This page offers an overview of tax developments being reported globally by KPMG member firms in response to the Novel Coronavirus (COVID-19).
The content will be updated regularly. However, due to the fast-moving pace of change, it may not always reflect the most current developments in a given jurisdiction. Please refer to the date of accuracy and refer to the relevant links, under additional information, for original source information.
The “Cure Italy Decree (released on 17 March 2020 and converted into Law No. 27/2020), introducing urgent measures to limit the spread of Covid-19.The “Liquidity Decree” (released 8 April 2020 and converted into Law No. 40/2020) 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 and converted into Law. No 77/2020) includes urgent measures to support healthcare, employment and the economy, and social policies. The “Simplification Decree” (released on 16 July 2020 converted into Law n.120/2020) proceeds to simplify, inter alia, the administrative proceeding. Finally, the “August Decree“ (released on 14 August 2020 and converted into Law No. 126/2020) includes measures to support, inter alia, employment and economy. The Legislative Decree no. 15, dated 7 October 2020, extended the state of emergency until 31 January 2021. Finally, the Law Decree No. 129/2020, released on 20 October 2020, containing "Urgent provisions on tax collection", postponed the "final" term of suspension of the collection activity previously fixed to 15 October 2020 by the "August Decree".
Suspension for taxpayers who also carry out business activities with revenues or fees not exceeding EUR 2 million operating in Italy:
Provisions concerning corporate liquidity - assignment of credits:
Suspension of withholding tax for taxpayers with revenues / fees not exceeding EUR 400,000:
Deferral of tax and social security payments
Advance instalments falling due in June
Underpayments of advance instalments of IRPEF, IRES and IRAP will not trigger any penalties or interest, provided that the difference between the payment and the amount due is not more than 20 percent.
Simplification of the payment of stamp duty on einvoices
The payment of stamp duty has been deferred to:
In addition, taxes not levied by withholding agents can be paid directly by the taxpayer in one lump-sum by May 31, 2020 or in a maximum of five equal monthly installments, starting from May 2020, without penalties or interest for late payment.
Tax credit for the purchase of workplace PPE
Introducing provisions regarding corporate cash needs and the assignment of receivables, if trading and financial receivables are assigned for consideration by December 31, 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.
The tax credit for sanitization costs has been extended to include the costs of purchasing PPE, the costs of purchasing and installing other safety equipment to protect workers from accidental exposure to biological agents or to ensure that people are at a safe distance from one another, and the costs of hand cleansers and disinfectants. The tax credit amounts to 50% of the cost incurred up to December 31, 2020 and is capped at € 20,000 per beneficiary.
Individual Income Tax
Introducing a 30% tax deduction subject to a cap of €30,000 for 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.
Suspension of Tax Audits
Effective from March 11, 2020 and until “further notice” tax audits and certain other tax-related inspections are suspended.
The Italian Revenue Agency also announced the suspension of all formal audits of tax returns and other audit, assessment, inspection, collection and litigation actions—if these actions involve no imminent deadlines (or have already been suspended by law).
However, there is uncertainty as to whether the suspension also applies to negotiated settlements (accertamenti con adesione) and to mediation processes (especially those already underway).
The Law Decree n.18/2020 would suspend the collection payment deadlines related to payment notices (cartelle di pagamento) issued by collection agents and by the social security authorities, as well as tax assessment notices (avvisi di accertamento) issued by the tax authorities. Similarly, all notices of payment issued by the customs authorities and local authorities have been suspended.
VAT and other indirect taxes
In case of free supplies of pharmaceutical products made for “compassionate” purposes, the presumption of sale does not apply for VAT purposes. Therefore, the fair market value of such products is not subject to VAT and excluded from the computation of VAT taxable turnover.
Main VAT measures and tax payment deferrals introduced by Law Decree no. 34 of 19 May 2020 (the 'Relaunch Decree’):
The Budget Law for 2020 established that the VAT rates in Italy - both the 22 percent standard rate and the 10 percent 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: unless the law is changed in the meantime, the 22 percent standard and 10 percent reduced VAT rates will remain in force in 2021.
Art. 124 introduces a super-reduced 5 percent VAT rate for supplies of certain goods needed to tackle the COVID-19 outbreak. Supplies of the above products made by 31 December 2020 will be VAT-exempt, with the right to recover VAT.
