The second package of tax measures for supporting the Italian economy in the context of the COVID-19 outbreak has finally been approved. Indeed, Law Decree No. 34 dated 19 May 2020 (“Rilancio Decree“) was converted into Law No. 77 on 17 July 2020, with a few amendments with respect to the prior version (which are highlighted in bold).
Beneficial tax measures helping individual and companies to face the COVID-19 outbreak will be commented upon therein, while tax incentives and measures affecting tax litigation activities will be explored in separate follow-up alerts.
The Rilancio Decree came into effect on 19 May 2020, while the amendments made at the time of the conversion into law highlighted in bold took effect from 19 July 2020.
IRAP payments — Article 24
Payments of: (i) the IRAP balance referred to the fiscal year in progress as of 31 December 2019 (advance payments, if any, are still due); and (ii) the first instalment of the advance IRAP payment referred to the fiscal year following the one in progress as of 31 December 2019 are not due.
This provision is subject to the limitations and conditions provided by the communication issued by the European Commission “Temporary Framework for state aid measures to support the economy in the current COVID-19 outbreak” and applies to taxpayers carrying out business and self-employment activities with, in the fiscal year in progress as of 31 December 2019, revenues or fees not exceeding EUR 250 million, with the exclusion of:
- bank and other financial intermediaries, financial and non-financial holding companies
- insurance companies
- public administrations
- individuals, non-business partnership, entities and companies operating in the agricultural sector
Extension of the delivery period for new tangible assets subject to the enhanced depreciation — Article 50
Due to COVID-19 outbreak, the terms for the delivery of tangible assets eligible to benefit from the 2019 enhanced depreciation, according to Article 1 of the Law Decree of 30 April 2019 No. 34, is postponed until 31 December 2020.
The repeal of VAT and excise duties’ safeguard clauses — Article 123
The so-called “safeguard clauses” which provide for the automatic increase of VAT rates and excise duties on certain fuels as of 1 January 2021 are repealed.
VAT rate reduction for supplies of medical devices and personal protective equipment for the COVID-19 epidemiological emergency — Article 124
Until 31 December 2020, transfer of medical devices and personal protective equipment for COVID-19 are VAT exempt with no limitation on input VAT deduction.
Starting from 1 January 2021, such transfers will be subject to 5% VAT rate.
Deferral of the plastic tax and sugar tax — Article 133
The application of plastic tax and sugar tax is deferred to 1 January 2021.
Revaluation of lands and unlisted shares and quotas — Article 137
Taxpayers can opt for the revaluation of lands and unlisted shares and quotas held as of 1 July 2020 by paying an 11% substitutive tax by 15 November 2020 (instead of 30 September 2020) in its full amount or in three equal yearly instalments (interest at 3% applies).
Electronic storage and transmission daily data considerations — Article 140
Penalties related to the violation of the VAT obligations to electronic storage and transmission daily data considerations will not apply until 1 January 2021.
Deferral of automated clearance procedure of stamp duty on electronic invoices — Article 143
The automated procedure according to which the Italian tax authority applies stamp duty on electronic invoices sent through the Interchange System, will apply to invoices filed starting from 1 January 2021.
Increase of the yearly cap of tax credit that can be offset through the F24 form — Article 147
For fiscal year 2020, the yearly cap of tax and social security credits that can be offset through the F24 form against other tax or social security liabilities is increased to EUR 1 million (previously EUR 700,000).
Recovery procedure for undue payment of social security benefits and salaries subject to withholding tax — Article 150
In the case of the repayment of social security benefits and salaries subject to withholding tax:
- The taxpayer shall reimburse an amount equal to the income received net of any withholding tax levied at source.
- A tax credit is granted to the withholding tax agent equal to 30% of the amounts received, which can be offset against other tax and social security liabilities.
These provisions shall apply to sums reimbursed starting from 1 January 2020.
Municipality tax exemptions for tourism sector — Article 177
For 2020, the first municipality tax (IMU) instalment is not due with respect to:
- buildings used for bathing and SPA
- real estate properties in cadastral category D/2 and properties of farmhouses, holiday villages, hostels, mountain huts, sea and mountain colonies, short-stay rooms, holiday homes and apartments, bed & breakfast, residences and campsites, provided that the owners of the properties are also managers of the relevant activities
- real estate properties in cadastral category D in use by companies carrying out the setting-up of exhibition structures in the context of trade fairs or exhibitions.