The following new tax provisions, effective as of 26 May 2021, are introduced under the Italian law decree no. 73 of 25 May 2021 ("Sostegni-bis"), published in the Italian Official Gazette no. 123 of 26 May 2021.
CONTRIBUTIONS TO LOSSES
The following contributions to losses are introduced under the Support decree 2 ("Sostegni-bis") (the same provisions as contained in the support decree apply, if any, to which reference is made).
1. A first contribution to losses is recognized to taxpayers who
- have a VAT number active on 26 May 2021;
- submitted an application and were recognized a contribution to losses under the previous support decree (and did not wrongly receive and then repay such contribution).
The amount of contribution is the same (100 percent) as the one already recognized under the support decree, and is paid and directly credited by the Italian tax authority on the bank or postal account, to which the first contribution was paid, or recognized as tax credit, if the applicant opted to receive the previous contribution as a tax credit.
2. As an alternative to the contribution under the previous paragraph 1), a contribution to losses is recognized to those resident or established in Italy:
- that act as entrepreneurs, artists, or professionals or that produce agricultural income with proceeds or income not exceeding EUR 10 million in the second tax period before the one as of 26 May 2021,
- holders of a VAT number active on 26 May 2021;
- whose monthly amount of turnover and income of the period between 1 April 2020 and 31 March 2021 is lower by at least 30 percent than the average monthly amount of turnover and income of the period between 1 April 2019 and 31 March 2020.
Those who benefited from the contribution under the previous paragraph 1) may be eligible for the possible higher contribution under paragraph 2): in such case, the contribution already paid or recognized under paragraph 1) will be subtracted from the contribution under paragraph 2).
The following taxpayers are excluded from the contribution in any case:
- public entities pursuant to section 74 of the Italian Tax Code;
- financial entities pursuant to section 162-bis of Italian Tax Code.
The amount of the contribution under paragraph 2) above for those who benefited from contribution under paragraph 1) above is equal to the difference between the average monthly amount of turnover and proceeds of the period from 1 April 2020 to 31 March 2021 and the average monthly amount of turnover and proceeds of the period from 1 April 2019 to 31 March 2020, multiplied by:
- 60 percent for those with proceeds and income not exceeding EUR 100,000;
- 50 percent for those with proceeds or income of more than EUR 100,000 and less than EUR 400,000;
- 40 percent for those with proceeds or income of more than EUR 400,000 and less than EUR 1 million;
- 30 percent for those with proceeds or income of more than EUR 1 million and less than EUR 5 million;
- 20 percent for those with proceeds or income of more than EUR 5 and less than EUR 10 million;
The amount of the contribution under paragraph 2) above for those who did not benefit from contribution under paragraph 1) above is equal to the difference between the average monthly amount of turnover and proceeds of the period from 1 April 2020 to 31 March 2021 and the average monthly amount of turnover and proceeds of the period from 1 April 2019 to 31 March 2020, multiplied by:
- 90 percent for those with proceeds and income not exceeding EUR 100,000;
- 70 percent for those with proceeds or income of more than EUR 100,000 and less than EUR 400,000;
- 50 percent for those with proceeds or income of more than EUR 400,000 and less than EUR 1 million;
- 40 percent for those with proceeds or income of more than EUR 1 million and less than EUR 5 million;
- 30 percent for those with proceeds or income of more than EUR 5 million and less than EUR 10 million.
For any taxpayer the amount of the contribution under paragraph 2) may not exceed EUR 150,000.
In order to receive the contribution under this paragraph 2), eligible taxpayers are required to file the relevant application (electronically only) with the Italian tax authority within 60 days from the date on which the electronic procedure for the filing of the application is made available. The modes for filing the application shall be disclosed in a decision to be released by CEO of the Italian tax authority.
For those required to submit notices on the periodic VAT settlement, the application may be filed after the VAT notice relating to the first quarter of 2021 only.
