Support for businesses and the economy

December 30, 2020

The Italian government is taking extraordinary measures to support Italian companies, ensuring their stability during the emergency and helping them to relaunch themselves when things start to recover. The ‘Cure Italy’ Decree introduced initial measures to support liquidity, implementing the ‘Covid-19’ wage supplement scheme and a moratorium on loan and mortgage repayments, while the ‘Liquidity’ Decree launched a plan worth over € 750 billion to ensure that businesses had access to more financing and the necessary liquidity. The ‘Relaunch’ Decree set aside over € 16 billion and continued along the same path, extending the wage supplement scheme, strengthening measures focusing on liquidity, taking further action in terms of taxation and providing non-refundable grants, as well as ways to strengthen capital and achieve recapitalisation.

The ‘August’ Decree and ‘Relaunch’ Decree both introduced a series of significant measures to support businesses, providing immediate protection for enterprises as well as creating the basis for them to relaunch themselves once the emergency is over.

Payment of the 2019 IRAP (regional income tax) balance and the first advance IRAP payment for 2020 cancelled: the June IRAP payment was cancelled for all businesses and self-employed workers with revenues or fees of up to € 250 million (excluding banks, insurance companies and public administrations and bodies), with approximately € 4 billion being set aside for this purpose.
A non-refundable grant was introduced for those who run a business/are self-employed with a turnover of up to € 5 million and who recorded at least a 33% drop in revenues in April 2020 compared with April 2019. This grant is paid by the Italian Revenue Agency, applying a percentage to the difference between the turnover/remuneration amount in April 2020 and the turnover/remuneration amount in April 2019; this percentage is equal to 20% for those with revenues/remuneration of up to € 400 thousand, 15% for those with revenues/remuneration of between € 400 thousand and € 1 million and 10% for those with revenues/remuneration of between € 1 million and € 5 million. The minimum grant amount shall be no less than € 1,000 for natural persons and € 2,000 for non-natural persons.
Tax credit for the adaptation of workplaces: those running a business or carrying out artistic activities or a profession in places open to the public and associations, foundations and other private entities, including third-sector organisations, are entitled to a 60% tax credit for any expenses incurred in 2020 for the work needed to ensure compliance with health requirements and the measures to contain the spread of the COVID-19 virus, up to a maximum of € 80,000 per beneficiary.
Tax credit for sanitisation and PPE: those carrying out artistic activities or a profession, non-commercial bodies, including third-sector organisations and civilly recognised religious organisations, are entitled to a 60% tax credit for expenses incurred in 2020 to sanitise surroundings and equipment, as well as to purchase personal protective equipment for workers and users. This tax credit can reach up to € 60,000 per beneficiary.
€ 1.5 billion set aside to strengthen the capital of state-controlled companies, through share capital increases or alternative forms of capitalisation, with the aim of supporting their solidity and their plans to recover and further develop.
Incentives for purchases made using electronic forms of payment, as part of the 'Cashless plan'; a total of € 1.75 billion has been set aside for 2021 to reimburse part of the purchases made using these payment methods.
The Fund for state incentives has been increased by € 500 million; this fund is for those who buy and register cars with low CO2 emissions in Italy and is designed to support the recovery of the automotive industry, while encouraging the development of new technology.
€ 600 million has been set aside to support catering businesses whose turnover between March and June 2020 was less than three quarters of the turnover recorded during the same period in 2019; to this end, a non-refundable grant will be offered for the purchase of Italian agricultural products, food and wine. 90% of this grant will be paid in advance upon acceptance of the application.
€ 500 million set aside to provide non-refundable grants to those working in the tourism industry in Italy's historic centres who have recorded a significant drop in foreign tourists and who, in June 2020, recorded a turnover of less than two-thirds that of the same month in 2019; a minimum of € 1,000 will go to natural persons and € 2,000 to other entities meeting these requirements.
Help to pay rent, with the introduction of a tax credit equal to 60% of monthly rent payments for non-residential properties for the months of March, April and May; this tax credit is for those with remuneration or revenues of up to to € 5 million and who have recorded a 50% drop in turnover due to the Covid-19 emergency. Hotels will be entitled to this tax credit regardless of the turnover recorded in the previous tax period.
Reduction of the fixed amounts in energy bills: around € 600 million has been set aside to reduce this component in energy bills, for a three-month period starting from May 2020. This measure aims to reduce electricity costs for small and medium-sized enterprises requiring low voltage.
€ 64 million refinancing of the “new Sabatini”, with subsidies being granted to SMEs for investments in new machinery, plant and equipment, equal to the interest calculated on a 5-year loan.
€ 500 million refinancing of development contracts to support large-scale production investments and to implement national industrial policies.
An additional € 50 million in refinancing in 2021 for the consulting and innovation voucher (the so-called ‘Innovation Manager Voucher’).
€ 950 million in refinancing for the ‘Ipcei Fund’ to support companies that contribute to implementing important projects of European interest.

