Cura Italia Decree – Part I – Financial support measures for enterprises and workers

The measures aim to contain the economic damage caused by the COVID-19 epidemic.

Prepared by Flavio Mondello Malvestiti, Ginevra Bruno, Enrico Cristoforoni

Measures to support corporate liquidity through the banking system

Central SME Guarantee Fund

In relation to the epidemiological emergency, further interventions of the Central SME Guarantee Fund are proposed (in addition to the provision of Article 25 of Decree-Law No 9/2020), which constitute a derogation, justifiable only because of the temporary and contingent nature of the ordinary rules of the Fund (paragraph 1), no longer limited to “Red Zones” only, but with a view to limit the overall effects on the business system.

The following measures shall apply for a period of 9 months:

  • the guarantee is granted free of charge
  • the maximum guaranteed amount per company is high, in compliance with the EU framework at €5 million
  • for direct guarantee operations, the maximum coverage percentage is 80% of the amount of each financing operation for a maximum guaranteed amount per company of €1,500,000. For reinsurance operations, the maximum coverage percentage is 90% of the amount guaranteed by the Confidi or other guarantee fund, provided that the guarantees issued by the latter do not exceed the maximum coverage percentage of 80% and for a maximum amount guaranteed per company of €1,500,000
  • financing for debt rescheduling operations of the beneficiary entity is eligible for a Fund guarantee, provided that the new loan provides the beneficiary entity with additional credit in an amount equal to at least 10% of the outstanding amount of the loan being rescheduled
  • Administrations and holders of Special Sections of the Fund or of EU programmes supplementing the Fund’s resources or operations may insure their contribution to raise the maximum percentage guaranteed by the Fund up to a maximum of 80% in direct guarantee and 90% in reinsurance
  • The duration of the Fund’s guarantee is extended for operations for which banks or financial intermediaries have agreed, even on their own initiative, to suspend the payment of the amortization instalments or to suspend the principal instalment only, in connection with the effects induced by the spread of the COVID-19 Virus, on operations covered by the Fund’s guarantee
  • without prejudice to the exclusions already provided for in Article 6(2) of the Decree of the Minister of Economic Development in agreement with the Minister of Economy and Finance of 6 March 2017, for financial transactions of up to €100,000, for the purposes of access to the Fund’s guarantee, the probability of default by companies shall be determined exclusively on the basis of the economic and financial form of the valuation model referred to in Part IX, letter A, of the eligibility conditions and general provisions for the administration of the Guarantee Fund set out in the Annex to the Decree of the Minister of Economic Development of 12 February 2019. In any case, companies with exposures classified as “non-performing” or “probable default” within the meaning of the banking regulations or falling within the notion of “company in difficulty” within the meaning of art. 2, point 18 of Regulation (EU) no. 651/2014 are excluded
  • No commission is due for failure to complete the financial transactions referred to in Article 10(2) of the Ministerial Decree of 6 March 2017.
  • For real estate investment operations in the tourism – hotel and real estate sectors, with a minimum duration of 10 years and for an amount of more than € 500,000, the Fund’s guarantee can be cumulated with other forms of guarantee acquired on the loans
  • For guarantees on specific portfolios of funding dedicated to companies damaged by the Covid-19 emergency, or belonging, for at least 60%, to specific sectors/branches affected by the epidemic, the proportion of the junior tranche covered by the Fund may be increased by 50%, which may be further increased by 20% if additional guarantors intervene
  • New 18-month loans minus one day of an amount not exceeding €3,000 provided by banks, financial intermediaries provided for by art. 106 of Legislative Decree no. 196. 385 of September 1, 1993 (Consolidated Banking Act) and other entities authorized to grant credit and granted in favour of individuals carrying out business activities, arts or professions subject to the COVID-19 emergency as per self-certified declaration pursuant to art. 47 of Presidential Decree 445/2000 are eligible for the guarantee of the fund, with coverage of 80% direct guarantee and 90% reinsurance. In favour of these beneficiaries, the intervention of the Central Guarantee Fund for small and medium-sized enterprises is granted free of charge and without evaluation
  • Sectoral administrations, together with the associations and bodies of reference, may contribute resources to the Fund for the purpose of setting up special sections aimed at supporting access to credit for certain economic sectors or business chains
  • all time-limits relating to the administrative formalities concerning operations covered by the Fund guarantee shall be extended for three months

Containment of the costs for SMEs resulting from the Confidentiality Guarantee

The purpose of the provision is to prevent an increase in the costs of the fees charged to SMEs for guarantees granted by the trusts referred to in Article 112 of the TUB as a result of the new institutional structure responsible for their control.

