Italy: Extraordinary measures to minimize the impact of COVID-19 on tax litigation activities

The scope of the measures is to facilitate both taxpayers and the Italian Tax Administration to navigate through the ongoing sanitary emergency, by:

• Providing automatic hypothesis of suspension/postponement of the deadlines for tax payment and tax fulfillment (ref. articles 60, 61-bis and 62).
• Providing automatic suspension of tax audit, tax collection and tax assessment activities, as well as the deadlines for the Tax Office to reply to tax ruling requests, the deadlines connected to: (i) APA procedures, (ii) requests for secondary adjustment on incomes deriving from transactions between affiliated companies with international activity, (iii) Patent Box procedures and (iv) cooperation and collaboration procedure procedures. The automatic extension of the deadline for the Tax Office to issue tax assessments for FY 2015, and FY 2014, if the taxpayer fails to submit the relevant Tax Return, have been excluded at the time of the conversion into law (ref. article 67).
• Providing automatic suspension of the deadlines for filing appeals before Provincial, Regional Tax Courts and the Italian Supreme Court, postponement of the deadlines for filing final briefs and automatic postponement of the hearings. Oblige to file new briefs/documents before the Italian Supreme Court in telematics manner. To this extent, the Director-General for Information Systems and the Minister of Justice will issue appropriate provision (ref. article 83)
• Providing automatic suspension of the deadlines connected to the pending administrative procedures, albeit mandatory, and extending the validity of certain certificate, permits, concessions and authorizations (ref. article 103).
• Introducing new tax credits (ref. articles 64 and 65).

The updates mentioned above entered into force on 30 April 2020 but must be coordinated with the provision of the Law-Decree No. 23 dated 8 April 2020 (“Liquidità Decree“), containing the second package of tax measures for supporting the Italian economy, which is still valid and should be converted into law before 8 June 2020. With the purpose to coordinate the measures recently approved with those provided by the Liquidità Decree, we will include some comments in bold. Finally, reference will be made also to the coordination measures approved by the Italian Government with the Law Decree dated 30 April 2020, No. 28, that includes some amendments to the suspension of the judicial terms provided by Article 83 of the Cura Italia Decree, as recently converted into law.

Reschedule of deadlines for payments – Article 60, to be coordinated with Article 21 of the Liquidità Decree

Payments to public administrations, including social security contributions and premiums for mandatory insurance, expired on 16 March 2020 are extended to 20 March 2020, please note that the Liquidità Decree provides that such payments shall be considered as timely made, if they occurred by 16 April 2020 and such a prevision is still valid.

Provisions regarding the terms for pre-filled tax returns for FY 2020 – Article 61-bis

1. 1. The provisions set forth article 16-bis of the Law Decree 26 October 2019, No. 124 concerning:

1. 1. 1. Terms and formalities for filing Tax Returns regarding the recipients of employment incomes and similar incomes.
      2. Terms within which the withholding agents issue the so-called Certificazioni Uniche and communicate the latter to the Tax Authority.
      3. Terms related to pre-filled tax returns.
      4. Terms for third parties to communicate to the Tax Authority data related to charges an expenses incurred by taxpayers.

Produce their effects starting from 1 January 2020, instead 1 January 2021, while provisions regarding the Certificazioni Uniche records, that should be available on the authenticated area of the Italian Revenue Agency’s website, produce their effect starting from 1 January 2021.

1. 2. The Italian Revenue Agency shall make available to recipients of employment income and similar incomes the pre-filled tax returns for FY 2019 within 5 May 2020 instead of 30 April 2020.

Suspension of tax and contribution obligations and tax payments – Article 62, to be coordinated with Article 19 of the Liquidità Decree – with specific reference to suspension of withholding taxes

1. 1. For taxpayer having their fiscal domicile, legal seat or place of business in the Italian territory, all tax obligations expiring between 8 March 2020 and 31 May 2020 are suspended with to sole exception of: (i) payments, (ii) applications of withholding taxes, including those related to the additional regional and municipal taxes, and (ii) filing of pre-filled Tax Returns for FY 2020 which falls under a specific law provision, see Article 61-bis of the present Law. Such tax obligations shall be carried out by 30 June 2020, without the application of penalties.
   2. The following payments, expiring between 8 March 2020 and 31 March 2020, that should be made by corporate entities or professionals, having their fiscal domicile, legal seat or place of business in the Italian territory and whose revenues or fees for FY 2019 do not exceed EUR 2 million, are automatically suspended:

1. 1. 1. Deductions at source of income from employment.
      2. VAT.
      3. Social security contributions and mandatory insurance premiums.

