For the Italian Supreme Court, the activities carried out by Port Authorities (such as, for example, leasing out port quays, which is, indeed, compulsory by law) can undoubtedly be attributed to their State functions and cannot be considered part of a business activity, “as they have to be functional and follow the interests of the State in having port areas operating correctly, by means of powers conferred on them exclusively for that purpose, (see Law No 84/1994, for the choice of concessionaires) with a binding discretion, subject to control by the Ministry of Transport (now the Ministry of Infrastructure and Transport).”
The Supreme Court is very decisive in tackling the procedure initiated by the European Commission against Italy for the presumed liability to standard taxation of the lease payments received by Port Network Authorities. It does so in the context of a ruling relating to a dispute initiated by the inland revenue against the former Taranto Port Authority in relation to a claim that payments received for concessions to third parties of state property in the port area should be taxable.
Claiming port concession fees must be qualified as business or land tenure income intrinsic to the management of assets related to the Port Authority’s institutional activity is not acceptable for the Supreme Court: “This assumption cannot be shared in the light of the unequivocal jurisprudential guideline of legitimacy according to which the fees received by Port Authorities for leasing maritime state property are not subject to VAT, nor to IRES (corporate income tax) , since they are amounts paid for the performance of activities proper to the institutional purposes of these non-economic public bodies: i.e., to guarantee, on behalf of the State, that ports can operate. These activities are put in place on the basis of a pre-determined masterplan and with the attribution of supervisory and sanctioning powers, extended until the revocation of the act of concession in the event of incorrect pursuit of the objectives set or failure by the concessionaire to fulfil its obligations.”
Translation by Giles Foster