It is possible to contain these costs without any burden on the State budget by acting on two levers corresponding to the two paragraphs of the legislative proposal:

  • allowing the trustees to reduce the compulsory contributions to the interconsortium funds (which are private in nature) by an amount equal to the amounts paid to the Body that supervises them
  • making it clear that the legal nature of this Body is the same as that (conceived at the same time) of Credit Agents and Mediators, so that the rules in force for legal persons under private law and not those (much more onerous) regarding public contracts and public employment contracts are applicable.

Other guarantee mechanisms through Cassa Depositi e Prestiti S.p.A.

The exposures assumed by Cassa Depositi e Prestiti S.p.A., including in the form of first loss guarantees on loan portfolios, in favour of banks and other entities authorised to provide loans to companies that have suffered a reduction in turnover due to the aforementioned emergency, may be covered by the State guarantee.

The arrangement allows:

  • To banks, with the support of Cassa Depositi e Prestiti S.p.A. (CDP), to provide loans more easily to companies that have suffered a reduction in turnover as a result of the aforementioned emergency
  • CDP to support banks that provide these loans through specific instruments such as funding and/or portfolio guarantees, including first loss guarantees, with respect to the exposures incurred by the banks themselves.
  • The State, to grant “counter-guarantees” up to a maximum of 80% of the exposures taken on by CDP and at market conditions, with a clear multiplier effect on the resources available to the system.

Suspension of the repayment terms for the Fund 394/81

The provision provides for the suspension of repayments of instalments falling due in 2020 of subsidized loans from the “fund 394” managed by Simest SpA and aimed at supporting the internationalization of exporting companies. The measure concerns 1457 firms in all sectors.

Solvency II – Access and pursuit of the Insurance Business

The adjustment for the volatility of the maturity structure of risk-free rates in relation to the calculation of technical provisions is a measure widely used by Italian insurance companies in order to reduce the artificial volatility in their balance sheets (generated by changes in assets and liabilities that do not correspond to changes in their risk profile) and ensure that they can continue to provide long-term cover at an affordable price.

The change consists in lowering the reference from 100 basis points to 85 basis points, which is necessary in order to facilitate the activation of the national component of the adjustment by making it more sensitive to fluctuations in the national spread. The change takes effect from fiscal year 2019.

Other financial support measures for enterprises through the banking system

If a company transfers, by 31 December 2020, pecuniary receivables due from defaulting debtors for consideration, it may convert the deferred tax assets relating to the following components into a tax credit:

  • tax losses not yet computed as a reduction in taxable income
  • amount of the notional return exceeding the total net income not yet deducted or enjoyed by means of a tax credit at the date of disposal

For the purposes of conversion into a tax credit, the components may be considered for a maximum amount not exceeding 20% of the nominal value of the assigned receivables.

The tax credits resulting from the conversion are not interest-bearing. They may be used, without limit of amount, in offsetting or they may be or may be claimed for refund. The tax credits must be indicated in the tax return and do not contribute to the formation of the company’s income or to the tax base of the regional tax on productive activities.

The provision is intended to encourage the sale of impaired loans that companies have accumulated in recent years, also as a result of the financial crisis, with the aim of supporting them in terms of liquidity in the face of the current context of economic uncertainty. The impaired loans that are the subject of the incentive can be both commercial and financial in nature.

The intervention allows companies to anticipate the use of these amounts as tax credits, which they would otherwise have used in subsequent years, resulting in an immediate reduction in the tax burden.