Such payments shall be made in the full amount by 31 May 2020, without interest and penalties, or in maximum of five monthly installments. The amounts already paid cannot be refunded.

1. 3. With specific reference to VAT payments of taxpayers having their fiscal domicile, legal seat or place of business in Bergamo, Brescia, Cremona, Lodi and Piacenza provinces, the suspension shall apply regardless of the thresholds mentioned above. Such payments made and such obligations shall be fulfilled by 31 May 2020, without interest and penalties, in their full amount or in maximum of five monthly installments. The amounts already paid cannot be refunded.
   4. With specific reference to taxpayers having their fiscal domicile, legal seat or place of business in Bertonico, Casalpusterlengo, Castelgerundo, Castiglione D’Adda, Codogno, Fombio, Maleo, San Fiorano, Somaglia, Terranova dei Passerini and Vo’:

1. 1. 1. Tax payments and tax obligations expiring between 21 February 2020 and 31 March 2020 are suspended.
      2. Deductions at source of income from employment.

Such payments made and such obligations shall be fulfilled by 31 May 2020, without interest and penalties, in their full amount or in maximum of five monthly installments. The amounts already paid cannot be refunded.

1. 5. Withholding taxes on self-employment incomes shall not apply for taxpayers having their fiscal domicile, legal seat or place of business in the Italian territory and whose revenues or fees for FY 2019 do not exceed EUR 400.000, not having incurred any costs for employees in February 2020. In order to take advantage of this option, taxpayers shall issue a specific statement and shall pay the amount of withholding taxes not applied by the withholding agent by 31 May 2020, in full or in maximum of five installments, without interest and penalties.
   6.  The suspension of the withholding taxes initially provided by the article 62, paragraph 7 is abrogated and substituted by article 19 of Liquidità Decree, which provides the following:

• Withholding agents are exempted from the obligation to levy withholding taxes, according to Articles 25 and 25bis of DPR 600/1973, mainly referred to self-employment income and commissions, on revenues and fees paid between 17 March and 31 May 2020, should they obtain a self-declaration of the taxpayers attesting that revenues and fees are not subject to withholding tax pursuant to the present law provision.
• In particular, the exemption operates in relation to incomes paid to taxpayers:

1. 1. 1. Having their tax domicile, registered offices or operating headquarters in Italy.
      2. Whose revenues or fees declared in the fiscal year preceding the one in course as of 9 April 2020 do not exceed EUR 400,000.
      3.  That did not bear employment expenses, or similar, in the previous 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 July 2020 in full or in a maximum of five equal monthly installments, without penalties and interests.

Tax credit for the sanitization costs of workplace – Art. 64, to be coordinated with Article 30 of the Liquidità Decree – with specific reference to Tax credit for the purchase of protective devices

1. 1. A tax credit for sanitization costs of workplace and tools, in the measure of 50% of the sanitization expenses proved by appropriate evidences and not exceeding EUR 20,000 for each beneficiary, for a total amount of maximum EUR 50 million is granted for FY 2020.
   2. Implementing measures will be defined by a decree of the Minister of Economic Development, in consultation with the Minister of Economy and Finance.
   3. Article 30 of Liquidità Decree extended the tax credit for sanitization of workplaces and tools to the costs related to protective devices and such provision is still valid.

• • Notably, the tax credit have been granted by Liquidità Decree also in relation to costs incurred in 2020 related to:

1. 1. 1. The purchase of personal protective equipment, e.g, surgical masks, FFP2 and FFP3, gloves, protective visors and glasses, protective suits and shoes.
      2. The purchase and installation of other safety devices to protect workers from accidental exposure to biological agents or to guarantee interpersonal safety distances, such as, for example, protective barriers and panels.
      3. The purchase of hand cleaners and disinfectants.

Tax credit for shops and workshops – Article 65

1. 1. For FY 2020, a tax credit is granted for an amount equal to 60% of the rental fees paid on March 2020 for renting real estate properties included in the cadastral category C/1, e.g., shops and workshops, regardless of the size of the property itself.
   2. The tax credit is granted to taxpayers which carry out a business activity, with the exclusion of the essential business activities listed under Annexes No. 1 and 2 of the Presidential Decree 11 March 2020, such as supermarket, pharmacy, parapharmacies and points of sale of essential foodstuffs, etc.. This tax credit can be offset from the tax exposure for FY 2020, according to Article 17 of Legislative Decree No. 241 of 9 July 1997.
   3. The tax credit for workshops and shops (i) does not contribute to the formation of the taxable base for direct taxes purposes, i.e., IRES, IRPEF and IRAP,(ii) is not relevant for the calculation of deductible interest for individuals according to article 61 of the Italian Tax Consolidated Text, and (iii) is not relevant for the calculation of the deductibility pro-rata for overheads according to article 109 of the Italian Tax Consolidated Text.

