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In the late evening of 17 March 2020, the Law Decree No. 18 of 17 March 2020 ("Cura Italia Decree") was published in the Official Gazette ("Gazzetta Ufficiale") to strengthen the national health service and to provide economic support to families, workers and businesses in relation to the COVID-19 emergency.

The Cura Italia Decree came into force on 17 March and has to be converted into ordinary law within 60 days, any amendments may occur during the conversion process.

The following are brief descriptions of the tax provisions envisaged in the Cura Italia Decree.

1. Postponement of payments (Article 60)

Payments to public administrations (such as withholding taxes, VAT, social security contributions and premiums for mandatory insurance) expiring on 16 March 2020 are postponed to 20 March 2020 for all taxpayers.

Specific provisions have been issued depending on the activity carried out by the taxpayer, the amount of revenues and earnings and/or their geographic location.

2. Suspension of payments of withholdings, social security contributions and premiums for mandatory insurance (Article 61)

The suspension, from 2 March 2020 to 30 April 2020 of:

• payments of withholding taxes at source on employment income and similar and

• fulfillments and payments related to social security contributions and premiums for mandatory insurance,

initially introduced for tourist-receptive companies, travel and tourism agencies and tour operators with tax domicile, registered offices or operational headquarters in Italy (Law Decree No. 9 of 2 March 2020), has been extended to taxpayers operating in the sectors most affected by the epidemiological emergency (such as tourism, sport, art and culture, catering and the rental of means of transport), as identified by resolution n. 12/E issued by the Italian tax authorities on 18 March 2020.

For the above-mentioned categories of taxpayers, VAT payments expiring in March 2020 are suspended.

The suspended payments are performed, without penalties and interests, in a single payment by 31 May 2020 without penalties and interests, or in five equal monthly installments from May 2020.

3. Suspension of tax and social contribution payments (Article 62)

Payments of:

• withholding taxes at source on employment income and similar,
• regional and municipal tax surcharges,
• VAT,
• social security contributions,
• premiums for mandatory insurance,

expiring between 8 March and 31 March 2020 are suspended for Italian taxpayers, other than those mentioned in the previous paragraph, having declared, in the preceding fiscal year, revenues or income lower than EUR 2 million.

VAT payments expiring between 8 March and 31 March 2020 are suspended for all taxpayers with their registered offices or operational headquarters in the provinces of Bergamo, Cremona, Lodi, and Piacenza, regardless of the volume of revenues or income.

The suspended payments will be performed,without penalties and interests, in a single payment by 31 May 2020 without penalties and interests, or in five equal monthly installments from May 2020.

The Cura Italia Decree also postponed to 31 May 2020 the deadline for tax payments expiring from 21 February and 31 March 2020 due by taxpayers with tax domicile, registered offices or operational headquarters in a municipality located in the first so-called "red zone".

4. Suspension of tax duties (Article 62)


Tax duties expiring from 8 March and 31 May 2020 — other than (i) payments, and (ii) the application of withholding taxes at source and regional and municipal surcharges — are suspended (e.g., the filing of the annual VAT return).

The suspended tax duties will be fulfilled by 30 June 2020 without penalties.

The deadlines for the tax duties connected to pre-filled tax returns (Dichiarazione precompilata) are not affected by the Cura Italia Decree. Therefore, according to Article 1 of Law Decree No. 9 of 2 March 2020, the deadline for the following tax duties remains 31 March 2020:

• filing to the Italian tax authorities of the Certificazioni Uniche related to income that can be declared through a pre-filled tax return;
• filing to the taxpayer of the Certificazioni Uniche and the tax certification related to any other withholding tax levied at source;
• filing to the Italian tax authorities of data related to expenses deductible in the pre-filled tax return.

5. Exemption from the application of withholding taxes (Article 62)


Withholding agents should not levy withholding taxes at source on self-employment income and commissions (set for by Articles 25 and 25-bis of Legislative Decree No. 600/1973) paid between the date in which the Cura Italia Decree entered into force and 31 March 2020, provided that the taxpayer (i.e., self-employed or agent) provides the withholding agent with a specific self-declaration attesting that the income will not be subject to withholding tax pursuant to Article 62 of the Cura Italia Decree.