3. Finally, a contribution to losses is recognized to those resident or established in Italy
- that act as entrepreneurs, artists or professionals or produce agricultural income with proceeds or income not exceeding EUR 10 million in the second tax period before the one as of 26 May 2021,
- are holders of a VAT number active on 26 May 2021;
- that suffered a deterioration in their economic result for the year of the tax period ended 31 December 2020 compared to the tax period ended 31 December 2019 equal to, or exceeding, a percentage still to be defined by a decree to be released by the Italian Ministry of Economy and Finance.
The following taxpayers are excluded from the contribution in any case:
- public entities pursuant to section 74 of the Italian Tax Code;
- financial entities pursuant to section 162-bis of Italian Tax Code
The amount of the contribution to losses is equal to:
- the difference of the economic result for the year of the tax period ended 31 December 2020 compared to the one ended 31 December 2019, net of any contributions to losses that may have been already approved by the Italian tax authority under section 25 of the Italian law-decree 34/2020, under section 59 and section 60 of the Italian law-decree 104/2020, section 1, section 1-bis and section 1-ter of the Italian law-decree 137/2020, section 2 of the Italian law-decree 172/2020, section 1 of the Italian law-decree 41/2021 and the previous paragraphs 1) and 2);
- multiplied by a percentage that will be set forth by a decree still to be released by the Italian Ministry of Economy and Finance.
The contribution may not exceed EUR 150,000.
The contribution does not add to the taxable income for corporate tax (IRES) and regional tax on productive activities (IRAP) purposes and for the purposes of the relationship under section 61 and section 109 (5) of the Italian Tax Code (TUIR).
The contribution to losses may be entirely recognised as a tax credit to be used for the set-off under section 17 of the Italian legislative decree 241/1997, without any limits of amount, only upon the taxpayer's irrevocable option. To this end the F24 payment form must be used and submitted to the Italian tax authority by using the electronic services made available only.
In order to receive the contribution, eligible taxpayers are required to file the relevant application (electronically only) with the Italian tax authority within 30 days from the date on which the electronic procedure for the filing of the application is made available. The modes for filing the application shall be disclosed in a decision to be released by CEO of the Italian tax authority.
The application for contribution recognition under this paragraph 3) may be submitted only if the income tax return relating to the tax period as of 31 December 2020 is submitted by 10 September 2021.
Pursuant to article 103 (3) of the Treaty on the Functioning of the European Union, the payment of the contribution is subject to authorization by the European Commission.
TAX CREDIT FOR NON-RESIDENTIAL PROPERTY AND BUSINESS LEASE RENTALS
Accommodation and tourism businesses, travel agencies and tour operators are eligible for the tax credit on non-residential property and business lease rentals until 31 July 2021, provided that their turnover or income in the 2021 reference month decreased by at least 50 percent compared to the same month of 2019.
The tax credit is granted for rentals paid for each of the months from January 2021 to May 2021 to:
- entrepreneurs, artists or professionals with proceeds or income not exceeding EUR 15 million in the second tax period before the one ended 26 May 2021;
- non-commercial entities, including voluntary sector and civilly recognized religious entities.
Lessees engaged in economic activities are eligible for the tax credit provided that the average monthly amount of turnover and income in the period from 1 April 2020 to 31 March 2021 is lower by at least 30 percent compared to the average monthly amount of turnover and income of the period from 1 April 2019 to 31 March 2020.
Tax credit is granted in any event to taxpayers that started their businesses as of 1 January 2019.
The above provisions apply within the limits and conditions set out in the European Commission Communication as of 19 March 2020 C(2020) 1863 final "Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak".
SUSPENSION OF TAX RECOVERY NOTICES
The suspension of the payment deadlines for tax recovery notices is extended until 30 June 2021. However, suspended payments must be made by the end of July 2021 in one single instalment. Payments already made are not reimbursed.
TAX ON DISPOSABLE ITEMS (MACSI)
The tax on disposable items (MACSI) is postponed until 1 January 2022.