In addition, in order to support business activities, SMEs may make use of the following financial support measures:

  • for revocable credit facilities and loans granted against advances on loans existing on 29 February 2020 or, if higher, the date of publication of this Decree, the amounts granted, both for the part used and the part not yet used, may not be revoked in whole or in part until 30 September 2020
  • for non instalment loans with contractual maturity before 30 September 2020, the contracts shall be extended, together with the respective ancillary elements and without any formalities, until 30 September 2020 under the same conditions
  • for mortgages and other loans repayable in instalments, including those completed through the issue of agricultural bills of exchange, the payment of instalments or lease instalments falling due before September 30, 2020 is suspended until September 30, 2020 and the repayment plan for the instalments or lease instalments subject to suspension is deferred, together with ancillary elements and without any formality, in a manner that ensures the absence of new or increased charges for both parties; companies are entitled to request the suspension of capital repayments only.

Further provisions to support corporate liquidity

Export credit

In order to mitigate the negative repercussions on the tourism sector resulting from the health emergency in progress, it is appropriate to provide for some measures to support export credit in 2020, also in line with what emerged during the presentation of the “Extraordinary Plan for Made in Italy” in March.

The regulatory intervention regulates the procedure for issuing the State guarantee in favour of SACE Spa for operations decided by the company in relation to some important orders for the construction of ships by Italian companies.

More specifically, the provision is intended to speed up the procedure for issuing the State guarantee pursuant to Article 6, paragraphs 9-bis and 9-ter, of Decree-Law no. 269 of 30 September 2003, converted, with amendments, by Law no. 326 of 24 November 2003 (the so-called “MEF-SACE reinsurance”), thus allowing the definitive completion of strategic commercial operations for the Italian economy and the maintenance of employment levels at this particular juncture.

Integrated promotion fund

The Ministry of Foreign Affairs and International Cooperation has set up the “Fund for Integrated Promotion” in the Ministry of Foreign Affairs and International Cooperation to implement the following initiatives:

  • implementation of an extraordinary communication campaign aimed at supporting Italian exports the internationalisation of the national economic system in the agri-food sector and in other sectors affected by the emergency arising from the spread of Covid-19, also making use of ICE-Italian Agency for the internationalisation of businesses and the attraction of investment;
  • strengthening of the promotion activities of the country system carried out, also through the network abroad by the Ministry of Foreign Affairs and International Cooperation and ICE-Italian Agency for the internationalization of enterprises and for the attraction of investments;
  • co-financing of promotion initiatives aimed at foreign markets carried out by other public administrations through the conclusion of specific agreements;
  • constitution, within the framework of the revolving fund referred to in Article 2, first paragraph, of Decree-Law No 251 of 28 May 1981, converted, with amendments, by Law No 394 of 29 July 1981, of a separate section for the granting of non-repayable co-financing of up to fifty per cent of the financing granted under Article 2, first paragraph, of Decree-Law No 251 of 1981. Co-financing is granted within the limits and under the conditions provided for by current European legislation on de minimis State aid
  • financial compensation equal to any financial compensation paid by national undertakings as a result of the application of any penalties linked to delays or failure to comply with the measures to contain the effects of the epidemiological emergency by COVID-19′.

Development contracts

The Legislative Decree provides for an increase in the budget for development contracts of Euro 400 million. The development contracts’ negotiation facilitation instrument is aimed at fostering the implementation of strategic and innovative development programmes of significant size for the strengthening of the country’s productive structure and is the main support measure for large investments throughout the country. The instrument allows the financing of large sectors (industrial development programmes – including those concerning the processing and marketing of agricultural products – are eligible; development programmes for environmental protection; programmes for the development of tourism activities which may include, for an amount not exceeding 20% of the total investments to be made, programmes for the development of commercial activities).

Increased allocation from the Solidarity Fund for the aviation sector

The Solidarity Fund allocation for the air transport sector and the airport system is increased by EUR 200 million for the year 2020.

Measures to support the liquidity of Natural People

Savers’ Compensation Fund (FIR)

Comma 1. The provisions referred to in paragraph 1, letter a) amend the rules indicated in Article 1, paragraph 496, of Law no. 145 of 30 December 2018 on compensation for shareholders. The amendments in question allow the Technical Commission, pending the preparation of the allocation plan, to authorise the contribution of an advance equal to 40% of the amount of the compensation decided by the same Technical Commission following the completion of the preliminary examination.

