MILANO Via Cusani 5 T +39.02.92955400 [email protected]ROMA Via XXIV Maggio 43 T +39.06.95215700 www.studiopbl.it 0$5&+ 2020 TAX ALERT THE TAX MEASURES OF THE ‘MARCH DECREE’ On March 17, 2020, the Government issued Law Decree No. 18 (published in the Italian Official Gazette No. 70 on the same day) also known as ‘March Decree’ or ‘Healing Italy’, containing several measures to strengthen the national healthcare service and to support Italian families, employers and enterprises, in connection with epidemic emergency due to COVID-19 (hereinafter the “Decree”). The Decree must be converted into law within May 16, 2020 and may be modified. In addition to the Decree, the legislative package regarding the COVID-19 emergency, currently comprises: - Resolution of the Italian Council of Ministers (‘CDM’) issued on January 31, 2020 on the emergency ‘status’, and Resolution of the CDM issued on March 5, 2020 increasing the Fund for national emergencies; - Law Decree (LD) No. 6/2020 – converted into Law No. 13/2020 – addressing urgent measures on containing and managing the emergency; LD No. 11/2020 addressing measures on judicial activity; LD No. 14/2020 addressing urgent measures to strengthen of the national healthcare service; - Six Decrees of the Italian Prime Minister (‘DPCM’) issued on February 25, 2020 and March 1, 4, 8, 9 and 11, 2020 containing implementing measures of Law Decree No. 6 above. This alert addresses a summary of the hottest topic tax measures contained in the Decree; the most important measures will be analysed in further detail in other Tax Alerts to be published in the near future. CONTENTS 1. ALLOWANCE FOR AFFECTED PROFESSIONALS AND SECTORS P. 2 2. SUPPORT TO ENTERPRISES P. 3 3. SUSPENSION OF TAX AND SOCIAL SECURITY CONTRIBUTIONS P. 3 4. SUSPENSION OF TAX OBLIGATIONS P. 5 5. BONUS FOR EMPLOYEES P. 6 6. TAX CREDIT FOR SANITATION EXPENSES P. 6 7. TAX CREDIT FOR SHOPS P. 6 8. INCENTIVES FOR DONATIONS P. 6 9. SUSPENSION OF THE TAX AUTHORITIES’ OPERATIONS P. 7 10. SUSPENSION OF PAYMENT OF OUTSTANDING CHARGES P. 7 11. EXTENSION OF PAYMENTS IN THE GAMING SECTOR P. 8 12. MENTION REQUIRED TO WAIVE THE SUSPENSION P. 8 13. MEASURES FOR JUDICIAL MATTERS P. 8 14. MEASURES SUPPORTING THE PRESS P. 9 15. COMPANY MEETINGS P. 9
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0TAX ALERT
THE TAX MEASURES OF THE ‘MARCH DECREE’
On March 17, 2020, the Government issued Law Decree No. 18 (published in the Italian Official Gazette No. 70 on the same day) also known as ‘March Decree’ or ‘Healing Italy’, containing several measures to strengthen the national healthcare service and to support Italian families, employers and enterprises, in connection with epidemic emergency due to COVID-19 (hereinafter the “Decree”).
The Decree must be converted into law within May 16, 2020 and may be modified.
In addition to the Decree, the legislative package regarding the COVID-19 emergency, currently comprises:
- Resolution of the Italian Council of Ministers (‘CDM’) issued on January 31, 2020 on the emergency ‘status’, and Resolution of the CDM issued on March 5, 2020 increasing the Fund for national emergencies;
- Law Decree (LD) No. 6/2020 – converted into Law No. 13/2020 – addressing urgent measures on containing and managing the emergency; LD No. 11/2020 addressing measures on judicial activity; LD No. 14/2020 addressing urgent measures to strengthen of the national healthcare service;
- Six Decrees of the Italian Prime Minister (‘DPCM’) issued on February 25, 2020 and March 1, 4, 8, 9 and 11, 2020 containing implementing measures of Law Decree No. 6 above.
This alert addresses a summary of the hottest topic tax measures contained in the Decree; the most important measures will be analysed in further detail in other Tax Alerts to be published in the near future.