The Relaunch Decree has further extended certain tax payment deadlines which had already been extended by the Cure Italy Decree and the Liquidity Decree:
Payment deferral for taxpayers in the 'red zone’: This deferral applies to payments of social security contributions and mandatory insurance premiums falling due between 23 February 2020 and 30 April 2020 and to be made by taxpayers whose fiscal domicile, registered office or operations center is in one of the municipalities within the 'red zone' (Casalpusterlengo, Codogno, Vo Euganeo ,etc.). These payments are now due either in a lump sum by 16 September or in up to four equal monthly instalments (the first instalment is due by 16 September 2020). Any amounts already paid are not refundable. The same applies to payments for withholding taxes due by the same taxpayers and falling due between 21 February 2020 and 31 March 2020.
Tax payment deferral for taxpayers operating in industries heavily impacted by the COVID-19 outbreak: Under the Cure Italy Decree and the Liquidity Decree, some entities (for example sports associations, operators in the tourism and hotel industry, travel agents, cultural entities) expressly listed in article 61 of the Cure Italy Decree, could benefit from the suspension (until 31 May 2020) of: payments of withholding tax on wages and suchlike, falling due between 2 March and 30 April 2020; payments and compliance deadlines for social security contributions, mandatory insurance premiums and related obligations, falling due between 2 March and 30 April 2020;VAT payments due in March 2020. Sports associations and sports clubs now benefit from a longer suspension period, until 30 June 2020. In all the above cases, the deferred payments can now be made either in a lump sum (and the related compliance obligations fulfilled) by 16 September 2020 or in up to four equal monthly instalments. The first instalment is due by 16 September 2020. Any amounts already paid are not refundable.
Tax payment deferral for taxpayers with a turnover of below EUR2 million: the Cure Italy Decree extended to 31 May 2020 (for taxpayers with a turnover of below EUR2 million in the previous fiscal year and fiscal domicile, registered office or operations center in Italy) the deadlines falling between 8 and 31 March 2020 for:
In the case of VAT payments, there is no turnover threshold for businesses and professionals whose fiscal domicile, registered office or operations center is in the Provinces of Bergamo, Brescia, Cremona, Lodi or Piacenza. Under the Relaunch Decree, these deferred payments can be made either in a lump sum by 16 September 2020 or in up to four equal monthly instalments (the first instalment is due by 16 September 2020). Any amounts already paid are not refundable.
Withholding tax payment deferral for taxpayers with a turnover of less than EUR400,000: the Cure Italy Decree provided that taxpayers with (i) a fiscal domicile, registered office or operations center in Italy, and (ii) a turnover of less than EUR400,000 in the fiscal year preceding that in which the decree came into effect, would not be subject to withholding tax on revenue or equivalent income received between 17 March 2020 and 31 May 2020 (provided they had no employee or employee-equivalent costs/expenses in the previous month). Under the Relaunch Decree, the tax not levied by withholding agents can be paid directly by the taxpayer in one lump sum by 16 September 2020 or in up to four equal monthly instalments (the first instalment is due by 16 September 2020 ). Any amounts already paid are not refundable.
Transmission of daily payment details by retailers: In April 2019 a new obligation was introduced, requiring retailers to electronically report their daily takings to the tax authorities, within 12 days of the date of sale. There was also a six-month grace period, during which retailers could report these details by the end of the following month, without facing any penalties. The Relaunch Decree extends this grace period to 1 January 2021 for retailers whose turnover does not exceed EUR400,000.
Tax receipt lottery The start of the tax receipt lottery has been postponed from 1 July 2020 to 1 January 2021.
Prepopulated VAT ledgers and VAT returns: the entry into force of the rules on prepopulated VAT ledgers has been postponed from 1 July 2020 to 1 January 2021. Under these rules, the Revenue Agency will prepopulate the (i) input and output VAT ledgers and (ii) quarterly VAT settlement reports due by VAT taxpayers established in Italy and will make them available inside the taxpayer's personal tax account on the Revenue Agency website. The Relaunch Decree also confirms that, starting with the annual VAT return for 2020, the Revenue Agency will prepopulate the annual VAT return and make it available inside the taxpayer's personal tax account on the Revenue Agency website.
