TAX ALERT 2020/08

The decree has to be converted into law by Parliament and may therefore still be subject to amendments. The main tax provisions are reported below.

Incentives for equity enhancement and investments

Equity enhancement. Subject to certain conditions and caps, a tax credit is granted for cash equity contributions to companies with revenues ranging between EUR 5 million and EUR 50 million if their revenues in March and April 2020 dropped by more than 33% as compared to the same months of 2019 due to the COVID-19 emergency. The benefits cannot overall exceed the maximum amount of EUR 800,000 for each industrial company. This measure is subject to the approval of the EU Commission pursuant to Article 108 of the Treaty on the Functioning of the European Union on State aids.

Long-term savings investment plans (“PIR”). A new kind of PIR is introduced to foster investments in enterprises (other than those included in the FTSE MIB and FTSE Mid Cap indexes or equivalent indexes of other regulated markets).

Innovative Start-ups. The tax deduction recognized for equity investments in innova-tive start-ups or innovative SME made by individuals directly or through undertakings for collective investment that mainly invest in innovative start-ups and innovative SME is increased to 50%. In both cases the max-imum investment deductible cannot exceed the amount of EUR 100,000 for each fiscal period and the investment must be held for at least three years.

Payments, refunds, offsetting and payments by the public administration

IRAP payments not due. The Regional Tax on Productive Activities (IRAP) balance payment for 2019 and first advance pay-ment for 2020 are not due for taxpayers with 2019 revenues not exceeding EUR 250 million. Banks and other financial intermedi-aries, holding companies, insurance compa-nies, public administrations and public enti-ties are excluded from the benefit.

Deferral of deadlines for certain tax payments and tax compliance obligations. Certain tax payments concerning VAT, withholding taxes and social security and compulsory insurance contributions otherwise due in April and May 2020 were previously suspended for some classes of taxpayers based on industry segment, geographic location and turnover reduction. The deadline for the payment of such taxes and contributions is now deferred to 16 September 2020. Moreover, other tax compliance deadlines (other than tax payments) falling between 8 March 2020 and 31 May 2020, which were previously postponed to 30 June 2020, are now further postponed to 16 September 2020.

Tax refunds and payments due by the public administration. For year 2020, the Tax Authorities will grant tax refunds with-out first offsetting their enforceable tax claims against the taxpayer’s credits. More-over, payments due by the public admin-istration during the period from 8 March 2020 to 31 May 2020 will not be subject to previous audit of the existence of tax liabili-ties.

Increase of the cap to offset tax credits. For 2020, taxpayers may offset tax and so-cial security credits against tax liabilities up to EUR 1 million (instead of the standard EUR 0.7 million cap).

Suspension of payments due as a result of certain tax procedures. The deadlines for tax payments due as a result of tax set-tlements, mediation, judicial settlements, deeds and assessments related to registra-tion tax and assessments for recovery of tax credits expiring between 9 March 2020 and 31 May 2020 are postponed to 16 Sep-tember 2020 without application of interest or penalties. Payments can be made in a single instalment by 16 September 2020 or in monthly instalments (up to 4) starting from the same date.

Tax credits and deductions

Tax credit for tenants of business prop-erty. Tenants of business property (includ-ing leaseholders under other types of real estate contracts) are entitled to a tax credit if their revenues for the previous tax period do not exceed EUR 5 million (no such condi-tion applies to taxpayers running hotel busi-nesses) and their turnover in March, April and May 2020 (April, May and June for tour-istic accommodation facilities with seasonal activities) decreased by at least 50% as compared to the same months of 2019. The tax credit is equal to 60% of the rents paid in 2020 for these months (30% in case of complex, integrated services contracts or lease of going concerns that include at least one real estate).

Incentive for energy efficiency measures, anti-seismic measures, in-stallation of photovoltaic panels and columns for charging electronic vehi-cles. Subject to certain conditions and caps, a tax deduction of 110% is granted to indi-viduals for specific costs related to energy efficiency measures, anti-seismic measures, installation of photovoltaic panels and col-umns for charging electronic vehicles in-curred between 1 July 2020 and 31 Decem-ber 2021. This tax deduction can be trans-formed in a discount applied directly by the supplier of the services (which, in turn, will benefit from a corresponding tax credit from the State) or in a tax credit that could be transferred to other persons, including banks or other financial intermediaries.

