Prepared by Flavia Barone and Fabrizio Tenuta
Law Decree no. 23 of 8 April 2020 was published in the Official Gazette on 8 April 2020 (into force on 9 April 2020) containing urgent provisions on access to credit and tax obligations for companies, special governative powers in strategic sectors, as well as measures in the field of health and work, and extension of administrative and procedural deadlines (“Liquidità Decree“).
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C) Tax and accounting measures
Suspension of payments for enterprises and professionals – Article 18
The provision is aimed at sustaining taxpayers dealing with liquidity matters arising from the Covid-19 emergency. The beneficiaries are identified based on income earned in the previous FY.
For enterprises (i) having tax domicile, registered office or place of business in Italy, (ii) revenues not higher than 50 million euros in the preceding fiscal year and (iii) which have had a reduction of their turnover for an amount higher than 33% during March or April 2020 if compared to the same months of 2019, the Liquidità Decree provides for the suspension of a) payment of withholding taxes on employment income and similar income, as well as b) withholding of local surcharges, c) VAT and d) social security contributions and premium for mandatory insurance on employment.
For enterprises and professionals having revenues higher than 50 millions euros the suspension is allowed in case the reduction of their turnover is higher than 50%.
For VAT taxpayers located in Bergamo, Brescia, Cremona, Lodi and Piacenza provinces, the suspension of VAT payments for April and May applies irrespective from the amount of revenues provided that they have had a reduction of their turnover for an amount higher than 33% during March or April 2020 if compared to the same months of 2019.
The suspension applies also to enterprises and professionals which started their activity after 31st March 2019. In addition, the suspension applies also to non-commercial entities including non-profit entities and recognized ecclesiastical entities, which carry out institutional activities of general interest not as business activity.
The suspended payments must be made by 31 June 2020 in full, or in five equal installments starting from June 2020, without penalties and interest. Sports associations and clubs must make payments by 30 June 2020 or in five equal installments starting from June 2020, without penalties and interest.
For entities pertaining to those sectors heavily hit by the crisis arising from COVD-19 emergency (inter alia tourism companies, travel agencies and tour operators, sport, art, culture, transport, catering, education, thermal, wellness and amusement parks sectors, non-profit organisations), in the case they lack one or more of the requirements to benefit from the abovementioned suspension, it is unprejudiced the possibility to benefit from the suspension of payments up to 30 April 2020 and the consequent obligation to perform the suspended payments by 31 May 2020 in full, or in five equal installments starting from May 2020, without penalties and interest. Sports associations and clubs must make payments by 30 June 2020 or in five equal installments starting from June 2020, without penalties and interest.
Extension of suspension of tax duties and payments for small taxpayers – Article 19
As far as small taxpayers are concerned, i.e. having income not higher than €400,000 in the previous FY, income earned 31st May 2020 are not subject to withholding tax at source provided that the taxpayer did not borne employment expenses in the previous month. A self declaration is required in this respect. The amount of taxes which have not been withheld must be paid by 31st July 2020 in full, or in five equal installments starting from July 2020, without penalties and interest.
Provisional method for advance payments due in June 2020 – Article 20
With the purpose to promote the utilisation of the provisional method (instead of the historical method) for the calculation of tax advance payments due in June 2020 by those subjects who may have an heavy reduction of income for personal, corporate and regional tax, the Liquidità Decree provides – for FY 2020 only – that penalties and interest are not applicable in case the advance payment calculated using the provisional method is different from the one which should have been calculated using the historical method up to 20%.
Further extension of deadline for payments – Article 21
Payments having expiration date on 16 March 2020 previously extended to 20 March are further postponed to 16 April 2020.
Extension of deadline to file the “Certificazione Unica 2020” – Article 22
With the purpose to allow withholding agents to have additional time to perform their duties and to taxpayers and consultants to be provided with the proper information flow to fill-in the tax return, the deadline provided for the “Certificazione Unica 2020” to be delivered by employers to their employees and to self-employed to assess the income paid in the previous FY and to be filed with the Italian Tax Authorities is postponed to 30 April 2020. Therefore, no penalties are applicable in case of filing by 30 April 2020.