Stamp duty on e-invoices: the Relaunch Decree postpones, from 1 January 2020 to 1 January 2021, the entry into force of the new rule on stamp duty introduced last year. Under this rule the Italian Revenue Agency will automatically check that e-invoices comply with stamp duty requirements and could apply penalties ranging from 100 percent to 500 percent of the stamp duty for non-compliant e-invoices.
Offsetting of a credit for one kind of tax against liabilities for another kind: for fiscal year 2020, the annual cap on the offsetting of a credit for one kind of tax against liabilities for another kind has been increased to EUR1,000,000 (it was EUR700,000 previously).
Trading of daily newspapers, periodicals, and their respective inserts and supplements: as an exception to the ordinary rules, and just for 2020, VAT on sales of daily newspapers, periodicals, and their respective inserts and supplements will be calculated on the number of delivered or dispatched copies, reduced by 95 per cent (instead of 80 per cent). Article 187 does not cover (i) pornographic material or (ii) newspapers and periodicals supplied with products other than inserts/supplements.
IRAP exemption: Article 24 of the Relaunch Decree introduces an IRAP (local business tax) exemption for (i) companies with revenues of up to EUR250 million and (ii) self-employed workers with revenues of up to EUR250 million. These parties will not have to pay the following.
This exemption does not apply to banks, financial institution, insurance companies, public administrations or public entities.
Incentives for energy retrofits, anti-seismic reinforcements: Article 119 of the Relaunch Decree increases the tax relief for energy retrofits and anti-seismic reinforcements made between 1 July 2020 and 31 December 2021 to 110 percent. This tax incentive applies to work carried out on (i) condominiums (and is thus available to all apartment owners and tenants, whether individuals or companies), (ii) detached one-family houses classed as an individual's primary residence and not used for business purposes, (iii) apartments used as second homes within a condominium. The 110 percent deduction for anti-seismic reinforcements also applies to detached houses even if they are not the primary residence.
The tax deduction is 110 percent because the state steps up the actual costs by 10 percent, thus allowing taxpayers to deduct more than they have actually spent.
The tax relief - to be split between the property owners/tenants (in the case of apartments in a condominium) and to be taken in equal instalments over five years - may be used for:
1. insulating external walls covering at least 25 percent of the building (Ecobonus);
2. replacing old heating, hot water and air conditioning systems with certain new systems (Ecobonus);
3. for rendering buildings in earthquake-prone areas more quake-resistant and also for purchasing earthquake proof homes (Sismabonus).
To qualify for the tax relief, these improvements must raise the property's energy efficiency ratings by at least two bands or bring it into the top band. The energy efficiency rating must be certified by a qualified technician before and after the work takes place.
Photovoltaic systems and charging systems for electric vehicles: provided they are combined with one or more of the energy retrofit or earthquake-proofing measures listed above, all the energy-efficiency improvements indicated in article 14 of Law Decree no. 63/2013 are also eligible for 110 percent tax relief, subject to the existing caps explained below. These improvements include the installation of photovoltaic panels and their connection to the national grid, as well as the installation of charging systems for electric vehicles in buildings.
In the case of photovoltaic systems, expenses of up to EUR48,000 can be deducted, as is the case under previously existing legislation. In any event, the maximum deduction allowed is EUR2,400/kW (nominal capacity).
If an integrated storage system is installed at the same time as the photovoltaic system (or afterwards), this qualifies for the same amount of tax relief. In this case, how ever, the maximum deduction allowed is EUR1,000/KWh (storage capacity).
In the case of photovoltaic plants installed separately from an energy retrofit or earthquake proofing but as part of the renovation of an existing property or construction of a new one, the maximum deduction allowed is EUR1,600/kW (nominal capacity).
Conversion of tax deductions into a discount and into a transferable tax credit: deductions can be made directly by taxpayers through their tax returns. Alternatively, article 121 of the Relaunch Decree introduces two other options.
To qualify for an immediate discount or the tax credit, the taxpayer must have all the necessary details and documentation endorsed by a qualified tax adviser or tax service center (CAF).
