Italy: Italian Government’s reaction to COVID-19

In August, given the persistent negative state of the Italian economy, the government has issued the “August Decree” introduced by Law Decree n. 104 of 14 August 2020, providing the implementation of urgent measures to support employment and the economy. 

1) Measures to refinance enterprises’ activities 

The Decree refinances some instruments in support of enterprises, such as: (i) the contributions provided for the purchase of plant and equipment for production purposes by small and medium enterprises (known as ‘Beni strumentali - Nuova Sabatini’); (ii) the relief allowed as the non-repayable grant or the soft loan to promote the implementation of development projects (the ‘Contratti di Sviluppo’); (iii) the Fund for safeguarding employment and for carrying on business. In accordance with the Decree, this Fund, regardless of the number of employees of the enterprises in question is directed at saving and restructuring also enterprises holding assets and relationships of strategic relevance for the national interest, and operates, in case of authorization of the six-month extension of the Ordinary Redundancy Scheme, for the costs to be borne in relation to the aforesaid extension; (iv) The duration of the moratorium on mortgages and lines of credit has been extended to 31 January 2021. 

2) Specific measures for companies and tax obligations 

Company shareholders’ meetings can use electronic vote or meeting attendance through telecommunication means. 

A further division of suspended payments into installments is envisaged by August’s Decree: in particular, 50% of the suspended sums can be paid at once by and no later than 16 September or split into a maximum of four equal installments starting from 16 September 2020. The remaining 50% can be paid, in a maximum of twenty-four monthly installments of the same amount, with the first installment paid by January 16, 2021. 

This decree has postponed, from 31 August 2020 to 15 October 2020, the ending date of the suspension of the payments, deriving from payment notices, from enforcement notices relating to tax and non-tax revenues. 

3) Update tangible/untangible assets and shares book value 

The Article 110 allows enterprises to revaluate, for accounting purposes only, tangible and intangible assets, excluding those which the enterprise is intended to produce and trade, as well as shares in subsidiaries and associates in accordance with Article 2359 of the Italian Civil Code constituting fixed assets, resulting from the financial statements for the current year as at 31 December 2019. 

The purpose is to allow enterprises to adjust the accounting representation of the assets to their actual values. 

The higher accounting value attributed to assets by effect of the revaluation may, however, also be recognized for tax purposes through the payment of a substitute tax in the measure of 3%. 

Similarly, the positive balance resulting from the revaluation may be recognized - also only in part - through the payment of a substitute tax of income taxes, of the IRAP regional tax and of any surtaxes in the measure of 10%.

‍