Extension of validity of tax certificate for contractors – Article 23
The validity of tax certificates issued within 29 February 2020 by the Italian Revenue Agency in the context of procurement contracts to the contractors is extended to 30 June 2020.
Deadline for primary residence benefits – Article 24
In the period between 23 February 2020 and 31st December 2020 the following deadlines are suspended:
- The 18 months period as from the purchase of the primary residence (“prima casa”) by which the taxpayer must transfer his residence within the Municipality in which the home is located;
- The 1 year deadline by which the taxpayer who sold the home on which he benefitted from the primary residence (“prima casa”) relief must purchase another house to be considered as primary residence, in case of sale within 5 years from the first purchase;
- The 1 year deadline by which the taxpayer who purchased a home to be considered as primary residence (“prima casa”) must sale the house previously acquired in order to benefit from the “prima casa” relief.
In addition, the deadline provided for by article 7 of Law 23 December 1998 no. 448 to re-purchase the primary residence in order to benefit from a tax credit is extended also.
All the above mentioned terms will re-start to run as from the end of the suspension period.
Free transfer of medicines and drugs – Article 27
The provision equates the free transfer of medicines and drugs for compassionate purposes to their destruction for VAT purposes and excludes that said transfers are taxable for CIT purposes. In fact, under the ordinary regime the transfer of medicines and drugs entails that VAT is not deductible and it should be taxable for CIT purposes. Such regime may negatively affect the transfer for compassionate purposes.
Amendments to the tax regime of dividends received by simple partnerships – Article 28
The tax regime of dividends received by simple partnerships (“Società semplici”) is amended as follows:
- the domestic tax regime applicable to dividends received by simple partnership is now applicable to foreign dividends as well, except for dividends deriving from Countries or territories having a privileged tax regime;
- clarifications on modalities of application of withholding tax on dividends received by simple partnerships for the portion pertaining to those partners who are natural persons;
- a specific rule concerning dividends received by the simple partnership and pertaining to partners which are non-commercial entities and those partners who are not-Italian resident is introduced;
- a transitory regime for dividends produced up to 31st December 2019 which are decided to be distributed within 31st December 2022 is introduced, which provides that they are subject to the tax regime applicable before the amendments occurred by means of the Finance Bill for 2018.
Tax controversies – Article 29 and 37
The Cura Italia Decree provided for the deferral of hearings and suspension of terms also for tax controversies from 9 March to 15 April.
Now the deferral of hearings and suspension of terms of – inter alia – tax proceedings is further postponed to 11 May 2020, so that the overall suspension is equal to 64 days. The deferral applies to appeals of first instance, appeals of second instance and appeals before the Supreme Court as well as to the filing of documents and defensive briefs.
The Liquidità Decree provides, in addition, the alignment between the terms of suspension of tax litigation in the hands of both the parties of tax controversies (taxpayers and tax offices), to be now intended aligned to 11 May 2020.
It is also provided that the filing of documents and acts referred to controversies started in paper form must be now performed by electronic means.
Similarly, penalties related to the omitted or insufficient payment of standard court fee (“contributo unificato”) must be notified by means of certified email or by means of deposit at tax court’s offices.
Extension of tax credit for sanitation costs in the workplace – Article 30
The tax credit for sanitization costs is extended to the purchase of personal protective equipment (such as, for example, surgical masks, Ffp2 and Ffp3, gloves, protective visors and protective goggles, protective suits and shoes), purchase and installation of other safety devices designed to protect workers from accidental exposure to biological agents or to guarantee an interpersonal safety distance (such as, for example, barriers and protective panels). Also included are hand cleaners and disinfectants.
The amount of the tax credit is unprejudiced, being equal to 50% of the costs borne by enterprises and professionals for 2020 FY up to an amount of €20,000. The expenditure limit is €50,000,000 for 2020.
Temporary provisions on accounting principles – Article 7
With reference to the principle based on which financial statements shall be prepared on a going concern basis, considering the current emergency situation the Liquidità Decree provides that the evaluation may be performed making reference to financial statements approved before 23 February 2020, even if they have been closed but not yet approved. The evaluation criteria are commented within the explanatory notes to the financial statements even making reference to the results of the previous financial statements. The postponement of the deadline to approve financial statements stated by the Cura Italia Decree is unprejudiced.
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