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Italy imposes a series of liquidity measures in reaction to the COVID-19 emergency

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Gian Luca Nieddu and Barbara Scampuddu of Hager & Partners discuss the latest tax measures adopted in Italy during the COVID-19 crisis.

With the aim of issuing urgent measures to address the economic and social impact of the COVID-19 emergency, the Italian government issued Law Decree No. 18 of March 17 2020 (the Decreto Cura Italia) in order to strengthen the national health service and provide economic support for families, workers and enterprises.

Later, on April 8 2020, Law Decree No. 23/2020 (the Decreto Liquidità) has been approved containing urgent measures on access to credit and tax obligations for businesses. It also provides special powers to the government in strategic industry sectors, as well as more measures in the field of health and work, and the extension of administrative and procedural deadlines. 

Some of the most relevant measures of the liquidity decree are presented below.

Financing to businesses guaranteed by SACE

In 2020, all forms of funding provided by banks and financial institutions to businesses with offices in Italy, other than to banks and financial institutions themselves, are guaranteed by the Italian export credit agency SACE, up to the ceiling of €200 billion ($219.5 billion). At least €30 billion of the overall value is targeted to small and medium-sized enterprises (SMEs). The guarantees are issued when specific conditions are met. In particular, the following simplified procedure applies to loans for companies with less than 5,000 employees in Italy and a turnover of less than €1.5 billion:

a) The company files an application for a state-guaranteed loan with its bank (or other financial institution);

b) Upon successful loan application approval, the bank files the application for the issuance of a guarantee with SACE and the latter processes such an application, verifies whether the loan application has been successfully approved by the funding institution and issues a single loan and guarantee identification code; 

c) The bank provides the loan secured by a guarantee granted by SACE.

For loans granted to businesses with more than 5,000 employees in Italy or a turnover of €1.5 billion or higher, the issuance of the guarantee and the corresponding sole identification code must be first approved by a decree to be released by the Italian Ministry for Economics and Finance (MEF). In order for the support measures to be effective, they must first be approved by the European Commission.

Guarantee fund for enterprises

In 2020, the Guarantee Fund for SMEs (Fondo centrale di garanzia PMI) provides the following:

  • A guarantee granted for free;

  • Maximum amount guaranteed for each business of up to €5 million; businesses with no more than 499 employees are eligible for the guarantee;

  • The guarantee covers 90 percent, but cannot exceed the following limits: twice the salary expenses of 2019, 25% of the turnover in 2019, the cost of operating expenses or investment cost for the next 12/18 months; 

  • For property investments in the tourism and accommodation industry and in the real estate industry with a minimum duration of 10 years and an amount of more than €500,000, the guarantee may add to other forms of guarantees for the funding.

  • Furthermore, new loans provided by banks and financial intermediaries are eligible for the guarantee fund's guarantee, and covered at 100 percent, provided that specific conditions are met. 

Suspension of tax payments

The following clarifications are provided as regards the suspension of tax payments due in April and May 2020, as provided for under the Italian law-decree No. 23/2020 (Italian Central Revenue, Circular Letter No. 9 as of April 13 2020).

The suspension applies to enterprises, sole proprietor companies and self-employed people with tax domicile, legal or operational offices in Italy (in the absence of clarifications, mere VAT fiscal representatives or direct identifications are deemed excluded):

  • That started operations after March 31 2019, regardless of a loss in turnover and income;

  • That started operations before March 31 2019 at the following conditions:

  • With proceeds or income not exceeding €50 million in the tax period before April 9 2020 (or in 2019, provided that the business year coincides with the calendar year), if they suffered a loss of turnover or income of at least 33 percent in March 2020 (compared to March 2019) and in April 2020 (compared to April 2019); 

  • With proceeds or income exceeding €50 million in the tax period before April 9 2020 (or in 2019, provided that the business year coincides with the calendar year), if they suffered a loss of turnover or income of at least 50 percent in March 2020 (compared to March 2019) and in April 2020 (compared to April 2019). 

The suspension is provided for:

a) Taxes withheld on employment and similar income under section 23 and section 24 of the Italian DPR No. 600/1973 and regional and municipality income surtaxes withheld by those acting as withholding agents;

b) VAT;

c) Social security contributions and mandatory insurance premiums.

For enterprises, sole proprietor companies and self-employed people having their tax domicile, legal or operational offices in the Italian provinces of Bergamo, Brescia, Cremona, Lodi and Piacenza only, the April and May VAT payments are suspended regardless of the proceeds and income achieved in 2019, if they suffered a loss of turnover or income of at least 33 percent in March 2020 (compared to March 2019) and in April 2020 (compared to April 2019).  

Suspended payments (no penalties and interest) are payable in one instalment by June 2020 or in no more than 5 monthly instalments of equal amount starting in June 2020.  

Gian Luca Nieddu

T: +39 02 7780711


Barbara Scampuddu 

T: +39 02 7780711


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