Government and institution measures in response to COVID-19.
Government and institution measures in response to COVID-19.
Return to homepage | Last updated: 24 June, 2020
The “Liquidity Decree” (released 8 April 2020 and converted into Law no. 40, dated 5 June 2020) includes measures that are intended to assist businesses by providing loan guarantees, government assumption of non-market risks, and certain targeted tax relief.
The “Relaunch Decree” (released 19 May 2020) includes urgent measures to support healthcare, employment and the economy, and social policies.
Click here to see a comprehensive summary of jurisdictional tax measures and government reliefs in response to COVID-19.
The Government has expanded the reasons for access to the “Cassa Integrazione Ordinaria” (support of salary payment by the State), providing employers with the possibility to suspend or reduce work activity for events related to Covid-19, to apply for the support check “integrazione salariale” with a COVID-19 emergency reason, Employees are entitled to a monthly amount of 80% of their salary (subject to caps: EUR 939.89 where salary is EUR 2,159.48 or below, and EUR 1,199.72 where salary is in excess of EUR 2,159.49);
The duration of social safety nets, which was originally granted for a maximum period of 9 weeks between 23 February and 31 August 2020, has been extended by the Relaunch Decee for a further 5 weeks for employers who have used up the 9-week period.
It is also possible to request the CIGO subsidy for a further 4 weeks between 1 September and 31 October 2020. However, employers in the tourism, trade fair, conference, amusement and entertainment sectors may access this 4-week period prior to 1 September, on condition that they have fully used up the previous total period of 14 weeks.
The application of the "COVID-19 emergency" social safety nets is foreseen in relation to the employees in force on 23 February 2020.
Until the end of the emergency, private-sector worker who have at least one child under the age of 14 are entitled to work from home, even without an individual agreement with their employer, on condition that the other parent in the family is not receiving a wage subsidy for suspended/terminated employment and is not unemployed. Employees can use their personal IT devices when working from home, if these are not provided by their employer.
Private-sector employers should inform the Ministry of Labour and Social Policies of the names of the employees and of the termination of the home-working period (using the documentation available on the Ministry’s website).
Reduction in working hours and leave
The Government granted to employees with children (including foster children) aged 12 or under to benefit from special parental leave, from 5 March until 31 July 2020. This age limit does not apply to children with certified disabilities enrolled in schools or in day care centres. Leave is granted to one parent, for a continuous or split period of not more than 30 days, provided that neither parent is unemployed or benefits from a wage subsidy due to suspended employment. The period of leave ‒ during which an allowance equal to 50 percent of the ordinary remuneration is paid to the employee ‒ is covered by national contributions.
As an alternative to leave, there is the possibility of opting for a childcare allowance of up to EUR1,200 (the allowance increases to EUR2,000 for doctors, nurses, biomedical laboratory technicians, medical radiology technicians, health workers in the public, private and accredited health sectors and emergency service personnel deployed in relation to the COVID-19 outbreak). The allowance can be used for childcare over a continuous or split period of up to 30 days.
Workers who assist a family member with a serious disability (i.e. Law 104/92) are granted an additional 12 days’ leave. These additional days of leave must be taken in May and June 2020.
Renewal of fixed-term employment agreements
Employers may renew or extend fixed-term employment contracts until 31 August 2020 without having to justify this (normally, when renewing or extending a fixed-term contract after the first 12 months are up, justification has to be given).
Suspension of the time limit for appealing dismissals
Until 17 August 2020, collective redundancy procedures cannot be started. Similarly, procedures which began after 23 February 2020 are suspended.
Until this date the employer, regardless of the number of employees, cannot terminate indidividual workers’ contracts for justified business reasons (i.e. “giustificato motivo oggettivo”).
New Skills Fund
For 2020, through company-level or local collective bargaining agreements, employer associations and trade unions can implement specific agreements to, among other things, redefine working hours, organizational and production needs and allocate a number of working hours to training courses. The costs of training courses, including the related social security and welfare contributions, will be covered by a special fund called the "New Skills Fund", set up at the National Agency for Active Labour Policies (ANPAL).