CONTENTS
1. ALLOWANCE FOR AFFECTED PROFESSIONALS AND SECTORS
P. 2
2. SUPPORT TO ENTERPRISES P. 3
3. SUSPENSION OF TAX AND SOCIAL SECURITY CONTRIBUTIONS
1. Allowance for various sectors (professionals, coordinated and cooperative freelancers, general mandatory insurance, seasonal workers, agricultural and entertainment sectors) – Articles from 27 to 31 and Article 38
For specific individuals listed in the chart to the right, a lump sum allowance has been provided in an amount of EUR 600.
Such allowance is addressed to self-employed professionals enrolled with the separate national insurance and pension scheme (‘INPS’), excluding those individuals enrolled in mandatory pension schemes provided for specific professions or orders (e.g. mandatory contributions for lawyers, chartered accountants, engineers, etc.).
The allowance will not be relevant for individual income tax purposes and will be paid by INPS, upon specific application.
The allowance:
- may not be cumulated with any other allowance already provided for other sectors;
- may not be used by individuals receiving the s.c. ‘citizenship income’ (reddito di cittadinanza);
- will be distributed within specific public spending limitations (as reported in the chart to the right).
Workers Subjective requirements
Budget limits (€)
Self-employed professionals
Term-contract workers
(Art. 27)
- active VAT/term-contract active since 23 Feb. 2020
- Enrolled with the so-called gestione separata of INPS
- Not retired - Not enrolled with
other compulsory social security funds
203.4M
Farmers
Artisans
Retail traders
(Art. 28)
- Enrolled with the general compulsory insurance (Assicurazione Generale Obbligatoria)
- Not retired - Not enrolled with
other compulsory social security funds
2.16 B
Seasonal workers of the tourism sector and of thermal baths
(Art. 29)
- Involuntary termination of employment between 1 January 2019 and 17 March 2020
In order to stimulate liquidity into enterprises, the Decree introduced a new ‘special’ regime for the ‘transformation’ of Deferred Tax assets (‘DTA’) into tax credit.
The new provision applies in the following circumstances:
- sale of ‘outstanding receivables’ against non-complying debtors (i.e. receivables whose payment are in excess of 90 days past the original due date); and
- presence of carry forward tax losses and/or surplus arising from the corporate equity provision allowance (‘ACE’).
For tax credit computation purposes, the carry forward tax losses and the ACE surplus must be calculated in an amount not exceeding 20% of the nominal value of the transferred credit. In addition, this provision applies solely to transfers of credits the total nominal value of which does not exceed EUR 2 Billions. In the case of corporate groups, the above threshold must be determined taking into account all the transfers carried out by group companies.
Therefore, in the case of transfer of credits for an amount equal to 1,000, and considering
- an amount of ACE-derived carry forward tax losses/surplus equal to 200, and
- the Italian corporate income tax rate (IRES) equal to 24%,
the DTA to be transformed into tax credit would be equal to 48.
The transformation regime described above does not apply to companies having an assessed ‘instability risk’ or ‘instability status’ (as provided
by Art. 17 of Legislative Decree No. 180/2015), or ‘insolvency status’ (as provided by Art. 5, R.D. 267/1942 and by Art. 2 of the Italian ‘code of corporate distress and insolvency’).
In addition, the credits above must be transferred only to ‘third-party’ companies (i.e. intra-group transfers are not allowed for transformation purposes).
The new transformation regime described above is subject to the taxpayers’ option to carrying on the DTA transformation regime (as provided by Art. 11 of Law Decree No. 59/2016). The option may be exercised within the end of the fiscal year where the transfer of the credits occurred (and not necessarily upon transfer).
The credits to be transferred may have a ‘commercial’ or ‘financial’ nature.
The provision does not contain any specific limitation regarding the proceeds of the transfer.
Tax credits from the transformation must be reported in the income tax return and are not relevant for both corporate income tax (IRES) and regional activity tax (IRAP) purposes.
Tax credits may be:
- offset against other taxes;
- transferred within the group or to third-party companies;
- requested for tax refund.
3. Suspension of tax and social security payments (Articles from 60 to 62)
The Decree provides for the suspension of payments and taxpayers’ obligations, which will vary depending on the kind of consequence suffered as a result of the current emergency, as explained below.
The term for payments to public administrations scheduled for March 16, 2020 will be postponed to March 20, 2020, including payments related to social security contributions and mandatory insurance premiums.
3.2. Taxpayers particularly impacted by the emergency (Article 61)
A suspension of payments is provided for:
- withholding taxes for employment incomes;
- social security contributions and insurance premiums;
- VAT payments due within the end of March 2020.