The provisions of paragraph 1, letter b) amend the rules indicated in Article 1, paragraph 497, of Law no. 145 of 30 December 2018 on compensation for bondholders. The amendments in question allow the Technical Commission, pending the preparation of the distribution plan, to authorise the granting of an advance equal to 40% of the amount of the indemnity decided by the Technical Commission following the completion of the preliminary examination.

Comma 2. In view of the large number of savers interested in accessing the services of the FIR for the payment of compensation and the operational difficulties in issuing the necessary banking documentation by the competent credit operators, the provisions of paragraph 2 amend Article 1, paragraph 237, of Law no. 160 of 27/12/2019, providing for a further extension of the deadline for the filing of claims for compensation. The deadline of April 18, 2020 is extended to June 18, 2020.

Solidarity Fund mortgages “first home”, so-called “Gasparrini Fund”

The Solidarity Fund referred to in art. 2, paragraphs 475 to 480 of Law no. 244/2007, as amended by Law no. 92/2012 (set up at the Ministry of Economy and Finance and managed by Consap S.p.A.) allows the holders of a loan contract for the purchase of their first home to benefit from the suspension of payment of instalments, up to 18 months, when specific situations of temporary difficulty arise, which are likely to negatively affect the overall income of the household.

  • admission to the benefits of the Fund is extended to self-employed workers and professionals who self-certify in accordance with Articles 46 and 47 of Presidential Decree 445/2000 that, in a quarter following 21 February 2020 or in the shorter period of time between the date of application and the aforementioned date, they have recorded a fall in their turnover of more than 33% of turnover in the last quarter of 2019 as a result of the closure or restriction of their activity in implementation of the provisions adopted by the competent authority for the coronavirus emergency
  • No equivalent economic situation indicator (ISEE) is required for access to the Fund.

Measures to support work and employment

Wage supplementation and redundancy fund by way of derogation 

(a) Employers who in the remainder of the year 2020 suspend or reduce their employment due to events related to the COVID-19 epidemiological emergency may apply for the granting of the ordinary wage supplementation treatment or access to the ordinary allowance with the causal “COVID-19 emergency” from 23 February 2020 for a maximum duration of nine weeks and in any case by August 2020. In order to obtain the above mentioned treatment, employers do not need a trade union agreement, it is sufficient to carry out information, consultation and joint examination, also electronically. 

(b) For companies that already have extraordinary salary integration treatment, it is possible to apply for ordinary treatment, dispensing with the payment of additional contributions. Similarly, for employers who are members of the Wage Supplement Fund who already have a solidarity cheque in progress, it is possible to apply for ordinary treatment, again waiving the payment of additional contributions, which may last for a maximum of nine weeks. 

Provisions for employees in the private sector, enrolled in the Separate Account and self-employed 

Leave and Allowance

(a) For the period of suspension of childcare services and activities in schools, parents who are employed in the private sector, self-employed parents registered with National Social Security Institute (INPS) or enrolled in the Separate Administration shall be entitled to benefit, for children up to the age of 12 years (age limit not applicable in the case of a disability of proven seriousness), leave for a continuous or fractionated period not exceeding 15 days, with payment of an allowance equal to 50 percent of salary (50 percent of daily income in the case of self-employed workers) or 1/365 of income. Parents employed in the private sector with children between the ages of 12 and 16 have the right to abstain from work for the period of suspension of childcare services and activities in schools, without payment of compensation or recognition of imputed contributions, with a ban on dismissal and the right to keep their job. Only one parent per household shall be granted leave, provided that there is no other parent in receipt of income support. 

(b) As an alternative to the above mentioned benefits, beneficiary workers have the possibility to choose to take advantage of a baby-sitter bonus up to a maximum amount of EUR 600. 

(c) The number of days of paid monthly leave covered by notional contributions limited to the months of March and April 2020 shall be subject to an increase of a maximum of twelve days.

