It has been approved by the Council of Ministers a Law Decree introducing urgent measures in the field of health, support to work and economy, as well as social policies, related to the epidemiological emergency from COVID-19 following a proposal made by the President of the Council of Ministers, Mr Giuseppe Conte, and the Minister of Economy and Finance, Mr Roberto Gualtieri.
The President of the Republic signed the above-mentioned document on May 19th, 2020.
The Law Decree introduces concrete and immediate measures to support businesses and other economic operators with VAT ID numbers, including craftsmen, self-employed workers and professionals affected by the health emergency.
A summary of the main measures introduced as communicated by the Italian Government is provided below.
Entities carrying out business activities and self-employed workers, holders of VAT number with an income not exceeding 5 million euros in the tax period prior to the one in progress are granted with a non-repayable grant. The non-repayable grant shall be granted to those entities with an income not exceeding two thirds of the income generated in April 2019. Entities starting business activities on January, 1st 2019 are granted with The non-repayable grant even if the income reduction requirement is not met.
The percentage of the amount to be granted shall be determined as follows:
20% for individuals with revenues or income not exceeding 4 hundred thousand euros in the tax period prior to the one in progress;
15% for individuals with revenues or income exceeding 4 hundred thousand euros and up to one million euros in the tax period prior to the one in progress;
10% for individuals with revenues or income exceeding 1 million euros and up to five million euros in the last tax period.
Exemption from the payment of the balance of IRAP (i.e. Regional tax on productive activities) due for 2019 and from the payment of the first instalment, equal to 40%, of the advance payment of IRAP (i.e. Regional tax on productive activities) due for 2020 shall apply to companies with revenues between 0 and 250 million and self-employed with an equal volume of income. The payments in advance due for the tax period as at 31.12.2019 shall remain mandatory.
Entities carrying out business activities, arts and professions are granted a tax credit of 60% of the monthly lease rental paid in March 2020 for buildings falling under cadastral category C/1 (non-residential use intended for the performance of industrial, commercial, craft, agricultural, tourist interest or the usual and professional exercise of self-employment) who have suffered in the months of March, April and May a decrease in turnover or fees of at least 50% compared to the same month in the tax period prior to the one in progress.
The credit is granted to subjects with revenues or income not exceeding 5 million euros in the tax period prior to the one in progress.
Hotels are entitled to receive the credit regardless of the volume of business in the tax period prior to the one in progress. The tax credit is due at the rate of 30% of the relevant lease rents for service contracts for complex services or business leases, including at least one non-residential buildings intended for the performance of industrial, commercial, artisan, agricultural or tourist activities or for the habitual and professional carrying out of self-employment activities.
Suspension of IMU - municipal real estate tax first instalment payment due by June, 16th 2020, quota reserved for State and quota reserved for Municipality, for owners of buildings falling under cadastral category D/2, (i.e. hotels and guesthouses), provided that owners directly manage their own activity) The above mentioned tax advantage for beach resort, bathing facilities, lake and river establishments is provided by the regulation.
Capital strengthening of small and medium-sized companies: in 2020 in favour of individuals and legal entities the regulation provides the deductibility of at least 20% of the amount invested by the taxpayer in the share capital of one or more joint stock companies, limited partnerships, limited liability, even simplified, cooperative, not operating in banking, financial or insurance sectors. The maximum tax deductible investment may not exceed Euro 2,000,000.
The same companies are granted, following the approval of the financial statements for the year 2020, a tax credit equal to 50% of the losses exceeding 10% of shareholders' equity up to 30% of the capital increase and in any case within the limits provided for by the decree (with a maximum of € 800,000). The distribution of reserves before January 1st , 2024 by the company entails the forfeiture of the benefit for the taxpayer who subscribed the capital increase and for the company itself and the obligation for all beneficiaries to return the amounts, together with legal interest.
Simplification and speeding up the raising of risk capital through capital increases.
Patrimonio Rilancio - Capital Relaunch: authorisation to Cassa Depositi e Prestiti S.p.A. (CDP) to set up a dedicated asset, called "Patrimonio Rilancio", to which assets and legal relationships are provided by the Ministry of Economy and Finance. , which may be divided into sectors and whose resources will be used to support and relaunch the Italian economic and productive system.
Fondo Patrimonio SMEs: creation of a fund whose management will be entrusted to the National Agency for the Attraction of Investments and Enterprise Development Spa – named Invitalia. The fund will be aimed at subscribing equity financial instruments issued by the companies already mentioned in the previous point by December 31st.
Companies currently in crisis: strengthening the recovery action of companies currently in crisis and strengthening the support structures for business crisis and industrial policy.
Fund for the safeguarding of employment levels and the going concern: the Ministry of Economic Development, establishes a fund with an endowment of 100 million euros in 2020 and the increase of allocations of the national fund for the support to access to leased properties, of the fund to cover the guarantees granted to small and medium-sized enterprises, of the so-called Ismea (public entity which supplies financial, insurance and IT services to farming businesses.) for a financing guarantees to SMEs in the agri-food sector, of the guarantee fund on the mortgage for primary residence, of the fund for the purchase of vehicles with low CO2 emissions, the integrated promotion fund provided by the so-called " Cura Italia" decree, the fund 394/81 for the internationalization of SMEs, with the further establishment of a guarantee fund aimed at aimed at relieving small and medium-sized enterprises that draw on credits for internationalisation from the costs and administrative burdens arising from the need to provide bank and insurance guarantees for part of the credits obtained.
