Deductibility of directors’ fees

In its Order no. 7329 of 16/03/2021, the Italian Supreme Court dealt with the issue of directors’ fees deductibility conditions, affirming that a shareholders’ resolution is always necessary, as in the absence of a resolution there would be no certainty of the cost. Given that directors’ fees are deductible on a cash basis pursuant to article 95, paragraph 5, of the Consolidated Income Tax Law, in the absence of a resolution setting the fee, the amount paid to directors would lack the characteristics of certainty and determination.

Furthermore, this is consistent with the principles governing the negative components of income to which the cash principle is applied, as article 109, paragraph 1, of the Consolidated Income Tax Law is very clear, and establishes that “expenses and other components whose existence is not yet certain or whose amount cannot be objectively determined in the year in which they accrue contribute to forming it in the same year in which such conditions occur”.