Moratorium on the payment of corporate debt has been introduced
Liquidity shortages and facilitate access to financing
Central Guarantee Fund (“Fondo centrale di garanzia”)
Measures to support export, internationalization and investment by businesses
A co-insurance system has been introduced. The state will assume 90 percent of the non-market risks (as defined in EU legislation) attached to the guarantees issued by SACE; the remaining 10 percent will be assumed by the company that receives the SACE-backed loan.:
To support the production and supply of medical devices and personal protective equipment
All industrial and commercial activities suspended, response to coronavirus (COVID-19)
Enhanced transparency in “listed companies” and disclosure requirements (COVID-19)
State guarantees for newly issued bonds
To preserve financial stability the Relaunch Decree authorizes the Ministry of Economy and Finance, over the next six months, to guarantee bonds issued by Italian banks, for a total amount of up to EUR19 billion. The state guarantee will be subject to (i) verification by the Bank of Italy or the European Central Bank that the bank meets the capital requirements laid down by EU Regulation No 575/2013 and (ii) approval by the European Commission. Even if the bank applying for the aid does not meet the above requirements, it will be eligible as long as it still has positive equity and urgently needs a liquidity boost.
State aid to facilitate the orderly compulsory administrative liquidation of small banks
This measure is designed to ensure that compulsory administrative liquidation processes beginning after 19 May are managed in an orderly manner. It applies to the liquidation of small banks with total assets of up to EUR5 billion but not to the liquidation of cooperative credit banks (banche di credito cooperativo). Under the Relaunch Decree, the Ministry of Finance is authorized to grant state aid to facilitate another bank's purchase of the failing bank's assets and liabilities, business/business units and account portfolios.
These measures include the conversion into tax credits of the deferred tax assets of the bank in liquidation or of the purchaser (even if not recognized in the financial statements), the granting to the purchaser of a guarantee (express, free of charge, on first demand, unconditional and irrevocable) on some of the items transferred, and aid to the purchaser if these measures are insufficient.
The measures are subject to (i) confirmation by the European Commission that they are compatible with EU legislation on state aid and (ii) a Ministry of Economy and Finance decree, which must take Bank of Italy indications into account. Such transfers are considered as transfers of business units for VAT purposes and, where due, the registration tax, imposta ipotecaria tax and imposta catastale tax on the transfer deeds are fixed at EUR200 each. The purchaser and the seller are subject, respectively, to bridge-bank rules and bank-resolution rules, which treat such transfers as tax-neutral. Income attributable to measures supporting a transfer is excluded from the calculation of the transferee's IRES and IRAP bases. In accordance with article 2 of Presidential Decree no. 633/1972, sales and contributions of businesses/business units to companies or other entities are not treated as VATable supplies of goods.
Equity consolidation for medium-sized businesses: focus on financial instruments
The Relaunch Decree has implemented equity consolidation measures for businesses that have a registered office in Italy and fulfil other requirements. These include certain levels of revenue (as defined in the Relaunch Decree), a fall in revenue in March and April 2020 of at least 33 percent compared to the same period last year, due to the COVID-19 outbreak, and a share capital increase paid in full between 19 May and 31 December 2020. One of these measures involves the creation of a fund to assist small and medium-sized businesses. Called the Fondo Patrimonio PMI, it will be used to underwrite - up to 31 December 2020 and for an amount proportionate to the capital increase and the business's revenue - bonds or debt securities issued by the company and repayable six years or, if repaid in advance, three years after the underwriting. Businesses that take advantage of this measure must undertake not to approve or make, until the financial instruments have been fully repaid, any distribution of reserves, purchase of own shares or quotas and/or repayment of shareholder loans. They must also pledge to use the financing for staff costs, investments or working capital used for business in Italy. This measure is subject to authorization from the European Commission.