GUARANTEE FUND FOR SMEs (FONDO GARANZIA PMI)
In derogation to the current provisions of the fund under section 2 (100 a) of the Italian law 662/1996, the following measures apply to guarantees on new medium-long term loan portfolios granted to businesses with no more than 499 employees for research, development and innovation projects or investment programmes:
- the maximum amount of loans is increased to EUR 500 million;
- the loans have a term length of no less than 6 years and no more than 15 years and are aimed at research, development and innovation projects and/or investment programmes for at least 60 percent;
- the beneficiaries are eligible without any economic and/or financial evaluation by the fund manager;
- d) the cut-off point and thickness of the junior tranche of the financing portfolio are determined by using the probability of default calculated by the applicant based on his or her internal models;
- the guarantee is granted to cover no more than 80 percent of the loan portfolio's junior tranche;
- the share of junior tranche covered by the fund shall not exceed 25 percent of the loan portfolio amount;
- as to the single loans included in the guaranteed portfolio, the fund covers 80 percent of the loss registered on the single loan;
- the loan portfolio construction period must be closed by the deadline set forth by the applicants at the time of guarantee request and must not exceed 24 months from the date on which the guarantee is granted by the fund.
CAPITAL GAINS OF INNOVATIVE START-UP BUSINESSES
Capital gains earned by individuals from the disposal of equity investments held in:
- innovative start-up businesses under section 25(2) of the Italian law-decree 179/2012,
- innovative small and medium-sized enterprises under section 4 of the Italian law-decree 3/2015,
acquired by subscription of corporate capital from 1 June 2021 to 31 December 2025 and held for at least three years, are not subject to taxation.
Similarly, capital gains derived from the disposal of equity investments held in resident companies are not subject to taxation, if and to the extent that, within one year from their accrual, they are reinvested in innovative start-up businesses or in innovative small and medium-sized enterprises through subscription of corporate capital by 31 December 2025.
Pursuant to article 108 (3) of the Treaty on the Functioning of the European Union, the effectiveness of these provisions is subject to authorization by the European Commission to be requested by the Italian Ministry of Economic Development.
EXTENSION OF MORATORIUM ON SME LOANS
Upon prior notice to be submitted to the lender by 15 June 2021 by businesses already admitted to the support measures on 26 May 2021, the moratorium on SME loans is extended until 31 December 2021, limited to the principal amount only.
This provision is effective in accordance with the authorization given by the European Commission pursuant to article 108 of the Treaty on the Functioning of the European Union.
VAT CREDIT/DEBIT NOTE ON BANKRUPTCY PROCEDURES
VAT credit/debit notes may be issued in the event of failure to pay the consideration, fully or in part, by the purchaser or the principal:
- as of the date on which the latter is subject to a bankruptcy procedure or the date of the decree authorizing a debt restructuring arrangement under section 182-bis of the Italian royal decree 267/1942, or as of the date of disclosure of a turnaround plan pursuant to section 67 (3d) of the Italian royal decree 267/1942;
- further to unsuccessful individual enforcement proceedings.
The purchaser or the principle subject to the procedures under a) above are not obliged to record a VAT debit note.
The above provisions apply to bankruptcy procedures started after 26 May 2021.
CONVERSION OF DTA INTO TAX CREDITS
The provisions under section 44-bis of the Italian law-decree 34/2019 on the conversion of deferred tax assets (DTA) into tax credits are extended until 31 December 2021.
NOTIONAL INTEREST DEDUCTION
The notional interest deduction (NID) incentive for the tax year subsequent to the one as of 31 December 2020 is increased.
More specifically, the notional return is set forth at 1.5 percent (instead of 1.3 percent) on the 2021 net equity increase compared to the one at the end of the previous business year, for a maximum amount of EUR 5 million.
Moreover, the higher NID deduction may be converted into a tax credit calculated by applying the tax rate set forth for individual income taxpayers (IRPEF) and for corporate taxpayers (IRES). The tax credit may be used:
- upon notice given to the Italian tax authority, as of the day following the one on which the cash contribution is made or the day following the one on which the credits are waived or set off or as of the day following the one on which the shareholder meeting adopted the resolution on the allocation of a part or of all of the profits of the year to reserves;
- for offsetting tax liabilities pursuant to section 17 of the Italian legislative decree 241/1997, without any limits of amount, or may be requested for refund and thereafter transferred to other taxpayers.
In the event of conversion into tax credits, if the difference between the net equity increases relating to subsequent tax periods (2021, 2022 and 2023) and the one relating to the tax period immediately preceding is lower than the increases that benefit from tax credits, the tax credit is refunded in proportion to this lower amount.