Such provision extends the suspension – already provided by Article 8 of Law Decree No. 9/2020 – applied to:
- hotel and tourism businesses, travel and tourism agencies, tour operators;
- further sectors particularly affected by the emergency such as, inter alia:
• national sport federations, sport promotion organisations, sports clubs and associations;
• stadiums managers, sport facilities, gyms, clubs and dancing facilities, swimming pools, theatres, concert halls, cinemas;
• entities organizing classes, exhibitions, events, including those having artistic, cultural, recreational, sport and religious nature;
The payment will be due, without penalties and interest:
- for all taxpayers, in a single payment within May 31, 2020 or in (not more than 5) monthly equal instalments, starting from May 2020;
- for national sport federations and sport promotion organisations, sport clubs and sport associations (both professional and non-professional), in a single payment within May 31, 2020 or in (not more than 5) monthly equal instalments, starting from June 2020;
In case of payments (that may benefit from the suspension) but that have already been made, taxpayers are not allowed a refund.
3.3. Specific categories of taxpayers (Article 62)
3.3.1. With regard to subjects operating business, artistic or professional activity and:
- having their tax residence, registered office or operating office in Italy;
- having revenues or proceeds not exceeding EUR 2 M in the last fiscal year,
the Decree provides for a suspension of payments (i.e. self-payment) the term of which is fixed between March 8, 2020 and March 31, 2020 and in relation to:
- withholding taxes, withholding taxes related to regional and municipal additional taxes;
- VAT;
- social security contributions and mandatory insurance premiums.
The payments will be due in a single payment within May 31, 2020 or in (not more than 5)
monthly equal instalments, starting from May 2020, without penalties and interest.
3.3.2. As regards subjects operating a business activity, art or professional activity and having their tax residence, registered office or operating office in certain Italian areas (i.e. Bergamo, Cremona, Lodi and Piacenza), the suspension above applies without considering any thresholds of revenues or proceeds.
3.3.3. As regards subjects having their tax residence, registered office or operative office in the so-called ‘red zone’ as defined in the Annex 1 to DPCM of 1 March 2020, the following is provided:
- a suspension of tax payments and tax obligations, including those deriving from:
• statements of taxes due (cartelle esattoriali) issued by the agent for the collection of taxes (agente della riscossione);
• enforceable tax assessment having due date between 21 February 2020 and 31 March 2020;
- the non-application of the ordinary withholding taxes.
The suspended payments will be made in a single payment within May 31, 2020 or in (not more than 5) monthly equal instalments, starting from May 2020, without applying penalties and interest and without the possibility to ask for a refund in the case of payments that have already been made.
3.3.4. As regards subjects having revenues not higher than EUR 400.000 in the last fiscal year (e.g. self-employed persons or working on
commission, agency services, intermediary services, etc.), revenues received in the period between March 17, 2020 and March 31, 2020, are not subject to withholding tax, provided that in the previous month the same subjects:
- have not incurred any expenses for employment (or assimilated to employment); and
- submit a certificate attesting the fulfilment of the requirement above.
The amount of the withholding tax not withheld will be paid (in a single instalment) within May, 31 2020 or in (not more than) 5 monthly equal instalments from May 2020, without applying penalties and interest and without the possibility to request the refund in the case of payments that have already been made.
4. Suspension of tax obligations (Article 62)
With regard to subjects having their tax residence, registered office or operating office on Italian soil, a suspension is provided for all tax obligations due between March 8, 2020 and May 31, 2020, excluding:
- payments;
- withholding tax;
- withholding tax related to regional and municipal additional taxes.
The suspension does not apply to terms connected to obligations related to the ‘pre-filed’ tax return for 2020; in this respect, article 1 of Law Decree No. 9/2020 already postponed:
- the submission by third parties of the data to be used for tax return to March 31, 2020;
- the submission of the ‘pre-filed’ tax return form to September 30, 2020.
5. Bonus for employees (Article 63)
The Decree introduced a cash bonus for employees (working in the private or public sector):
- having a total employment income not higher than EUR 40,000;
- carrying on their activity in their ordinary workplace during March 2020.
The bonus amount is equal to EUR 100, which has to be proportional to the actual days of work in the ordinary workplace.
The bonus is not relevant for income tax purposes and will be disbursed by the withholding agent (i.e. the employer) starting from the payment of April 2020 wages or, in any case, within the terms provided for year-end adjustments.
