At a meeting of the Italian Council of Ministers of 16 March 2020 (press release no. 37/2020), the Prime Minister, the Minister of Labour and Social Policies (Nunzia Catalfo), and the Minister of Economy and Finance (Roberto Gualtieri) set out the principle measures contained in a Law Decree (Decreto-Legge 17 marzo 2020, n. 18 “Cura Italia”).
A Law Decree (a decree which has legal effect), constitutionally speaking, is an executive measure (technically to be taken only in special and urgent circumstances) and is subject to approval by Parliament within 60 days after the Law Decree is issued. It is very possible that during the Parliamentary approval process modifications are made and that those changes will have effect as if enacted in the original Law Decree.
Many of these measures have been widely discussed in the press and on Italian TV and Radio.
This note intends to focus on the main tax and social security aspects for individuals living and working in Italy.
1 Deferral of assessment and payment periods
Litigation and Assessments
Existing measures, already in force since 22 March, covering the postponement of court civil, criminal, administrative hearings, and the automatic extension of limitation periods are extended until 31 May 2020.
The deadlines for the response to the request for formal rulings from the tax authorities is also extended to 31 May 2020.
Suspension of the terms for paying Tax Collection Agencies
The Law Decree defers the term for making payment from 8 March to 31 May 2020 of:
payment orders (cartelle) issued by tax collection agencies;
- assessment notices issued by the Tax Agency;
- payment notices issued by social security institutions;
- enforcement assessment notices by the Customs Agency;
- new enforcement documents issued by local authorities.
The payments subject to suspension must be made in a single amount following the end of the suspension period, i.e. 30 June 2020.
2 Tax and Social Security
Deferral of Tax Payment Deadlines
The Law Decree defers all deadlines for payment of payment of withholding taxes, social security and welfare contributions, premiums for compulsory insurance against accidents at work due for the months of March and April. These can be paid, without penalty or interest, in a single payment on or before 30 June 2020 or in a maximum of 5 equal monthly instalments starting on that date.
Other tax payments which fall due between 8 March 2020 and 31 May 2020 can be made without penalty or interest, in a single payment on or before by 31 May 2020 or through a maximum of 5 monthly instalments of the same amount from May 2020.
Deferral of Withholding Tax
For professional taxpayers with revenues under Euro 400,000, in 2019 will be exempt from withholding tax on income received between 17 March 2020 and 31 March 2020 provided that in the previous month they did not incur expenses for employee or similar work.
Taxpayers need to make a specific declaration stating that revenues and fees should not be subject to withholding tax pursuant to this provision.
The withholding tax needs to be paid:
- in a single solution by May 31, 2020 or five monthly instalments beginning on that date
- without application of penalties and interest.
Tax credits are available as follows:
- For 60% of the amount of rent, relating to the month of March 2020, of properties that fall within the cadastral category C/1 (shops, excluding pharmacies and food shops) paid to business (non private) landlords;
- 50% of the costs of sanitizing environments and work tools, up to 20,000 euros, to encourage sanitization of the workplace, for business, art or profession operators.
The Law Decree sets a cap of 50 million euros for the current year on the cost to the exchequer.
3 Social safety nets
The Decree provides that employees earning less than 40,000 euros in the previous year are entitled to a payment, for the month of March 2020, equal to 100 Euros. This payment is not to be considered taxable income is calculated pro rata on the number of working days carried out in one’s workplace in March.
The premium will eb paid automatically by the employer, either in the April pay packet or no later than the deadline for year-end adjustment (congualio). For employers the payment represents a tax credit to be offset in the normal way against tax/social security due.
Extraordinary family leave for coronavirus or baby-sitter vouchers
As of 5 March 2020, in order to support families in the face of the closure of schools of all levels for Coronavirus, extraordinary leave of absence of up to fifteen days is granted to parents (including adoptive and foster parents) with children not older than 12 years of age in the following categories:
- Employees in both the public and private sectors with compensation equal to 50% of the salary
- Employees registered with the INPS gestione separate (the “separate fund” – scheme for the self-employed), with a daily payment equal to 50% of 1/365 of the income identified to determine the maternity indemnity
- Self-employed workers registered with INPS, for whom the allowance is 50% of the conventional salary set for 2020
Excluded are households benefiting from other means of income support or where a parent works in smart working mode, whether unemployed or not.