Relaunch fund and refinancing of other funds
To help relaunch Italy's economic and production system in the wake of the COVID-19 outbreak, Cassa Depositi e Prestiti S.p.A. is authorized to set up a ring-fenced pool of assets, to be provided by the Ministry of Economy and Finance. This will be called the 'Relaunch Fund' (Patrimonio Rilancio). The fund will be used to support joint-stock companies (SpAs) that (i) have a registered office in Italy, (ii) do not operate in the banking, finance or insurance sector, (iii) have an annual turnover of more then EUR50 million. Cassa Depositi e Prestiti S.p.A. will be able to use the fund to invest, preferably, in convertible bonds and capital increases, and, in the event of strategic transactions, to purchase shares listed on the secondary market. Should the fund be unable to meet its obligations, the state will automatically act as ultimate guarantor. For 2020 the Relaunch Decree also gives a EUR30,000 million boost to the fund used by SACE S.p.A. (Italy 's Credit Export Agency) to guarantee bank loans. The fund used to guarantee loans made to SMES has been boosted by approximately EUR4,000 million. Finance (as the ultimate guarantor), upon request by the securitization company, to allow certain changes to the securitization contracts and other documents , provided that the changes have been agreed between the securitization company and the servicer. In this way it is possible to suspend - for one or more payment periods - the mechanism whereby prompt payment of the servicer's fees is conditional on it meeting certain debt collection targets.
SACE guarantee for insurers of trade receivables
To safeguard trade, as well as insurance services for businesses hit by the economic fallout of the COVID-19 epidemic, SACE S.p.A. (Italy 's Credit Export Agency) will guarantee registered credit insurers of short-term trade receivables that sign up for this scheme. SACE will guarantee 90 percent of the pay-outs made as a result of claims related to trade receivables maturing between 19 May and 31 December 2020. A EUR2,000 million fund has been set up for this purpose. The state will act as the ultimate guarantor and the SACE guarantee is an express, unconditional, irrevocable first demand guarantee, with no right of recourse. This guarantee mechanism is subject to approval by the European Commission, as per article 108 TFEU.
Securitization of non-performing bank loans: state guarantee
Article 32 of the Relaunch Decree gives securitization companies and servicers greater autonomy in contracting in securitization transactions for which the securitization company has requested, or will request, a GACS guarantee (Garanzia Cartolarizzazione Sofferenze) from the State. Under a CAGS, the state agrees to act as the ultimate guarantor of the senior securities.
In view of the practical difficulties caused by the COVID-19 emergency, such as longer debt collection times, the Relaunch Decree authorizes the Ministry of Economy and Finance (as the ultimate guarantor), upon request by the securitization company, to allow certain changes to the securitization contracts and other documents , provided that the changes have been agreed between the securitization company and the servicer. In this way it is possible to suspend - for one or more payment periods - the mechanism whereby prompt payment of the servicer's fees is conditional on it meeting certain debt collection targets.
Participation in the European Investment Bank's Pan-European Guarantee Fund and in the new European scheme to provide temporary support to reduce unemployment risks during the emergency
The Relaunch Decree authorizes the Ministry of Economy and Finance to enter into the necessary agreements with the European Investment Bank (EIB) so that Italy can join the Pan-European Guarantee Fund . The ministry is also authorized to provide an unconditional and first-demand guarantee to the EIB for an overall amount of EUR1,000 million.
As explained in the report accompanying the Relaunch Decree, the guarantee fund would enable the BEi to issue guarantees and direct or indirect loans to SMEs, mid-caps, large corporations and public bodies. If a guarantee is enforced, the BEi would pay the amounts to the beneficiaries and then ask the Member States participating in the fund to pay their pro rata share, according to an agreed time frame. The Ministry of Economy and Finance is also authorized to (i) agree with the European Commission on how Member States should counter-guarantee the risks to be assumed by the EU under a new European scheme to provide temporary support to reduce unemployment risks during the COVID-19 emergency, and (ii) issue the relevant national guarantee.