The withholding agent (i.e. the employer) will recover the amounts above through tax offset with other taxes.
6. Tax credit for workplaces sanitation expenses (Article 64)
The Decree introduced a tax credit related to expenses incurred for the sanitation of workplaces during 2020.
In particular, entities operating business, artistic or professional activities may benefit from a tax credit equal to 50% of the expenses incurred during 2020 for sanitation of workplaces and work instruments up to of EUR 20.000 (a budget limit of EUR 50 ML has been set for all taxpayers).
In this respect, an implementing decree must be published within 60 days from effective date of the Decree.
7. Tax credit for shops (Article 65)
With regard to entities operating business activity and paying rental fees for shops (i.e. comprised within the C/1 cadastral category) – excluding specific activities (such as supermarkets and hardware stores) and services (as cleaners) listed in Annexes 1 and 2 to DPCM of March,11 2020) – may benefit from a tax credit equal to 60% of the rental fees to be paid in March 2020, and which may be used solely for tax offset purposes.
8. Tax incentives for cash or in kind donations supporting the COVID-19 epidemiological emergency (Article 66)
The Decree introduced a tax incentive regime in order to stimulate donations (in cash or in kind) made by individuals and aiming at financing actions supporting the current epidemiological emergency. In particular:
- individuals (not carrying on a business activity) and non-commercial entities may benefit from a 30% deduction for the purposes of personal income tax (IRPEF) for all donations (up to EUR 30,000) made to the State, Regions, local territorial entities, public entities, legally recognised non-profit organizations (foundations and associations);
- for subjects carrying on a business activity (individuals and companies), the donation is fully deductible for IRES and IRAP purposes in the fiscal year of payment.
Furthermore, considering that the provision references Article 27 of Law No. 133/1999 – and
subject to further analysis – it must be pointed out that the incentive above applies solely to donations to foundations and associations, committees, and entities listed in the DPCM of 22 June 2000 and other subsequently issued decrees (e.g. socially useful non-profit organization, foundations and associations providing expressly humanitarian interventions in favour of populations affected by disasters or other extraordinary events).
9. Suspension of the Tax Authority’s operations (Article 67)
The Decree provides for a suspension from March 8, 2020 to May 31, 2020 of the terms set for the Revenue Agency in relation to payment, auditing, assessment, collection and litigation.
The same suspension is provided for:
- terms of reply to rulings (i.e. statutory rulings, admission rulings, anti-abuse rulings, disapplication rulings and rulings for new investments and for cooperative compliance procedure);
- terms fixed for cooperative compliance procedure for advanced arrangements for multinational companies (ATA) and to advance pricing agreements procedure (APA) (in accordance to article 31-ter and article 31-quater, D.P.R. 600/1973);
- terms for applications for patent box regime.
For rulings submitted during the suspension period above (8 March – 31 May), all terms of the procedure will begin from the first day of the month following the end of the suspension period (i.e. June 1 2020).
Statutes of limitation and forfeiture for the suspended activities above have been postponed to
31 December of the second year following the end of the suspension.
Following such provision, the ordinary terms provided for assessments on fiscal year 2015 (and 2014 in case of omitted tax return) have been extended.
10. Suspension of payments to Collection Authority (Agente della riscossione) (Article 68)
The Decree provides for a suspension of the terms for the payment of taxes and non-taxes expiring between March 8, and May 31, 2020 and related to:
- statements of taxes due issued by the collection authority;
- notice of assessment;
- assessment notices issued by Customs and Monopolies Agency for the purposes of collecting their own duties and VAT on imports, and
- collection activity by territorial entities.
At a preliminary reading, it seems that the provision above may exclude:
- amicable notices (avvisi bonari);
- instalments for deferred payments related to tax roll (in accordance to Article 19 of Presidential Decree No. 602/1973).
The suspended payments must be made out in a single payment within the month following the end of suspension (i.e. June 30, 2020). It seems, therefore, that taxpayers are not allowed to split payment into different instalments and to ask for a refund for payments already made (if any).
The suspension of terms for payments implies a suspension (for the same period of time and in relation to the same payments) of the terms for any court-related obligations and of the statutes of limitations and forfeiture payment, auditing, assessment, collection and litigation in favour of tax authorities, social security institutions and collection agents.
