Law decree No. 34 of May 19 2020 published in the Official Gazette, the so-called ’relaunch decree’, has introduced tax incentives to revitalise the Italian economy. The most relevant measures are outlined below.
Regional tax on productive activities allowance
The payments below are not due from enterprises or self-employed people with revenues below €250 million ($285.7 million) in the fiscal year prior to that ongoing from May 20 2020:
Final rate of regional corporation tax (IRAP) balance related to the fiscal year ongoing as of December 31 2019 (down payments for that fiscal year would still be payable); and
First IRAP down payment for the fiscal year following that ongoing as of December 31 2019 (e.g. 2020, if the fiscal year 2019 ended on December 31 2019).
Banks, financial institutions, insurance companies and public sector bodies are excluded from this tax benefit.
Non-repayable public contributions
Enterprises, self-employed people and agricultural income holders may receive a non-repayable public contribution if they:
Hold an active VAT number;
Are still active on the date the application is filed; and
Posted revenues not exceeding €5 million in the fiscal year prior to that ongoing from May 20 2020.
This contribution may be granted provided that revenues posted in April 2020 do not exceed two thirds of the revenues, recorded in April 2019. In any case, this contribution is granted to those who started their businesses after January 1 2019.
The contribution amount is determined as the difference between April 2019 and April 2020 turnover, multiplied by the following ratios:
20% for those with revenues not exceeding €400,000 in the fiscal year prior to that ongoing from May 20 2020;
15%, if the revenues range between €400,000 and €1 million; and
10%, if the revenues range between €1 million and €5 million.
The minimum amount of this contribution is €1,000 for individuals and €2,000 for companies and other entities, and is not subject to taxation for both corporate income tax (IRES) and IRAP purposes.
In any case, this public contribution may not be paid to banks, financial institutions, public sector bodies, self-employed people registered with a private pension scheme and all those entitled to receive the €600 aid set forth by Law Decree No. 18/2020.
Deferral of tax payments
Prior law decrees released by the Italian government during the COVID-19 pandemic had provided a suspension for payments related to:
Withholding taxes on compensation of employees and similar income, VAT, social security contributions and mandatory insurance premiums for March 2020, April 2020 and May 2020; and
Non-withheld taxes on self-employed income.
As stated in the relaunch decree, the above payments must be made by no later than September 16 2020 or in up to four equal monthly instalments, the first of which must be paid by September 16 2020.
Moreover, this measure also introduces a further postponement to September 16 2020 of those payments due between March 9 2020 and May 31 2020 and related to, among others:
Negotiated settlement procedures (accertamento con adesione);
Conciliation on a tax assessment;
Mediation pursuant to Article 17-bis of the legislative Decree No. 546/1992 (mediazione);
Payment notices (e.g. for omitted registration of rental lease or others); and
Notices of collection of tax credits improperly used (please consider that the maximum threshold to offset tax credits has been raised to €1 million for fiscal year 2020).
Tax credits for workplace adaptation
Enterprises, self-employed people, foundations and other private entities carrying out their business in places opened to the public may benefit from a tax credit equal to 60% of the expenses incurred in 2020, with a maximum of up to €80,000. They would need to re-adapt their workplaces in order to comply with the sanitary requirements aimed at containing the spread of COVID-19.
These public health protection measures include, for instance:
The re-arrangement of entrances and way outs;
Modification of public areas such as gyms, canteens and infirmaries;
Purchase of specific furniture and technological devices to allow distance working; and
Others.
This tax credit may be cumulated with other initiatives and offset against taxable income, without any limitation, in 2021 only.
In addition, this measure also introduces a further tax credit equal to 60% of the expenses incurred in 2020 for the disinfection of workplaces and the purchase of personal protection devices (e.g. masks, eye glasses, face guards, disinfectants, detergents, gloves, sterile clothes and footwear) compliant with the safety requirements set forth by the European law.
Moreover, the purchase of thermometers, thermal scanners, plexiglass barriers and other devices for social distancing, and their installation, is suitable to benefit of this tax credit.
The maximum amount of this credit attributable to each beneficiary is €60,000.
The tax credit may be offset without any amount limitation and is not subject to taxation for both IRES and IRAP purposes.
Gian Luca Nieddu
T: +39 02 7780711
E: gianluca.nieddu@hager-partners.it
Barbara Scampuddu
T: +39 02 7780711
E: barbara.scampuddu@hager-partners.it