Moreover, improvements qualifying for Ecobonus tax relief must be certified by authorized technicians, who should confirm that they meet the necessary standards and that the costs are reasonable. In the case of improvements qualifying for the Sismabonus relief, their efficacy must be certified by the qualified professionals in charge of planning, directing and inspecting the work. These professionals must also certify that the costs are reasonable. Anyone who issues false statements or certificates for 110 percent deductions will be given a fine ranging from Eur 2,000 to EUR 15,000 for each one issued. False statements or certificates will result in loss of the tax relief. Transfers of tax credits and payment discounts are also extended to all construction work done under pre-existing legislation in order to renovate properties, retrofit properties and make them more earthquake proof, restore facades of existing buildings, install 'stand-alone' photovoltaic systems, and install charging stations for electric vehicles inside buildings. In all cases (110 percent deduction or deductions made under pre-existing schemes), if the tax deduction requirements are not met, even partially, the Revenue Agency will recover the corresponding tax credit from the beneficiary/ies of the tax relief, plus interest and penalties. If one or more beneficiaries breaches the rules, the supplier who has applied the discount and the tax credit transferee will be jointly and severally liable as well. If, instead, the tax credit is unlawfully used, even partially, by the supplier or the transferee, the relevant amount - plus interest and penalties - will be recovered from them alone. Individuals must give online notification of their election to the Revenue Agency, following the guidance to be issued, with other implementation measures, by the Director of the Revenue Agency within 30 days of the entry into force of the Relaunch Decree.
Tax credit for advertising expenses: the Cure Italy Decree raised the tax credit for advertising expenses incurred in 2020 to 30 percent. The Relaunch Decree has increased this further, to 50 percent.
Transfers of tax credits arising from measures issued in the context of the COVID-19 outbreak: between 19 May 2020 and 31 December 2021, taxpayers that have taken one of the tax credits introduced by the Cure Italy Decree and by the Liquidity Decree are entitled to transfer them (totally or partially, at the taxpayer's option) to third-party buyers, including banks, financial institutions and financial intermediaries.
The tax credits covered by this measure are the following:
These tax credits can, at the taxpayer's discretion, be used directly by the taxpayer; or wholly/partially transferred to third parties, including banks and financial intermediaries.
The transferee can use the tax credit to offset its own tax payments, just like the original beneficiary of the tax credit could have done. Any portion of the tax credits that is not used in the tax year can be carried forward to the subsequent tax year but cannot be claimed as a refund. The transfer of the tax credit does not prevent the tax authorities from assessing whether all the preconditions for the tax credit were met by the original beneficiary. Transferees are liable only for the use of the tax credit and not for its amount.
Additional division into instalments of suspended payments
Alternatively to the provisions of the Relaunch Decree (see Articles 126 and 127 that prescribed payments no later than 16 September 2020, all at once, or in four instalments starting from the same date), the August Decree provides an additional division of suspended payments into instalments. In particular, 50% of suspended amounts may be paid all at once no later than 16 September or divided into a maximum of four instalments of equal amounts starting from 16 September 2020. The remaining 50% may be paid, without penalties and interest, in up to twenty-four monthly instalments of equal amount, with the first instalment paid no later than 16 January 2021. Any amounts already paid are not refundable.
Postponement of enforced collection
The Law Decree No. 129/2020, released on 20 October 2020, containing "Urgent provisions on tax collection“, postpones, from 15 October to 31 December, the ending date of the suspension of the payments, deriving from payment notices, from enforcement notices relating to tax and non-tax revenues, as well as the ending date of the suspension of the allocation obligations deriving from third party seizures carried out by the collection agent with regard to amounts due as salaries, wages, other indemnities relating to employment, including those due as a result of termination, and as pensions, indemnities in lieu of pension, or of pension allowances.
General revaluation of business assets and of 2020 shares
Article 110 of the August Decree allows enterprises to revaluate, for accounting purposes only, tangible and intangible assets, excluding those which the enterprise is intended to produce and
trade, as well as shares in subsidiaries and associates in accordance with Article 2359 of the Italian Civil Code constituting fixed assets, resulting from the financial statements for the current year as at 31 December 2019.The purpose is to allow enterprises to adjust the accounting representation of the assets to their actual values, without waiving the negative nature of the revaluation for the purposes of the tax recognition of the higher values attributed to the assets. With respect to the most recently introduced voluntary revaluation regulations (i.e. those in paragraphs 696-et seq. of Article 1 of Law no. 160 of 27 December 2019), the revaluation of Article 110 provides the possibility of recording the higher value of the assets in the financial statements, without any tax recognition for the higher value (in other words, any revaluation carried out in the financial statements shall not necessarily entail a corresponding revaluation of a tax nature, compliance with the substitute tax being necessary for this purpose).
