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20-03-2020 - COVID-19: Summary of fiscal measures adopted by the Italian Government

On 17 March 2020, the D.L. 18/2020 (the Decree) came into force, bringing urgent measures aimed at supporting the business, workers and families in the present epidemiological emergency from Coronavirus.

The following is a summary of the most relevant provisions for companies belonging to multinational groups.

1. Measures relating to the suspension of payments

Article 60 of the Decree has provided - as a temporary matter of urgency - a slight deferral for all taxpayers to 20 March 2020 of payments to public administrations, including those relating to VAT, social security and welfare contributions and INAIL premiums for compulsory insurance previously expiring on 16 March 2020.

In addition, there are specific, more beneficial rules for suspending payments, which may apply depending on:

- The industry (e.g., retail shops, cultural activities, and others affected by the lock-down);
- The size (i.e., reserved to small business, based on 2019 figures);
- The location (i.e., the most affected areas of Northern Italy).

2. Measures relating to deferral of tax fulfilments other than payments

Article 62 of the Decree provides for the suspension of tax obligations other than payments and the application of withholding taxes, which expire between 8 March 2020 and 31 May 2020 for all persons with tax domicile, legal office or operational headquarters in the territory of the State. Please note that, based on the present language of the provision, the deferral does not apply to the tax obligations of foreign established enterprises registered in Italy for VAT purposed (direct registrations or registrations though a VAT representative).

Suspended fulfilments must be carried out by 30 June 2020. No penalty would thus apply within such term. 

The suspension is also applied in respect of the filing obligations concerning financial transactions entered into by financial institutions and holding companies. 

Please note that there is no deferral of the deadline of 31 March 2020 related to the online filing of withholding certifications, where relevant for the preparation of pre-compiled tax returns for 2019 and related to the delivery to recipients of withholding tax certifications (e.g., the CUPE Form).

3. Tax litigation measures

The Decree has made changes to the main procedural terms. As an indication, Article 83, Paragraph 2 of the Decree, ordered the suspension, in the period between 9 March 2020 and 15 April 2020, of the deadline for notification of the appeal in the first instance before the tax commissions and for the completion of the complaint/mediation procedure.

It may be questioned whether any suspension of the terms applies to the ongoing pre-judicial settlement procedures. There is no specific provision on this matter, albeit it can be argued that these procedures fall within the general postponement of terms concerning administrative procedures.

In addition, a partial suspension of liquidation, inspection and auditing activities, collection and tax litigation (Article 67 of the Decree) activities by the Tax Authorities has been envisaged.

The payment obligations arising from auditing and verification activities by the Tax Authorities are suspended from 8 March 2020 to 31 May 2020. 

On the other hand, no suspension has been openly provided in respect of payments arising from so-called "informal notices" and tax collection lists deferral.

Finally, the statute of limitations has been extended by two years (e.g. tax year 2015 can be inspected until 31 December 2022 rather than 31 December 2020).

4. Tax subsidies and incentives

The Decree has introduced an array of tax relief measures, including:

- the possibility of converting deferred tax assets deriving from tax losses and notional capital allowance surpluses into tax credits, in front of the divestment by 31 December 2020 of outstanding receivables or loans to defaulting debtors. The conversion is limited to the deferred tax assets corresponding to tax losses and notional capital allowance surpluses of 20% of the face value of the receivables/loans transferred. Divested receivables/loans cannot exceed a maximum face value of 2 billion Euro (Article 55 of the Decree);
- a tax allowance of 50% of the sanitization costs borne in year 2020 of the environments and working tools, where documented and up to a maximum of 20,000 Euro (Article 64);
- a tax allowance of 60% of the amount of rental cost, relating to March 2020, of properties in the C/1 cadastral category (i.e., shops) devoted to the carrying out of locked – down activities (Article 65). 

5. Other measures to support corporate liquidity

A number of measures have been included in the Decree to support corporate liquidity, including:

- the strengthening of the facilitation measures of the "Central SME Guarantee Fund" (Article 49);
- financial support measures (e.g. suspension of the payments of instalments or leases until 30 September 2020 for mortgages and other loans) for companies which have suffered a decrease in activity (Article 56);
- guarantee mechanisms for companies that have suffered a reduction in turnover (Article 57).

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