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Italy: Tax relief and incentives in response to coronavirus (COVID-19)

Italy: Tax relief and incentives, coronavirus

Law Decree no. 18/2020 (published in the official gazette on 17 March 2020) provides tax and employment-related relief in response to the coronavirus (COVID-19) pandemic.

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The law decree must be “converted into law” within 60 days; during that parliamentary process, it is possible that certain changes could be made. The measures in the law decree address, in part:

  • Tax payments, tax collection

Concerning tax payment and compliance deadlines, the decree suspends (among other items) certain payments of withholding tax on wages; suspends payments of social security contributions, of mandatory insurance premiums and of related obligations; and suspends value added tax (VAT) payments due for March 2020.

Under the guidance, taxes not levied by withholding agents can be paid directly by the taxpayer in one lump-sum by 31 May 2020 or in a maximum of five equal monthly instalments, starting from May 2020, without penalties or interest for late payment.

The decree also suspends collection payment deadlines related to payment notices (cartelledi pagamento) issued by collection agents and by the social security authorities, as well as tax assessment notices (vvisidi accertamento) issued by the tax authorities. Similarly, all notices of payment issued by the customs authorities and local authorities have been suspended.

  • Tax incentives

Tax incentives provided concern payments of “employee bonuses” and tax credits for amounts paid by businesses to sanitize work premises.

Donations made by individuals and non-profit entities during 2020 to the state, regions, local public authorities, other public institutions or legally recognized non-profit organizations to finance investments or expenses aimed at coping with the COVID-19 emergency can benefit from a 30% tax deduction subject to a cap of €30,000.

There are provisions regarding corporate cash needs and the assignment of receivables. If trading and financial receivables are assigned for consideration by 31 December 2020 and the customers have defaulted (payment is over 90 days late), it is possible to convert the deferred tax assets into a tax credit.

  • Tax assessment, tax collection and tax litigation

The decree provides for a temporary suspension of certain tax agency deadlines and the statute of limitations. For instance, from 8 March to 31 May 2020, there will be a suspension of the deadlines by which the tax agency must finalize tax audits, issue and serve notices of assessment, request payments and pursue litigation; respond to applications for tax rulings (ordinary rulings, fast-track rulings under the cooperative compliance regime, and substantial investment rulings); confirm admission to the cooperative compliance regime (even as part of the procedure to be followed when disclosing an unreported permanent establishment); and respond to applications for international rulings (such as APAs), unilateral corresponding adjustments (transfer pricing), and patent box relief.

Read a March 2020 report [PDF 233 KB] prepared by the KPMG member firm in Italy

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