Italy oversees delivery of decree worth €25 billion to manage COVID-19
Gian Luca Nieddu and Barbara Scampuddu of Hager & Partners outline the measures set out by Italy to assist businesses and taxpayers manage the economic impact caused by the COVID-19 outbreak.
On March 16 2020, Italy’s government approved a decree worth €25 billion ($27 billion) to support the Italian health system, companies, entrepreneurs and professionals during the COVID-19 outbreak. The decree is immediately effective and provides €3.5 billion to assist the healthcare system and €10 billion to support employment and workers.
The new decree laid out new measures ranging from suspending tax payments to helping cover layoffs to mortgage relief. It is estimated that the decree should activate about €340 billion in financing: the measures outlined include state underwriting for a portion of companies’ property rental costs, subsidies for the self-employed and a nine-month mortgage relief plan for self-employed and other non-salaried workers who have seen their earnings fall by more than a third during the coronavirus crisis.
Provisions include the strengthening of the state-guaranteed fund for small and medium enterprises (SMEs) with an additional €1 billion: this fund will raise a maximum guarantee for a single company equal to €5 million.
Moreover, for SMEs’ enterprises, credit lines are guaranteed and payments related to mortgages and loans are suspended until September 30 2020. For larger companies, public company CDP (Cassa Depositi e Prestiti S.p.A.) will guarantee, with €500 million, up to €10 billion loans that banks will be able to grant to companies affected by the ongoing pandemic.
Other measures include:
All firing procedures begun after February 23 2020 are suspended;
Families can apply for permission to suspend their mortgage payments if business shutdowns caused by the pandemic threaten their livelihoods;
For self-employed or seasonal workers, the government will provide a one-off contribution;
Families with children will be helped with longer parental leaves (equal to 15 days) and a so-called ‘babysitter voucher’ equal to €600;
In March and April, people caring for someone with disabilities are entitled to take up to 12 days' leave a month instead of three;
Tax incentives for non-performing loans (NPLs) selling are granted;
Employees can claim time under quarantine as sick leave.
In addition, companies with a turnover lower than €2 million will benefit from the suspension of withholding payments of contributions, insurance premiums and VAT until May 31 2020.
Gian Luca Nieddu
T: +39 02 7780711
T: +39 02 7780711