Technology transfer fund: the Ministry of Economic Development, establishes a fund aimed at promoting initiatives and investments useful for the valorisation and implementing the results deriving form researching process made by companies operating in Italy, with specific reference to innovative start-ups.
Start up: further regulations aimed at strengthening public support for the birth and development of innovative start-ups, operating within the "Smart&Start Italia" provision.
Guarantees and benefits on a territorial basis: the regions and autonomous provinces, other territorial authorities, chambers of commerce may adopt direct aid measures, from their own resources, up to an amount of € 800,000 per enterprise, granted in the form of direct grants, tax and payment facilities or in other forms, such as repayable advances, guarantees, loans and participations. The aid may not exceed EUR 120,000 per undertaking active in the fisheries and aquaculture sector and EUR 100,000 per undertaking active in the primary production of agricultural products. The same entities may grant guarantees for both investment loans and working capital loans to enterprises, either directly or through banks or other entities authorised to provide credit, or aid in the form of subsidised interest rates for loans to enterprises, aid for COVID-19 research and development, investment in test and upscaling infrastructure, investment in the production of COVID-19 related products, aid in the form of grants for the payment of employees' wages to avoid redundancies during the epidemiological emergency caused by Covid-19.
110% deduction of expenses incurred between 1 July 2020 and 31 December 2021 for specific interventions aimed at increasing the energy efficiency of buildings (the so-called ecobonus), the reduction of seismic risk (the so-called sismabonus) and related provision aimed at installing photovoltaic systems and columns for recharging electric vehicles. The taxpayer can opt for a contribution in the form of a discount on the invoice issued by the supplier if the taxpayer incurs in structural interventions - as for other specifically identified deductions in the building sector - instead of a deduction. The supplier may recover a tax credit transferable to other parties, including banks and financial intermediaries.
Tax credit for the costs incurred in the upgrading of working environments: a tax credit of 60% of the expenses incurred in 2020 for the safe reopening of exercises open to the public is provided, up to a limit of 80,000 euros per beneficiary.
Tax credit for the costs of workplace sanitization: subjects carrying out business, art or profession activities, associations, foundations and other private entities, including third sector entities, are granted a tax credit equal to 60% of the expenses incurred in 2020. The tax credit is granted up to a maximum of EUR 60,000 per beneficiary.
Fiscal compensation: starting from year 2020, the limit for horizontal compensation shall be increased from 700,000 to 1 million euros.
Tax credit for research and development in Southern regions: the standard rate shall be increased from 12% to 25% for large companies and from 12% to 35% for medium-sized companies and from 12% to 45% for small companies.
VAT reduction on goods necessary to limit and manage the epidemiological health emergency: from 22% to 5% on medical and personal protective equipment and devices such as lung ventilators, masks and other safety devices to protect workers. Suspension of VAT payments referred to the sale of the above- mentioned equipment shall apply until 31 December 2020.
Incentives towards investment in the real economy: the ability of long-term savings plans (PIR) to channel private savings to the business world has been enhanced, so that the investment of specific PIRs is directed, to the benefit of SMEs not listed on Ftse Mib and Ftse Mid for more than 70% of the total value of the plan,
Suspension of payments until September: the deadline for the payment of taxes and contributions, already suspended for March, April and May, was extended from June 30th 2020 to September 16th 2020. Payments can be executed in a single transaction or in instalments.
Suspension of mortgages on salaries and pensions: suspension of the mortgages on salaries, wages and pensions made by the Tax Collection Agent until August 31st 2020.
Suspension of payments of amicable and assessment notices: payments due between March 8th and the day prior to the entry into force of the decree can be executed by September 16th.
To offset tax claims against statutory debts: refunds can be made to all taxpayers without applying the offsetting procedure with statutory debts.
Postponement of the possibility to re-evaluate the cost of land and shares: the provision aims at the revaluation of unlisted shares and land owned at July 1st, 2020. The substitute tax rates are set at 11%.
Postponement of the automated procedure for the settlement of stamp duty on electronic invoices: the procedure carried put by the Revenue Agency to integrate the stamp duty due on electronic invoices transmitted through the exchange system which do not bear the tax liability shall be postponed until January 1st 2021
Postponement of the entry into force of plastic tax and sugar tax to January, 1st 2021.
Postponement of the tax lottery and of the obligation to implement the electronic recorder to January, 1st 2021.
Changes to the rules on summary tax reliability indices (Isa) for the 2020 tax periods.
Facilitating measures have also been introduced to support and relaunch those sectors: tourism, education and culture, publishing (including newspaper stands), infrastructure and transport, agriculture and education.
We will carry out specific in-depth studies the most significant tax advantages provided and listed above.
Please do not hesitate to contact your RSM professional for any clarification.