The payment of instalments related to tax collection settlement procedures (definizione agevolata delle cartelle di pagamento) and to final settlement and write-offs (saldo e stralcio delle cartelle) – formerly due within February 28, 2020 – has been postponed to May 31, 2020.
In addition, the Decree provides that the notice of the ‘non-collectability’ of payments assigned to collection agents in 2018, 2019, and 2020, have to be submitted respectively within the end of 2023, 2024 and 2025.
11. Extension of payments in the gaming sector (Article 69)
The Decree introduced an extension for the gaming sector in relation to payments due for gaming machines, set out under Article 110, para. 6, lett. a) (AWP) and lett. b) (VLT) of Italian public security code (TULPS).
In particular, the terms for the payment of the so-called single tax withdrawal (Prelievo erariale unico – PREU) on the gaming machines, and for license fees expiring on April 30, 2020 have been postponed to May 29, 2020. The payment must be made:
- in a single payment; or
- in monthly instalments of equal amounts (as from May 20, 2020) and increased by legal daily interest at the rate of 0.05%.
In other words, in the latter case:
- the first instalment is due within May 29, 2020;
- the following instalments will be due within the last day of the month (i.e. the second instalment is due within May 31, 2020, postponed to June 1, 2020); and
- the last instalment is due within December 18, 2020.
Furthermore, the payment of concession fees provided for the extension of the ‘Bingo’ game license fees is not due as from March and so long as business operations are suspended.
Finally, the Decree provides for a 6-month deferral of the terms related to:
- the calling for tenders related to betting and bingo;
- the calling for tenders related to entertainment machine, and
- effective date of the Sole Gaming Register.
12. Mention required to waive the suspensions (Article 71)
Subjects waiving use of the suspension provided in the Decree (and described above), may ask for such waiver to be published on the website of Minister of Economy in order to have a return in terms of good reputation. In this respect, an implementing decree still needs to be published.
13. Measures to contrast the COVID-19 epidemiologic emergency and contain the effect for the purposes of civil, criminal, tax, and military proceedings (Article 83)
- all the hearings already scheduled are postponed after April 15, 2020;
- all the procedural terms are suspended from 9 March to April 15, 2020.
The suspension above regards both (i) the submission of notices starting a procedure and (ii) appeal terms.
If the initial term for start-of-procedure notices runs during the suspension period, such term is deferred to the end of the same period (i.e. after April 15, 2020).
Furthermore, in the case of terms computed backwards – and becoming effective during the suspension period – the hearing or activity from which the term starts to run will be deferred, in order to ensure compliance with the new term.
The provision above clarifies a provision of Law Decree No. 11 of March 8, 2020, stating that the suspension of terms applies to each act of the entire proceedings (not only of the trial) and, therefore, it applies also to terms set to adopt adoption a court order (e.g. judgments) and to submit their grounds or for start-of-procedure notices and the appeals (at every stage of court proceedings).
14. Extraordinary Measures supporting the press (Article 98)
The Decree provides for an ad hoc measure regarding the so-called ‘advertising bonus’ for 2020. In particular, enterprises, self-employed professionals, and non-commercial entities investing in advertising in daily or periodical press outlets (also on line) and in the local television or radio networks (both digital and analogic) may benefit – subject to same requirement already set out under Article 57-bis of Law Decree No.
50/2017 – from a tax credit equal to 30% of the entire investment made in 2020.
Unlike the past regime, the new bonus has to be computed on the entire investment made during the period (and not only on the portion of the investment exceeding the previous year’s investment).
15. Provisions regarding company shareholders meeting (Article 106)
According to the Decree, all companies – notwithstanding the ordinary rules set out in the Italian Civil code – are allowed to call ordinary shareholders’ meetings for the approval of 2019 financial statements within 180 days from the end of such year (i.e. within June 28, 2020).
Therefore, the payment of taxes must be made within the last day of the month following the month of financial statements the approval (i.e. within July 31, 2020, or within August 30, 2020 with a 0.4% surtax).
In this respect, let it be reminded that Article 1, para.1, lett. q), of DPCM of March 8, 2020 allows companies to carry out company and board of directors’ meetings also trough video or audio conference. The remote participation may be pertain to all meeting participants (including the chairman of the meeting), except the secretary assigned to record the meeting or the notary, who must attend at the location expressly indicated in the meeting notice of call (see Principle No. 187/2020 of the Notaries Council of Milan).
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This tax alert does not constitute a legal opinion and has been prepared for information purposes only.