The exemption concerns income paid to taxpayers who: •have tax domicile, registered offices or operating headquarters in Italy;

• had income no higher than EUR 400,000 in the previous fiscal year;
• did not bear employment expenses in the preceding month.

It should be noted that such suspension is not related to the payment of the withholding taxes made by the withholding agents, but rather the actual application of the same withholding taxes (upon request of the taxpayer that suffered the withholding).

The taxpayer should remit the withholding tax not levied at source to the Italian tax authorities by 31 May 2020 a single payment or in five equal monthly installments from May 2020, without penalties and interests.

6. Bonus to employees (Article 63)


Employees with incomes not exceeding EUR 40,000 in the previous fiscal years are entitled to benefit from a bonus of EUR 100, not taxable for income tax purposes and adjusted based on the days of March 2020 in which the work is performed in the ordinary workplace. The withholding agent grants the bonus and it is paid along with the salary paid for the month of April, or within the deadline for the year-end adjustments.

The withholding agent can offset the amount of the bonus granted according to Article 17 of Legislative Decree No. 241 of 9 July 1997.

7. Tax credits and tax deductions

The following tax reliefs have been introduced: •Tax credit for sanitation costs in workplaces (Article 64): The tax credit is equal to 50% of the costs borne to sanitize workspaces and instruments up to an amount of EUR 20,000 and up to the expenditure limit of EUR 50 million for 2020. Implementing measures will be defined within 30 days from the entry into force of the Cura Italia Decree.

• Donations (in cash and in-kind) made in 2020 to face the diffusion of COVID-19 outbreak (Article 66):

◦ Donations made by companies through foundations, associations and other institutions are deductible for corporate income tax ("IRES") and regional tax ("IRAP") purposes.

◦ Donations made by individuals and non-commercial entities in favor of state, regional or local entities, public bodies or institutions, foundations, and non-profit associations are 30% deductible from the income tax. The deduction cannot be higher than EUR 30,000.

• Tax credit for workshops and shops (Article 65): A tax credit is granted for an amount equal to 60% of the rental fees, related to the month of March 2020, and referred to real estate included in the cadastral category C/1 (e.g., shops) regardess of the size of the property itself. This tax credit is granted to the taypayers which carry out a business activity (excluding those who do not carry out business activities for tax purposes e.g. lawyers, charted accountant), with the exclusion of certain kinds of business activities expressly listed (e.g., supermarket, laundry, pharmacy and any other activities related to the manufacturing of primary/essential goods). This tax credit can be offset according to Article 17 of Legislative Decree No. 241 of 9 July 1997. According to this provision, such tax credit is not granted to taxpayers which carry out a business activity in a real estate property included in the cadastral category C / 1 on the basis of a contractual agreement other than a lease agreement (e.g. rent of a line of business as a going concern).

• Financial support measures for enterprises (Article 55): companies that, by 31 December 2020, transfer receivables (either commercial or deriving from financing activities) against defaulting debtors, may convert into tax credits the amount of the deferred tax assets (even if not booked in the financial statements, “DTA”) related to (i) tax losses (NOLs) and (ii) Notional Interest Deduction (Aiuto alla crescita economica — ACE) still available at the date of the transfer. Any company - regardless the activity carried out - may benefit from this tax relief. DTA may be converted into tax credits up to an amount equal to 20% of the nominal value of the receivables transferred. For this purposes, receivables may be considered only (i) if the relevant payment has been expired by more than 90 days and (ii) for a maximum nominal value of 2 billion euros calculated considering the total amounts of receivables transferred, by December 31, 2020, by companies being part of the same group. The conversion into tax credits: (i) is allowed if an option is exercised by the end of the tax period in which the disposal of the credits is effective; and (ii) is effective starting from the following fiscal year. The tax credit can be offset according to Article 17 of Legislative Decree No. 241 of 9 July 1997.


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