A series of measures has also been introduced to support private investment and tourism, one of the sectors that has been worst hit by the Covid-19 emergency.

Improving energy efficiency and incentives for earthquake prevention ('seismabonus’), photovoltaic systems and charging stations for electric vehicles: in order to boost the recovery of the construction industry, the tax deduction for specific work to improve energy efficiency, to reduce the earthquake risk and to install photovoltaic systems and columns to charge electric vehicles, has been increased to 110% for expenses incurred between 1 July 2020 and 31 December 2021, with the possibility to use the deduction in five equal annual instalments or to transfer the deduction to third parties.
Possibility to convert tax deductions into discounts on the amount payable and into transferable tax credits: on an experimental basis, the possibility has been introduced - for work carried out in 2020 and 2021 - for those entitled to certain tax deductions to choose whether they would prefer a contribution for the same amount, in the form of a discount on the amount payable (paid in advance by the supplier who carries out the work, who shall in turn receive a corresponding tax credit, with the possibility to then transfer said credit), or, alternatively, the transformation of the corresponding tax deduction amount into a tax credit, which may also be used for offsetting purposes, with the possibility to then transfer said tax credit to third parties, including to credit institutions and other financial intermediaries.
Favourable tax regime for investments in innovative start-ups and SMEs: favourable tax regime for natural persons who invest in innovative start-ups or SMEs, offering a tax deduction equal to 50% of the amount invested by the taxpayer in the share/quota capital of one or more innovative start-ups. The maximum deductible investment amount may not exceed € 100,000 per tax year.
Incentives for investments in the real economy (‘Super-PIR’): a measure has been introduced to encourage investments in the real economy and, in particular, in non-listed companies, boosting the capacity of long-term savings plans (so-called ‘PIRs’). This provision has altered applicable legislation, introducing a new type of 'Individual Savings Plan’ (in Italian: ‘PIR’), with specific fixed deposit arrangements if over 70% of the total value of the plan is invested in small-scale SMEs. For these individual savings plans, the so-called ‘concentration constraint’ stands at 20% instead of 10%.
Strengthening of alternative individual savings plans, with the tax-free annual investment threshold rising from € 150,000 to € 300,000 for long-term investments.
Holiday tax credit: for services offered in Italy by tourist-accommodation companies and bed & breakfasts, a tax credit has been introduced for 2020, which may be used from 1 July to 31 December 2020, by families with an ISEE income of up to € 50,000. This tax credit is equal to € 500 for each family unit, € 300 for families made up of two people and € 150 for one-person households; 80% of the credit may be used in the form of a discount on the amount due, paid in advance by the providers of the tourist service in question, while the remaining 20% may be used in the form of a tax deduction for the individuals entitled to it. The discounts granted will be reimbursed to the service providers as a tax credit that can only be used for offsetting purposes, with the possibility to transfer said tax credit to their own suppliers of goods and services or to other private individuals, as well as to credit institutions or financial intermediaries.
60% tax credit on monthly rent or leasing or concession amounts for spa facilities.
Exemptions from the IMU municipal property tax for the tourism industry: exemption from the first and second IMU instalments for 2020 on properties used as beach establishments and on properties falling under category "D2” of the land registry. Buildings used as cinemas and theatres shall be exempt from the IMU property tax also for 2021 and 2022.
The Fund established by the ‘Relaunch Decree’ to support travel agencies, tour operators and tourist guides has been increased by € 265 million for 2020.
Tax credit for 30% to 65% of investments, with € 180 million being set aside per year for 2020 and 2021, for expenses incurred for redevelopment and improvement work carried out by companies in the hospitality and spa industry, including holiday farms and campsites.
TOSAP and COSAP exemption: licensed establishments that hold concessions for the use of ‘public land’ shall be exempt from paying the taxes and fees for the occupation of public spaces and areas (‘TOSAP' & ‘COSAP’), from 1 May until 31 December 2020. Measures have been introduced to simplify the process to apply for new concessions to occupy public land or to extend the areas already granted.
VAT rate reduced for the sale of goods necessary to contain and manage the Covid-19 epidemiological emergency: VAT reduced (from 22% to 5%) on masks, ventilators and other devices to protect workers’ safety. Until 31 December 2020, as a transitional measure, the sale of these goods will be fully exempt from VAT (VAT rate equal to zero).
Plastic and sugar tax postponed: these taxes will now not come into force until 1 January 2021.
The ‘Enterprise and cultural institutions emergency fund’ introduced by the Relaunch Decree has been increased up to € 231.5 million, and the ‘Cinema, entertainment and audiovisual sector emergency fund’, introduced by the 'Cure Italy’ Decree, has been increased to € 335 million. A total of € 90 million is going towards museums and the implementation of measures as part of the strategic plan entitled ‘Major Cultural Heritage Projects’.
An incentive for advertising investments for professional sports leagues and clubs and for amateur sports clubs and associations; a total of € 90 million is being set aside for this purpose, in the form of a tax credit equal to 50% of the investments made between 1 July and 31 December 2020.
Boosting resources to support various transport activities, including taxis and car & driver hire services, road haulage, tourist buses and passenger and cruise services, with around € 200 million being set aside for this purpose.

