The Italian government already introduced relevant COVID-19 tax-related measures with the aim of assisting Italian individuals and companies that have been adversely impacted as a result of the COVID-19 pandemic.
Now the Italian government is going further by introducing additional significant tax measures with the so called Decreto Rilancio, published in the Italian Official Gazette on 19 May 2020 (Decree n. 34 of 19 May 2020, 'the Decree').
The Decree is effective as of 19 May 2020. The measures included in the decree should be converted into law by the Italian parliament within the next 60 days and could be subject to amendments during this process.
A summary of the main Italian tax measures included in the Decree is set out below.
Regional tax payments (article 24)
The 2019 regional tax (IRAP) balance and 2020 IRAP advance payments will not be payable by companies that have realised revenues lower than €250m in 2019. However, this measure will not be available to banks, other financial intermediaries, insurance companies and public entities.
Non-refundable subsidy (article 25)
Entities carrying out business activities that are registered for VAT purposes, will be entitled to a non-taxable and non-refundable subsidy if the turnover of the entity in April 2020 is lower than two-thirds of the entity’s April 2019 turnover. The subsidy is equal to a specific percentage of the difference between the April 2020 turnover and the April 2019 turnover amounts. To benefit from this measure, a specific request needs to be filed with the Italian tax authorities, together with certain self-declarations.
Net equity increases for small-medium companies (article 26)
Tax credits will be available in relation to equity injections made in favour of Italian companies (incorporated inter alia in the form of SpA, Srl and Sapa) and Italian permanent establishments of EU companies where four conditions are satisfied:
- the 2019 revenues of the relevant Italian entity are between €5m and €50m on a stand-alone basis (or group basis if belonging to a group);
- the individual or group March and April 2020 revenues are lower than 33 per cent of the March and April 2019 revenues;
- a share capital increase has been resolved and subscribed for in cash after the entry into force of the Decree and before 31 December 2020; and
- the relevant stake in the Italian company is held until 31 December 2023 and no reserves are distributed by the Italian entity until such date.
The contributing entity is granted a tax credit equal to 20 per cent of the cash contribution (up to an overall invested amount of €2m) if the contributing entity qualifies as an unrelated party. If not used in full, the tax credit may be carried forward. This measure should also be available if the investment is made through units or shares of Italian or EU collective investment schemes mainly investing in qualifying companies.
Following the approval of the 2020 financial statements, the company receiving the equity contribution is granted a tax credit equal to 50 per cent of the tax losses exceeding 10% of the net equity and up to 30 per cent of the share capital increase to the extent that it satisfies certain additional requirements.
The tax credits are considered alongside certain other beneficial measures which could qualify as state aid and the overall amount of these measures in aggregate cannot exceed €800,000 (€120,000 and €100,000 respectively for companies in the fishing and agriculture sector). A specific declaration should be given in this respect by the relevant entity.
The tax deduction recognized for equity investments in innovative start-ups or innovative SME made by individuals directly or through undertakings for collective investment that mainly invest in innovative start-ups and innovative SME is increased to 50 per cent. In both cases the maximum investment deductible cannot exceed the amount of €100,000 for each fiscal period and the investment must be held for at least three years.
Tax credit for rental payments (article 28)
A tax credit equal to 60 per cent of rental expenses incurred in March, April and May 2020 for real estate properties used to carry out business activities will be available for companies that have generated no more than €5m of revenue in 2019 and also for hotel groups irrespective of their 2019 revenues. Except for hospitality facilities, the tax credit is only available to those companies that have suffered a 50 per cent reduction in revenue compared to the previous year. The tax credit may be transferred to landlords or other third parties (including financial institutions and intermediaries).
Tax allowance for expenditure on energy efficiency and seismic risk reduction measures (article 119)
A tax allowance will be granted equal to 110 per cent of expenses incurred for expenditure incurred on measures aimed at improving energy efficiency and seismic risk reduction. However, this tax allowance will not be available to corporate entities.
Tax credit for adapting workspaces (article 120)
A tax credit equal to 60 per cent of expenses incurred in 2020 for adapting workspaces to deal with COVID-19 restrictions will be granted to companies that carry out business activities in locations open to the public. This tax credit should not exceed an amount equal to €80,000.
Transfer of tax credits (article 122)
The tax credits granted to companies for rental payments and for adapting workspaces outline above could be transferred to other companies, including banks and financial intermediaries.
Tax credits for sanitisation costs and purchase of devices (article 125)
Tax credits will be granted to companies for sanitation expenses and expenses to acquire devices ensuring security in work environments (eg protective masks, gloves, protective visors) equal to 60 per cent of the expenses incurred in 2020 and duly documented up to an amount of €60,000.
Tax credit compensation (article 147)
For the 2020 tax year, the annual limit of tax credits that can be offset against tax liabilities is increased from €700,000 to €1m.
Deadlines for tax assessments payments and filing tax appeals deferred (article 149)
The deadline for the payment of sums due between 9 March 2020 and 31 May 2020 under tax settlement deeds, tax assessments for registration tax purposes and other deeds is deferred to 16 September 2020. The deadline for filing tax appeals before the first instance tax court in certain cases is also deferred to 16 September 2020.
Refund of payments in excess made by withholding tax agents (article 150)
This article governs payments made between a withholding tax agent and the recipient of the income in cases whereby the latter is required to refund the former in respect of amounts that are subject to withholding tax at source. This provision is aimed at reducing litigation proceedings between withholding tax agents and recipients.
Extension of statute of limitations (article 157)
Tax assessment notices, tax payment orders that should have been notified by the Italian tax authorities between 8 March 2020 and 31 December 2020, without taking into account possible deferrals due to COVID-19, should be issued by the Italian tax authorities before 31 December 2020 and notified in 2021.
The postponement does not apply in case of urgent matters (i.e. tax violations triggering criminal tax law violations).
Extension of the deadline for the delivery of the assets to benefit from enhanced depreciation (article 50)
The deadline for the delivery of the assets to benefit from the 2019 enhanced depreciation regime is ex-tended from 30 June 2020 to 31 December 2020
Municipal property tax (IMU) exemption for the tourism sector (article 177)
Certain real estate properties used for tourism purposes (including hotels, holiday resorts, B&Bs, beach clubs and thermal spas etc) will be exempt from the first IMU payment in 2020 which would otherwise be due on 16 June 2020.