Bolstering of support for innovative start-ups
To bolster support for innovative start-ups throughout Italy, the Relaunch Decree allocates:
EUR10 million for relief granted in the form of non repayable contributions towards the purchase of services from public or private bodies that aid the development of innovative enterprises;
The length of time for which innovative start-ups can remain enrolled in the special section of the Trade Register has been extended by 12 months.
Support from regional and other local authorities
Drawing on their own resources, regional authorities, autonomous provinces, other local authorities and chambers of commerce can also adopt aid measures, in line with the Communication from the Commission C(2020) 1863 - 'Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak' .
The aid can be provided by these bodies, directly or through banks or other authorized lending institutions, for a maximum period of six years, in the form of loan guarantees or cheap loans.
This type of aid cannot be given to businesses that were already in financial difficulty on 31 December 2019 and it can only be granted until 31 December 2020. It is also subject to approval by the European Commission, as per article 108 TFEU.
There are three main measures:
Payments on account for excise duty on natural gas and electricity
Monthly payments on account for excise duty on natural gas and electricity for the period May-September 2020 may be made by paying 90 percent of the ordinary amount. The balance must be paid in a single instalment by 31 March 2021, in the case of natural gas, and by 16 March 2021, in the case of electricity. Alternatively, it is possible to split the balance into 10 equal monthly rates, to be settled between March and December 2021, without any interest. Any credit will be deducted, in the ordinary way, from payments on account made after submission of the annual return. Instead, payments on account for the period October December 2020 must be calculated and paid in the usual way, as per articles 26 and 56 of the Excise Act.
Postponement of certain new excise duty requirements
The operation of certain rules, introduced at the end of last year by Law Decree no. 124 of 26 October 2019, converted - with amendments - into law by Law no. 157 of 19 December 2019 (the 2020 Budget Law) has been deferred.
Deferred payment of excise duty on energy products released in March
The payment of excise duty on energy products released for consumption in March 2020 will be considered timely and, therefore, not subject to penalties or interest charges for late payment if made by 25 May 2020.
Payment of excise duty on energy products
In view of the COVID-19 emergency, monthly payments on account may be made - for April, May, June, July and August 2020 only - by paying 80 percent of the ordinary amount within the normal deadlines. The payment for energy products released for consumption in April must be made by 25 May 2020. The residual 20 percent for each month must be paid by 16 November 2020, together with the excise duty on energy products released for consumption in October. No interest will be charged.
Postponement of the plastic tax and sugar tax
1 January 2021 is now the start date for application of the rules introducing (i) the tax on 'MACSI' (the Italian term for single-use products that are used for packaging, protection or delivery of goods or foodstuffs and that are made, totally or partially, out of synthetic organic polymers), and (ii) the tax on the consumption of sugary drinks.
Deferred payment of customs duties
There is a 60-day extension, without any interest or penalties, for customs duty payments falling due between 1 May 2020 and 31 July 2020 and made in accordance with the procedures laid down by articles 78 and 79 of Presidential Decree no. 43 of 23 January 1973. In cases of serious economic or social difficulties, this extension can be granted, on request, to customs debit account holders covered by article 61 of the Cure Italy Decree or article 18 of the Liquidity Decree, e.g. companies providing transport services, companies that - among other conditions - have seen a 33 percent or 50 percent fall in turnover.
Payment of excise duty in different instalments
This new rule allows the keepers of energy tax warehouses and of alcohol/alcoholic beverage tax warehouses, who must normally pay excise duty in monthly instalments, to alter the frequency of the payments between the date of the Relaunch Decree and 30 November 2020 (which is the due date for the payment of excise duty on products released for consumption in November). To pay at shorter or longer intervals, warehouse keepers must apply to the Customs Agency, explaining the reasons for their financial difficulties. These must be supported by documentary evidence and be verifiable. The new arrangement is subject to the Customs Agency's acceptance of the application and the excise duty for the whole of the above period must be paid in full by 30 November.
KPMG Trade & Customs Italy Approach
Main sources of information
Main sources of information
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