{"id":25069,"date":"2023-04-13T12:49:00","date_gmt":"2023-04-13T10:49:00","guid":{"rendered":"https:\/\/www.delucapartners.it\/news\/damages-for-demotion-taxed-if-the-nature-of-the-compensation-is-not-specified\/"},"modified":"2026-02-16T16:19:42","modified_gmt":"2026-02-16T15:19:42","slug":"damages-for-demotion-taxed-if-the-nature-of-the-compensation-is-not-specified","status":"publish","type":"post","link":"https:\/\/www.delucapartners.it\/en\/news\/damages-for-demotion-taxed-if-the-nature-of-the-compensation-is-not-specified\/","title":{"rendered":"Damages for demotion taxed if the nature of the compensation is not specified (Norme & Tributi Plus Diritto De Il Sole 24 Ore, 13 April 2023 – Alberto De Luca, Claudia Cerbone)"},"content":{"rendered":"\n

The applicability of an exemption regime requires the taxpayer to provide rigorous proof of fulfilment of all factual prerequisites giving rise to compensatory damages.<\/strong><\/p>\n\n\n\n

The Court of Cassation, Tax Division, by Order No 8615 of 27 March 2023<\/a> returned to examine the complex subject of the taxation regime applicable to the compensation due in connection with demotion suffered by the worker.<\/p>\n\n\n\n

The case on which the Court was called upon to rule related to a dispute between the Italian Revenue Agency (Agenzia delle Entrate<\/em>) and a worker who, in the context of a legal proceedings for demotion, reached an out-of-court settlement with her employer who paid her a sum by way of \u2018compensation for moral, professional and biological damage<\/em>\u2019.<\/p>\n\n\n\n

Since there was no distinction between the compensatory headings, the Italian Revenue Agency deducted Italian Personal Income Tax <\/strong>(Imposta sul reddito delle persone fisiche<\/em>, \u2018IRPEF\u2019) <\/strong>from the amount received by the worker, who, therefore, brought proceedings seeking its reimbursement. The Provincial Tax Commission rejected the worker\u2019s application. In contrast, the Regional Territorial Court reversed the decision, upholding the application against the Italian Revenue Agency, and declaring that the exemption regime applied to the sums under discussion.<\/p>\n\n\n\n

On the subject of taxation of employment income or similar, the Italian Income Tax Consolidation Act No 917\/1986 (Testo unico delle imposte sui redditi<\/em>, \u2018TUIR\u2019) identifies the category of replacement income <\/strong>for employment income. Article Section 6, paragraph 2 of TUIR provides that thefollowing constitute income, of the same category as that replaced and\/or lost, regardless of the reason for the payment: (i) income earned as replacement income, including as a result of the assignment of the related receivables; (ii) indemnities received, including in the form of insurance, as compensation for damages consisting in the loss of income, excluding those resulting from permanent disability or death<\/em>.<\/p>\n\n\n\n

The rationale behindthe legislation is that only the payments, emoluments or compensation that have resulted in the enrichment <\/strong>of <\/strong>the subject should be considered taxable<\/strong>.<\/p>\n\n\n\n

For this purpose, a distinction is made between (i) loss of profit<\/em><\/strong>, i.e. the loss of income<\/strong> that is recognised as belonging to the same category as lost or replacement income <\/strong>(under Article 6, paragraph 2 of TUIR); (ii) consequential damages<\/em><\/strong>, i.e. the restoration of assets, namely compensation intended to cover the financial loss <\/strong>and not to replace lost income.<\/p>\n\n\n\n

Continue reading the full version published in Norme e Tributi Plus Diritto<\/a> of Il Sole 24 Ore.<\/p>\n","protected":false},"excerpt":{"rendered":"

The applicability of an exemption regime requires the taxpayer to provide rigorous proof of fulfilment of all factual prerequisites giving rise to compensatory damages. The Court of Cassation, Tax Division, by Order No 8615 of 27 March 2023 returned to examine the complex subject of the taxation regime applicable to the compensation due in connection […]<\/p>\n","protected":false},"author":5,"featured_media":25070,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[177,190,196,212,206,208],"tags":[1154,1855],"class_list":{"0":"post-25069","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","6":"hentry","7":"category-insights","9":"category-news","11":"category-press-review","12":"category-publications","13":"tag-corte-di-cassazione-en","14":"tag-demansionamento-en"},"acf":[],"yoast_head":"\nDamages for demotion taxed if the nature of the compensation is not specified (Norme & Tributi Plus Diritto De Il Sole 24 Ore, 13 April 2023 - Alberto De Luca, Claudia Cerbone) - De Luca & Partners<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.delucapartners.it\/en\/wp-json\/wp\/v2\/posts\/25069\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Damages for demotion taxed if the nature of the compensation is not specified (Norme & Tributi Plus Diritto De Il Sole 24 Ore, 13 April 2023 - Alberto De Luca, Claudia Cerbone) - De Luca & Partners\" \/>\n<meta property=\"og:description\" content=\"The applicability of an exemption regime requires the taxpayer to provide rigorous proof of fulfilment of all factual prerequisites giving rise to compensatory damages. 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