Josef Scheungraber, now 92, was sentenced to life in prison by a Munich court in 2009 for the deaths of 10 people in Tuscany in the 1944 massacre.
But he has remained free as lawyers launch successive appeals. Although the courts have upheld Scheungraber's conviction, prosecutors and defence attorneys now agree that he is too mentally incompetent to go to prison, according to the Süddeutsche Zeitung.
The latest report on his mental health, which was commissioned by prosecutors, says Scheungraber is completely disoriented and confused about what's happening.
"A prison sentence makes sense only if the person knows that he is suffering a penalty," his attorney Gunter Widmaier told the Süddeutsche. “With Mr. Scheungraber, that's no longer the case.”
The prosecutor, Barbara Stockinger, meanwhile, said courts would have to decide what to do with the man.
“There is still no final decision,” Stockinger told the newspaper.
Scheungraber became known for his strenuous pleas of innocence during his trial, in which he railed against prosecutors and the entire criminal justice system.
His lawyers have long said witness testimony is controversial and two much time had passed between the events in question and his conviction.