Compensation for employees, self-employed, seasonal workers 

For the month of March, an indemnity of 600 euros (not taxed for PIT purposes) is paid by National Social Security Institute to the following categories of workers: 

  • freelancers with an active VAT number on 23 February 2020
  • workers with coordinated and continuous collaboration relationships as of February 23, 2020, who are members of the Separate Account, who do not have a pension and who are not members of other forms of compulsory social security
  • who carry out activities in favour of amateur sports clubs and associations
  • self-employed workers who are members of the special management schemes of the the General Compulsory Insurance, who do not have a pension and who are not members of other compulsory social security schemes
  • seasonal employees in the tourism sector and spas that on 23 February 2020 terminated the New Social Insurance for Employment (NASPI)
  • fixed-term agricultural workers, not pensioners, who in 2019 have carried out at least 50 actual days of agricultural work
  • to workers enrolled in the Pension Fund for Workers in the Entertainment Industry, with at least 30 daily contributions paid in 2019 to the same Fund, resulting in an income not exceeding 50,000 euros.

Income fund of last resort

  • For employed and self-employed workers who, as a result of the epidemiological emergency from COVID-19 have ceased, reduced or suspended their activity or their employment relationship establishes, in the estimates of the Ministry of Labour and Social Policy, a Fund called “Fund for income of last resort”.

Extension of the Deadline for Submitting the Application for Unemployment 

  • For fixed-term and permanent agricultural workers and persons treated as such, the deadline for submitting applications for agricultural unemployment in 2019 shall be extended to 1 June 2020.
  • The deadline for submitting applications for the New Social Insurance for Employment (NASPI) and DIS-COLL unemployment applications for involuntary cessation of work in 2020 is extended from sixty-eight to one hundred and twenty-eight.
  • Extension of sixty-day application deadlines for self-employment incentives
  • Extension until 1 June 2020 of the limitation and prescription periods relating to social security, welfare and insurance benefits provided by National Social Security Institute (INPS) and National Institute for Occupational Accident Insurance (INAIL).

Suspension of the procedures for challenging dismissals

The provision states that from the date of entry into force of this decree, the opening of proceedings against individual and collective redundancies shall be precluded for 60 days and that pending proceedings shall be suspended during the same period. It is also provided that during this period the employer, regardless of the number of employees, may not withdraw from the contract for objective reasons.

Measures to support workers’ income 

Employees and self-employed workers who, as a result of the epidemiological emergency from COVID 19 have ceased, reduced or suspended their activity or their employment relationship, and who during 2019 have produced an income from work not exceeding € 10,000.00, establishes, in the estimates of the Ministry of Labour and Social Policy, a Fund called “Fund for the income of last resort “

Security, strengthening of health devices and accident events – National Institute for Occupational Accident Insurance (INAIL) provisions

The rule provides for the transfer of the amount of €50 million, by National Institute for Occupational Accident Insurance (INAIL)  to Invitalia, to be paid to companies for the purchase of equipment and other personal protective equipment. In order to strengthen the protection of injured and technopathic workers and strengthen, among other things, the prevention and health surveillance functions performed by INAIL, the regulation also provides for the authorization to hire, with a concomitant increase in the workforce, a contingent of 100 permanent staff, with the qualification of first level medical manager, in the specialist branch of forensic and occupational medicine and the authorization to hire with the same recruitment methods referred to in Article 1, of Decree-Law No. 9 March 2020, no. 14, 300 staff, of which 200 doctors and 100 nurses.

In confirmed cases of coronavirus infection (SARS- CoV-2) at work, the certifying physician draws up the usual accident certificate and sends it electronically to INAIL, which ensures the protection of the injured person in accordance with the regulations in force. INAIL’s benefits in proven cases of coronavirus infections at work are also provided for the period of quarantine or trustee stay at home of the injured person with the consequent abstention from work. The above accident events are a burden on the insurance management and are not taken into account for the purposes of determining the fluctuation of the average rate for accident trends pursuant to articles 19 et seq. of the Interministerial Decree of 27 February 2019.

Let’s Talk

For a deeper discussion please contact:

Flavio Mondello Malvestiti

PwC TLS Avvocati e Commercialisti

Director – Fiscal Policy and Economics Consulting