Suspension of Italian Tax Authority activities – Article 67

1. 1. Deadlines concerning tax audits, assessments, collection and litigation activities to be carried out by the Italian Tax Authority are suspended from 8 March 2020 to 31 May 2020, with the exclusion of audit activities concerning formal violations, as clarified by the Explanatory Notes to Cura Italia Decree.
   2. For the same period of time, the terms within which the Italian Tax Authority shall provide taxpayers with a reply to tax ruling requests filed according to article 11 of Law No. 212/2000 are suspended.
   3. For the same period of time, the terms for the Tax Authority to reply to the taxpayer’s request under the cooperative compliance regime according to art. 6 of Legislative Decree no. 128/2015, the terms for the Tax Office to reply to tax rulings on new investments according to art. 2 of Legislative Decree no. 147/2015, the terms relating to the request to access to the cooperation and collaboration procedure according to art. 1-bis of Law Decree no. 50/2017, the terms relating to the request for advanced ruling agreement for companies with international activity according to art. 31-ter of Presidential Decree no 600/1973, the terms relating to requests for secondary adjustment on incomes deriving from transactions between affiliated companies with international activity according to art. 31-quater of Presidential Decree no. 600/1973 and the terms of the so-called ‘Patent Box’ procedures according to art. 1, par. 37-43, of Law no. 190/2014, are suspended.
   4. For the tax ruling requests filed with the relevant Tax Authority during the period of suspension, the deadline for the Tax Authority to provide taxpayers with a reply, as well as the deadline for the regularization of ruling requests starts running from 1 June 2020. For the period of suspension, the above mentioned applications may be submitted only by telematics forms, using certified electronic mail, i.e., pec, while non-residents not having a domicile in the Italian Territory must use the following e-mail address: div.contr.interpelloagenziaentrate.it
   5. Statute of limitation and deadlines for the audits, assessments, collection and litigation activities to be carried out by the Italian Tax Authority are suspended for a time-frame equal to the suspension of the relevant tax payments or fulfillment of procedural formalities and the Collector Agent cannot issue Notice of payments during the suspension.
   6. The automatic extension of the deadline for the Tax Office to issue tax assessments for FY 2015, and FY 2014, if the taxpayer fails to submit the relevant Tax Return, have been excluded at the time of the conversion into law, since article 67 paragraph 4 makes specific reference to paragraphs 1 and 3 of article 12 of the Legislative Decree 24 September 2015, No. 159, and not to paragraph 2 of the same provision, providing for an automatic extension by two years of the Statute of limitation for the activities of the Revenue Agency.

Suspension of the Notice of payments issued by the Collector Agents – Article 68

1. 1. The terms for paying tax amounts indicated in: (i) notice of payments issued by the Collector Agent, (ii) tax assessment immediately effective issued by the Italian Revenue Agency, Customs Authorities and Local Authorities, (iii) debit notices issued by the social security institutions and (iv) injunctions of the Local Authorities, expiring between 8 March 2020 and 31 May 2020, are automatically suspended and shall be made in full by 30 June 2020. The amounts already paid cannot be refunded. The Law Decree does not take a clear position on the application of interests and penalties. However, based on its ratio, we may assume that they do not apply. For individuals having their residence or place of business in Bertonico, Casalpusterlengo, Castelgerundo, Castiglione D’Adda, Codogno, Fombio, Maleo, San Fiorano, Somaglia, Terranova dei Passerini e Vo’ as at 21 February 2020 as well as for corporate entity having their legal seat or place of business in such Towns the suspension runs as of 21 February 2020.
   2. Furthermore, the deadline for the payment of the amounts due under the so-called ‘rottamazioneter’, expiting on 28 February 2020, and/or the so-called ‘Saldo e Stralcio’, expiring on 31 March 2020, are postponed to 31 May 2020.
   3. The notifications of write-offs in respect of the installments entrusted to Collector Agent falling due in 2018, 2019 and 2020 must be made by 31 December 2023, 31 December 2024 and 31 December 2025 respectively.

