In response to the global pandemic, the Italian government announced several economic measures to help mitigate the financial damage caused by the COVID-19 pandemic. Tax relief measures are one of many temporary solutions that aim to assist businesses across Italy during this time of crises. In this article, we will look at some of the current tax assistance as announced by Prime Minister Giuseppe Conte.
Suspension of Tax Payments
Businesses most affected by lockdown restrictions will be eligible to apply for a tax payment suspension. This is according to Article 61 of the Save Italy Decree. Companies include those that fall under the tourism sector, such as travel agencies and restaurants. The suspension consists of social security contributions, premiums for compulsory insurance, welfare contributions and VAT payments with a deadline falling between April 8 to April 30. Also, all other tax payments were postponed until May 31, with no interest accrued.
Extension of Statute of Limitations
The big win is the extension of litigation activities from March 8 – May 31, 2020. This includes issues relating to liquidation and audits. Furthermore, the statute of limitations for corporate income taxes expires in 2020, with assessment postponed to the fiscal year 2022.
The Budget Law for 2020 establishes an increase in VAT from January 1 2021. However, the Relaunch decree allows for the reduced VAT rate to remain in place in 2021. The order makes provision for a further VAT reduction of 5% for medical supplies needed in the response in treating COVID-19. This includes PPE, ventilators, monitoring devices and other devices. Supplies of eligible goods will be VAT-exempt, provided the purchase is made before December 31, 2020
Italy’s Economy Minister, Roberto Gualtieri, announced a tax credit for a business who suffer a 26% decline in revenue as a result of the coronavirus pandemic. Funds will be directed explicitly to assisting health services, as well as the agri-food sector within the hotpot parts of the country. The government also made provision to include companies dealing in export by availing revolving loans and grants at a zero rate.
Taxpayers in Italy can breathe a sigh of relief as the government extends tax deadlines for both residents and businesses operating in the country’s hotspot regions. This includes Lombardy and Castelgerundo, which are amongst the hardest-hit areas by the global coronavirus pandemic. Furthermore, tax payments that were due between February 23, 2020, and April 30, 2020, will qualify for an extension until May 31, 2020.
The announced extension applies to social security contributions, wealth, income, customs agency decisions, and local tax authority decisions. The decree also made provisions for water and electricity bills to be suspended until April 30, 2020.
Tax deadlines were further extended to taxpayers relying on hotspot areas even if not necessarily based there. Retailers with a turnover of less than €400,000 qualify for an extended period to January 1, 2021, for daily tax receipts, filing.
To learn more about how other European governments are assisting businesses and individuals in this time of economic crisis, visit Tax Relief Measures in Germany.