In the absence of conversion into tax credits, if the net equity increase of the two tax years following the one as at 31 December 2021 are lower than the one available at the end of the previous tax period, the total taxable income is increased by an amount of 15 percent of the difference between the net equity increase at the end of the previous tax period and the net equity increase at the end of the current tax period.
TAX CREDIT FOR CAPITAL GOODS INVESTMENTS
Taxpayers with a turnover or income of no less than EUR 5 million may set-off the tax credit recognized to them under paragraph 1054 of the Italian law 160/2019 in a single annual instalment and use it for capital goods investments other than those specified in annex A to the Italian law 232/2016 between 16 November 2020 and 31 December 2021.
THERESHOLD OF CREDITS ELIGIBLE FOR SET-OFF
In 2021 the horizontal set-off threshold under section 34 of the Italian law 388/2000 is increased to EUR 2 million.
TAX CREDIT FOR INNOVATIVE MEDICAL PRODUCTS RESEARCH AND DEVELOPMENT
Enterprises carrying out innovative medical products research and development activities are entitled to a 20 percent tax credit on the expenses incurred between 1 June 2021 and 31 December 2030.
Enterprises resident in Italy or permanent establishments in Italy of non-residents that carry out research and development activities in Italy are entitled to such tax credit, if they entered into agreements with resident companies or companies located in other EU or EEA countries or other countries included in the Ministerial decree of 4 September 1996.
The tax credit is recognized up to a maximum amount of EUR 20 million per year to each beneficiary and may be used for set-off in three yearly instalments.
TAX CREDIT FOR SANITISATION AND PPD
Entrepreneurs, artists and professionals, non-commercial entities, including voluntary sector entities and civilly recognized religious institutions, as well as non-business accommodation facilities other than hotels, provided that they are in possession of the identification code under section 13-quater of the Italian law-decree 34/2019, are recognized a tax credit of 13 percent of the expenses incurred in June, July and August 2021 for
- the sanitisation of the premises and the equipment used,
- the purchase of individual protection devices and other devices aimed at protecting the employees' and users' health, including the expenses for the provision of COVID-19 tests.
The tax credit is granted up to a maximum amount of EUR 60,000 for each beneficiary.
TAX CREDIT FOR THE TOURISM INDUSTRY
A 65 percent tax credit for the restructuring and the improvement of tourist accommodation facilities and hotels under section 10 of the Italian law-decree 83/2014 is recognized in the three (not two anymore) tax periods following the one as of 31 December 2019.
TAX CREDIT FOR THE TEXTILE INDUSTRY
Businesses operating in the textile and fashion industry, in the shoes and leather manufacturing industries (textile industry, fashion and accessories) are recognized a tax credit of 30 percent of the value of final inventories pursuant to section 92 of the Italian Tax Code (TUIR) even in 2021, if such inventories exceed the average amount of the same value recorded in the three tax years prior to the one in which the tax incentive accrues.
The tax credit is recognised until the maximum amount of EUR 95 million available in 2021 and of EUR 150 million available in 2022 is achieved.
PURCHASE OF FIRST HOME BY YOUNG PEOPLE
Deeds on the transfer of "first home" ownership for consideration (except for A/8 and A/9 residential properties) and deeds on the transfer or the establishment of legal ownership, usufruct, rights of use and residence on such first homes are exempted from registration fees, mortgage and land registry fees, if they are executed to the benefit of
- taxpayers under the age of 36 in the year in which the notarial sale and purchase deed is signed,
- that have an economic status index (ISEE - indicatore della situazione economica equivalente) not exceeding EUR 40,000.
In the event of deeds subject to VAT, the purchasers are assigned a tax credit equal to VAT payable.
Loans granted for the purchase, the construction and the restructuring of residential properties are exempt from the substitute tax for registration fees, stamp duties, mortgage fees and land registry fees as well as charges on government licences, provided that the above-mentioned requirements are met.
These tax incentives apply to deeds entered into from 26 May 2021 until 30 June 2022.
Yours sincerely,
HAGER & PARTNERS