Mention for the waiver of suspension – Article 71

Taxpayers that decide not to benefit from the automatic suspensions provided by one or more of the provisions mentioned above, will be mentioned in the official website of the Ministry of Economy and Finances, in order to obtain a reputational advantage. The Minister of Finance will provide clarification on the certificate to be issued by the Tax Authority to be used also for commercial and advertising purposes.

Suspension of the terms related to tax litigation proceedings – Article 83, to be coordinated with Article 36 of the Liquidità Decree and Article 3 of the Law Decree 30 April 2020, No. 28

1. 1. The hearings of pending tax litigation proceedings falling between 9 March 2020 and 15 April 2020, shall be postponed and rescheduled after 15 April 2020, please note that the Liquidità Decree provides that such a suspension operates until 11 May 2020 and such a provision is still valid.
   2. The present article provides also for a suspension until 15 April 2020 of the following judicial activities, please note that the Liquidità Decree provides for a suspension until 11 May 2020 and such a provision is still valid:

1. 1. 1. Notification of appeals against any act falling within the jurisdiction of the provincial tax courts, including those subject to a mandatory attempt to reach a settlement pursuant to article 17-bis, paragraph 2 of Legislative Decree No. 546/1992.
      2. Notification of appeals against the tax court’s decisions.
      3. Term for the issuance of any kind of tax court’s decisions.
      4. Any other deadline related to judicial proceedings already pending or to be started before tax courts of any degree, including the Italian Supreme Court, falling between 9 March 2020 and 15 April 2020, please note that the Liquidità Decree provides that any deadline falling between 9 March 2020 and 11 May 2020 is suspended until 11 May 2020 and such a provision is still valid.

1. 3. Should one of the deadlines mentioned above start to run in the time-frame between 9 March 2020 and 15 April 2020, it will be considered as running as of 15 April 2020, please note that the Liquidità Decree provides for a suspension until 11 May 2020 and such a provision is still valid. While, in case of looking-back deadlines falling, entirely or partially, in the time-frame between 9 March 2020 and 15 April 2020 the relevant hearing will be postponed in order to grant that such deadline will expire after 15 April 2020, please note that the Liquidità Decree provides for a suspension until 11 May 2020 and such a provision is still valid.
   4. In addition, for the time frame between 12 May 2020, reference is to article 3, paragraph 1, letter b), of the Law Decree 30 April 2020, No. 28, and 31 July 2020, reference is to article 3, paragraph 1, letter i) of the Law Decree 30 April 2020, No. 28, the heads of judicial offices have the possibility to adopt measures aimed at minimizing the risks arising from the epidemiological emergency, such as the limitation of physical access to tax courts, the pleading of the hearings remotely, the payment of the courts stamp and the filing of court’s briefs by electronic means only.
   5. Until 31 July 2020, reference is to article 3, paragraph 1, letter i) of the Law Decree 30 April 2020, No. 28, the filing of briefs or notes before the Supreme Court shall be made in telematics manner, as well as the payments of the courts stamps at the time of the constitution in court. To this extent, the Director General for Information Systems and the Minister of Justice will issue appropriate provision.
   6. Power of attorney for appointing attorney-at-law can be signed and send to the attorney-at-law electronically, together with an ID of the person who signed the Power of attorney. Then the attorney-at-law can authenticate the signature by putting his/her digital signature. The Power of attorney shall be attached to the Courts documents to which refers.
   7. A suspension between 9 March 2020 and 11 May 2020, reference is to article 3, paragraph 1, letter h) of the Law Decree 30 April 2020, No. 28, is also provided for all the “out-of-court dispute resolution procedures” started or pending as at 9 March 2020 until 11 May 2020, reference is to article 3, paragraph 1, letter h) of the Law Decree 30 April 2020, No. 28. Consequently, the relevant maximum duration is suspended.

Suspension of the terms related to the pending administrative procedures – Article 103, to be coordinated with Article 37 of the Liquidità Decree

1. 1. Deadlines connected to administrative procedures, albeit mandatory, pending as at 23 February 2020 or started after 23 February 2020 are automatically suspended for a time-frame running from 23 February 2020 and until 15 April 2020, please note that the Liquidità Decree provides for a suspension until 15 May 2020 and such provision is still valid. Also the 90-days term for the deemed negative answers to the requests of refund filed by the taxpayers follow in the present provision.
   2. A suspension until 15 April 2020 operates also for the enforcement procedures and insolvency procedures and for the relevant judicial activities.
   3. The validity of certain certificate, permits, concessions and authorizations expiring between 31 January 2020 and 31 July 2020 is extended until 90 days before the end of the suspension, meaning 9 August 2020.