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Italy: VAT relief, other tax relief measures (COVID-19)

Italy: VAT relief, other tax relief measures (COVID-19)

Value added tax (VAT) relief measures and extensions of time to make certain tax payments are included in a new “law decree,” provided in response to the coronavirus (COVID-19) pandemic.

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Law Decree no. 34 of 19 May 2020 (known in English as the “Relaunch decree”) is effective on its date of publication in the official gazette—19 May 2020.

The Relaunch decree now must be converted into law within 60 days of this date of publication.
 

VAT relief

The Budget Law for 2020 established that the VAT rates in Italy (both the 22% standard rate and the 10% reduced rate) would automatically increase as of 1 January 2021 unless certain budgetary targets were reached by that date. The Relaunch decree repeals this mechanism; thus, unless the law is revised, the 22% standard rate and the 10% reduced rate will remain in effect during 2021.

The Relaunch decree also introduces a “super-reduced” 5% rate of VAT for supplies of certain medical goods needed to address the COVID-19 outbreak. These goods include ventilators, monitoring systems, infusion pumps for drugs, endotracheal tubes, and certain protective devices and masks, among many other items. Supplies of eligible goods if made by 31 December 2020 will be VAT-exempt, with the right to recover VAT.
 

Other relief measures

The Relaunch decree includes further relief measures. For instance, it extends certain deadlines for tax payments and social security contributions (deadlines already extended by the Cure Italy decree and the Liquidity decree). The extended deadline for certain remittances is now in September 2020.

A requirement (April 2019) directed retailers to electronically report their daily receipts within 12 days of the date of sale. This was subject to a six-month “grace period.” The Relaunch decree extends the grace period to 1 January 2021 for certain retailers whose turnover does not exceed a threshold of €400,000.

Under the Relaunch decree, for fiscal year 2020, the annual cap on offsetting a credit for one type of tax against liabilities for another type of tax has been increased to €1 million (from €700,000).


Read a May 2020 report [PDF 178 KB] prepared by the KPMG member firm in Italy

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