Further measures are modulated taking into account the size of businesses:

For companies with a turnover of between €5 and €50 million, the government has introduced tax incentives in the form of a 20% tax credit for recapitalisation, a tax credit of 50% of capital losses (exceeding 10% of shareholders’ equity) and an ‘SME Capital Fund’ for subscribing (by 31 December 2020) newly issued bonds or debt securities to help strengthen capital positions. In order to benefit from these measures, companies must have suffered a 33% drop in revenues compared to the previous year and must have approved a capital increase of at least € 250,000. Companies must be up to date with their social security contributions and tax payments and - as at 31 December 2019 - must not fall within the category of ‘companies in difficulty’.
For companies with a turnover of over € 50 million, a ‘Patrimonio Rilancio’ (‘Relaunch Fund’) has been established in the ‘Cassa Depositi e Prestiti’ (‘CDP’), for measures to support the recapitalisation of SPAs (companies limited by shares), which have their registered office in Italy, excluding banks and insurance companies. This capital may be used for work carried out under normal market conditions or in accordance with criteria to be defined by the temporary framework of state aid, approved by the European Commission, and shall preferably be carried out pursuant to standardised procedures, by signing convertible or subordinated loans. Subscribing capital, on the other hand, will require a specific investigation, will not lead to the acquisition of a controlling stake, and will normally involve co-investors. This capital may also be used to restructure companies in difficulty that nonetheless have prospects for recovery. When making the relative assessments, the company’s impact shall be taken into account with reference to technological development, critical and strategic infrastructure, strategic production chains, environmental sustainability, employment levels and the labour market, as well as other aspects.

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Support for businesses and the economy

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