The revaluation shall be carried out in the financial statements of the year following the one current as at 31 December 2019 (financial statements referred to the year 2020 for enterprises whose financial year coincides with the calendar year).The revaluation may be carried out distinctly for each asset; unlike the previous similar relief measures, therefore, it is not necessary for it to involve all assets in the same homogeneous category.The higher accounting value attributed to assets by effect of the revaluation may, however, also be recognized for tax purposes starting from the year following the one with reference to which the revaluation was carried out. This option is recognized through the payment of a substitute tax of income taxes, of the IRAP regional tax and of any surtaxes in the measure of 3% for depreciating and non depreciating assets. Therefore, starting from the year following the one in which the revaluation is carried out, the depreciation charge, including financial depreciation, of the revalued assets and the maintenance, repair, modernization and transformation expenses are commensurate to the new value of the assets.
Similarly, the positive balance resulting from the revaluation may be recognized - also only in part - through the payment of a substitute tax of income taxes, of the IRAP regional tax and of any surtaxes in the measure of 10%. The above substitute taxes shall be paid in no more than three equal instalments of which the first one no later than the date prescribed for payment of the balance of income taxes relating to the tax period with reference to which the revaluation is made, and the others with due date no later than the one respectively prescribed for the payment of the balance of income taxes related to subsequent tax periods.In case the asset object of the revaluation is sold, attributed to the shareholders or transferred before the first day of the fourth financial year following the one in which the revaluation is carried out, for the determination of the taxable gain it is required to make reference to the value of the asset before the revaluation itself.
Tax litigation and tax authority procedures
New rules for tax court hearings and specific provisions for stamp duty
The Relaunch Decree has introduced new regulations regarding tax court hearings, which can be held from a remote location via videoconferencing. From 8 March to 31 May 2020, the deadline for tax courts to apply penalties or to ask for the settlement of omitted or delayed stamp duty payments has been suspended.
Increase in the services offered by the tax authorities to encourage taxpayer compliance
To increase tax compliance, the Ministry of Finance will introduce new specific targets for tax authorities to be met in FYs 2020-22, aimed at optimizing assistance and consultancy services offered to tax payers. The new services will include boosting online assistance and speeding up the payment of tax refunds.
Suspension of any amounts due for tax bills (so-called 'avvisi bonari')
The Relaunch Decree provides that tax payments due between 8 March and 31 May 2020, following the service of tax bills (after automatic checks of tax returns), can be paid by 16 September 2020, as either a one-off payment or in four monthly instalments.
Suspension of the offsetting of tax credits against tax debts: in 2020 the Italian tax authorities will refund the full amount of tax credits to taxpayers, without offsetting existing tax debts . This is to inject liquidity into the economy.
Postponement of the deadline to pay any amounts due following tax assessments and postponement of the deadline to appeal before the first-level tax court
For tax assessment notices, whose deadline to pay or to appeal expires between 9 March and 31 May 2020, the following new deadlines apply:
Suspension of checks pursuant to article 48-bis of Presidential Decree no. 602 of 1973- payments by public administrations
From 8 March until 31 August 2020 certain measures, usually applied by public administrations or public companies when paying invoices, are suspended. For instance, authorities cannot suspend or block the payment of invoices to taxpayers even if they have tax debts.
Extension of the payment deadlines for items assigned to tax authority collection agents
The Relaunch Decree has extended certain deadlines introduced by Cure Decree, providing that:
Extension of the deadlines to serve notices of tax assessments, penalties, tax credit recovery and tax irregularities
Tax notices issued by the tax authorities with a 31 December 2020 deadline will not be served to the taxpayer until the following year (between 1 January and 31 December 2021).
These notices - which include notices of tax assessments, penalties, undue tax credit recovery and tax irregularities - will not accrue interest in the postponement period.
Suspension of the pre-hearing compromise procedure
The Relaunch Decree has clarified that the 90-day suspension period for a pre-hearing compromise procedure is added on to the COVID-19 suspension of 64 days (from 9 March to 11 May 2020).