Deductible costs related to the Influencer’s activity

by Francesco Daniele Di Donato, Giulia Sabelli

In its judgment No. 468/2024, the Tax Court of Second Instance of Lombardy has established that the costs for the purchase of clothing supported by an influencer are deductible provided those expenses are inherent and connected to the professional activity carried out. 

The case
The taxpayer, a world-famous fashion editor, appealed against the tax assessment notice by which the Italian Tax Office assessed more income tax due to the non-deductibility of costs of costs considered not inherent to her professional activity. For the same reasons, the relevant VAT was considered non-deductible.

For the same reasons, the relevant VAT was deemed non-deductible.

However, the taxpayer claimed the correct deduction of costs represented by consumer goods (designer clothes, jewellery, accessories, etc.) by reason of their closely related with her job.  

The court of first instance dismissed the appeal due to an absence of evidence regarding:

  • the inherent of the costs deducted to the professional activity performed under Article 54 of the Italian Income Tax Code;
  • the purchase, with the taxpayer's money, of the clothes used at events and photo shoots. 

For the same arguments, the VAT was non-deductible, under Article 29 of Italian Presidential Decree No. 633/1972.

The taxpayer appealed against the first instance judgement, claiming that the costs were deductible, because otherwise the professional activity would be cost-free.

The decision
The Appeal Court partially upheld the taxpayer's appeal with regard to the deductibility of the clothing costs, considering them strictly related to her professional activity.

In according to the Court, “regarding to corporate income tax, the principle of inherence requires the connection of the costs to the professional activity, also indirectly, potentially or in the future. The inherence must be assessed on a qualitative level and must be distinguished from the notion of usefulness, benefit, congruity of the cost, even though the non-economicity and incongruity of the expense may reveal the lack of inherence”.

However, in the present case, the Court stated that the clothing purchased by the taxpayer was not related to the specific events, recognising a 50% deductibility rate.