Tax credit for COVID-19 safety measures to be implemented on work-places. Taxpayers can benefit from a tax credit of 60% of the costs borne in 2020 for COVID-19 safety measures to be imple-mented on workplaces, as well as for the purchase of personal protective equipment and other safety equipment, with a cap of (i) EUR 80,000 for activities open to the public and (ii) EUR 60,000 for other activi-ties. This tax credit could be transferred to other persons, including banks or other fi-nancial intermediaries.

Increase of the tax credit for invest-ments in advertisement. For 2020, the tax credit for advertising investments is in-creased from 30% to 50%, subject to an overall cap for the treasury of EUR 60 mil-lion.

Tax credit for R&D investments in southern Italy. The tax credit for R&D in-vestments in southern Italy is increased from 12% to: (i) 25% for large enterprises, (ii) 35% for medium-size enterprises and (iii) 45% for small enterprises.

Tax credit for R&D investments in southern Italy. The tax credit for R&D in-vestments in southern Italy is increased from 12% to: (i) 25% for large enterprises, (ii) 35% for medium-size enterprises and (iii) 45% for small enterprises.

Procedures and litigation

Tax Court hearings via remote connec-tion. Upon request of the parties, the Tax Court hearings could be held via remote connection. The disputes for which the hear-ings could be held via remote connection will be identified by the judges, based on the criteria set forth by the Presidents of the Tax Courts.

Deferrals of the deadlines for the ser-vice of appeals. Deadlines for the service of appeals against different types of tax as-sessments that had to be paid between 9 March 2020 and 31 May 2020 are postponed to 16 September 2020.

Extension of the deadline for notifica-tion of the assessments. Tax assess-ments for which the statute of limitations expire between 8 March 2020 and 31 De-cember 2020 will be served by the Tax Au-thorities in 2021, except in case of urgency, provided that they are issued in 2020. No interest (for delayed registration in the tax roll) will apply from 1 January 2021 until the date when the tax assessment is served on the taxpayer.

Combination of the suspensions for COVID-19 emergency and tax settlement procedures. The deadline for appealing against tax assessments is computed by taking into account the suspension period provided for the COVID-19 emergency (9 March 2020 – 11 May 2020) and the sus-pension period of 90 days granted to tax-payers for tax settlement procedures.

VAT

Repeal of the VAT and excise duties safeguard clauses. The safeguard clauses providing for the increase of the VAT rates and excise duties on fuels rates in case of failure to find the resources to grant the balanced budget are repealed.

Temporary VAT exemption and reduc-tion of VAT rate on medical devices and personal protective equipment for COVID-19 emergency. The transfer of medical devices and personal protective equipment for COVID-19 emergency is VAT exempt with no limitation to the deduction of input VAT until 31 December 2020. As from 1 January 2021, the supply of the above products will be subject to the 5% reduced VAT rate.

Extension of the “grace” period for VAT obligations related to electronically stored and transmitted daily data. Penal-ties related to the violation of the VAT obli-gations to electronically stored and trans-mitted daily data will not apply until 1 Janu-ary 2021.

Support to tourism and arta

Measures for the tourism industry. Families with equivalent economic status in-dicator (ISEE, “Indicatore della Situazione Economica Equivalente”, which is an indica-tor of the economic status of a family unit, used to access tax incentives and other benefits) not exceeding EUR 40,000 are granted a subsidy for purchasing touristic services offered in Italy from 1 July 2020 to 31 December 2020. The subsidy is equal to EUR 500 for each family (EUR 300 for cou-ples and EUR 150 for singles). The subsidy is granted, subject to certain conditions, as follows: (i) 80% as a discount on the price of the services (in turn the supplier may benefit from a corresponding tax credit) and (ii) 20% as a tax deduction. Moreover, tour-istic real estate is exempt from the 2020 first instalment of the Municipal Property Tax (IMU).

Art bonus. The art bonus is extended also to donations to instrumental ensembles, or-chestra and circuses.

Other measures

Extension of the deadline for the deliv-ery of the assets to benefit from en-hanced depreciation. The deadline for the delivery of the assets to benefit from the 2019 enhanced depreciation regime is ex-tended from 30 June 2020 to 31 December 2020.

Extension of the applicability of State aids. The State aids for the COVID-19 emergency allowed by the EU Commission can be granted also to enterprises that ben-efitted from previous undue State aids and have not reimbursed them yet. This meas-ure does not however remove the obligation of repaying previous undue State aids.

Deferral of the plastic tax and the sugar tax. The application of the plastic tax and the sugar tax is deferred to 1 January 2021.

Revaluation of lands and unlisted shares. The optional regime that allows certain taxpayers to step up the tax basis of lands and unlisted shares by paying an 11% flat tax is reopened for lands and shares held at 1 July 2020.