A generic reference to Euribor is insufficient in variable-rate loans. The contract must contain criteria permitting objective determination of the applicable rate, without uncertainty or lender discretion.

The Court of Cassation reiterated this in Order No. 19348 of 11 June 2026, addressing a significant banking litigation issue: validity of the interest clause when the nominal annual rate (TAN), margin or technical Euribor calculation methods are not expressly stated.

The case

The dispute arose from an objection to a payment order requiring a guarantor to pay over €375,000 under a variable-rate loan granted to a pharmacy subsequently declared bankrupt.

The objector argued that the financial conditions prevented correct determination of the applied rate, seeking replacement with the rate under Article 117(7) of the Italian Consolidated Banking Act (TUB).

The Milan Court partially upheld the objection, setting aside the payment order and reducing the debt to around €117,000. The Court of Appeal reinstated the original amount, finding that the TAN, although not expressly stated, could be derived from the synthetic cost indicator (ISC) and repayment schedule.

The nominal annual rate may be implicit

The Court distinguished TAN from the annual percentage rate of charge (TAEG), or ISC: TAN identifies annual interest, whereas TAEG or ISC reflects the total cost of credit, including interest, commissions and other charges.

It is therefore wrong to say that stating the TAEG always replaces the TAN. However, failure to express the TAN numerically does not automatically invalidate the clause.

The rate may be determined by reference to other terms or derived from the contractual conditions as a whole, if objective factors permit certain calculation: the amount financed, duration, number and frequency of instalments, allocation between principal and interest, repayment schedule, TAEG and other agreed financial values.

The variable-rate issue

Indexed loans require a different approach. Reconstructing the initial rate mathematically is insufficient: the applicable rate must remain unambiguously ascertainable throughout the relationship.

The agreement examined referred to three-month Euribor, but inadequately specified the daily observation basis, use of a 360-day commercial year or 365-day calendar year, and the so-called day-count convention, meaning the method of counting days for interest calculation.

The possible conventions —360/360, actual/360, actual/365 or actual/actual— may yield different results. The external benchmark must therefore be objectively identifiable. Without an agreed methodology, the rate may be indeterminable.

The Court of Cassation’s decision

The Supreme Court did not itself declare the clause void. It set aside the appellate judgment because the lower court assumed Euribor was ascertainable without considering the omission of the 360/365 basis and day-count convention.

The case was remitted to a differently constituted Milan Court of Appeal for reconsideration.

Practical consequences

The decision draws an important distinction. Merely omitting the TAN percentage may not justify challenging a contract if the rate can still be derived with certainty from the repayment schedule and other agreed information.

For variable-rate loans, however, the clause must be checked for precise specification of:

  • the benchmark used;
  • its tenor, such as one-, three- or six-month Euribor;
  • the margin;
  • the observation date or period;
  • the benchmark’s publication source;
  • the 360 or 365 divisor;
  • the day-count method.

Missing one element does not automatically invalidate every clause. It must be established whether, despite the omission, the rate remains ascertainable without discretion and with an unambiguous result.

If indeterminacy is established, the interest clause may be partially void and the substitute rate under Article 117 TUB may apply, requiring recalculation.

Conclusions

The order confirms that validity depends not merely on a percentage being formally stated, but on actually reconstructing interest costs through clear, verifiable criteria.

TAN may therefore be implicit, but the variation mechanism cannot be ambiguous. Even apparently minor technical details in indexed loans may affect ascertainability and the amount claimed.