, made possible by the institutional coordination and procedural simplification introduced by the law. 

Regional Law No. 11/2026 presents a valuable opportunity for municipalities to strategically redevelop their territory and methodically plan for future growth. The law identifies data centers as potential tools for urban regeneration and the local ecological transition. A primary focus is the redevelopment of existing urban structures, promoting investment in underutilized or abandoned areas. A second key aspect is the integration of waste heat recovery systems, while a third concerns the planning discretion granted to local authorities to adopt measures consistent with regional sustainability objectives. 

The full implementation of the legislation remains subject to the adoption of the implementing measures by the Regional Council.