The benefit is available to only one of the two parents.
Any periods of parental leave (legislative decree 151 2001), already being used on 5 March and during the suspension, are converted into special leave for coronavirus.
In addition, employees with children between the ages of 12 and 16 may abstain from work for the entire period of school suspension, without payment of compensation or recognition of notional contribution. They have the right not to be dismissed and return to their jobs.
Alternatively, these workers may request a bonus for the purchase of baby-sitting services up to a maximum of 600 euros, paid through the INPS telematic family booklet. The amount is increased to 1000 for health service workers (public and private sector).
4 Special payments for professionals, chefs, agricultural and entertainment workers
A payment (stated in the Law Decree to be for the month of March, but possibly to be extended) of 600 euros will be made to: –
- freelancers who are registered for VAT at 23 February 2020;
- co.co (people on special freelance contracts) workers (excluding pensioners);
- self-employed workers enrolled int eh AGO (compulsory social security) excluding pensioners and individuals registered for other forms of social security);
- seasonal workers in the tourism sector and spas whose employment was terminated (other than by resigning) in the period between 1 January 2019 and 17 March 2020;
- fixed-term agricultural workers (excluding pensioners), who in 2019 carried out at least 50 days of agricultural work;
- workers enrolled in the Entertainment workers’ pension fund (ex ENPALS), with at least 30 days of contributions paid in the year 2019 and income not exceeding 50,000 euros, provided that such workers are employed on 17 March 2020
Professional works, lawyers, architects, engineers, who have their own social security schemes are not included in the hand-out. Also excluded are individuals in receipt of the Citizenship Dole (Reddito di Cittadinanza).
5 Other Measures
Suspension of social security contributions for domestic workers
The payment of social security and welfare contributions and premiums for INAIL (compulsory accident at work insurance) due by employers for domestic staff is suspended for the period from 23 February 2020 to 31 May 2020.
Suspension of individual and collective redundancy programmes
For 60 days from 17 March 2020 no staff lay-off or collective dismissal procedure can be initiated. Furthermore, until the expiry of the 60-day period no employer, regardless of the number of employees in the organisation, may terminate a contract of employment for due cause.
First house fund – Fondo Gasparrini
For a period of nine months from the legislative decree, admission to the benefits of the Fund scheme is extended to self-employed workers and freelancers who are in a position to self-certify to the bank a drop in turnover of more than 33% in the quarter after 22 February 2020 compared to the last quarter of 2019 in consequence of a reduction of earnings consequent to COVID-19 the provisions adopted by the Government. The Fund is to receive a capital injection from the Treasury.
The requirement for the means tested the ISEE declaration has been eliminated.
The Gasparrini fund has existed and operated since 2008. It allows borrowers under a mortgage contract for the purchase of the first home to benefit from the suspension of the payment of the capital repayment and interest instalments for a period up to 18 months.
Before the changes in the Law Decree there were 4 conditions that had to be met:
- termination of a permanent employment;
- termination of fixed-term employment
- termination of a para-subordinate relationships/ or a commercial agency relationship
- death or official recognition of a serious handicap, or certain civil disability (80%)
Providing that the loan is less than 250,000 euros the borrower can submit an application for access to the benefits of the Fund. The mortgage must also have been amortized for at least 1 year at the time of submitting the application. It also applies to borrowers who are late in making payments, provided that the delay does not exceed 90 consecutive days.
The Decree Law extends eligibility for suspension also where the a borrower has been suspended from work or seen their working hours red cured for a period of at least thirty days int eh year, and even if authorization is waiting for income support treatments.
The Law Decree also provides that the Fund will pay one half of the interest portion to the bank.
Measures for Internationalization
An “Integrated Promotion Fund” is set up to finance certain initiatives including:
- implementation of an extraordinary communication campaign aimed at supporting Italian exports and the internationalization of the national economic system in the agri-food sector and in other sectors affected by the Covid-19 emergency
- financial compensation for losses as a result of the application of any penalties related to delayed or omitted obligations, towards foreign clients, arising from compliance with the measures to contain the effects of the COVID-19 epidemiological emergency.
Extension of the validity of Identity Documents
ID documents expiring on or after 10 March 2020 shall be considered valid for the time being. This however does not extend to documents to be used for foreign travel.
Refunds of tickets for shows, museums and other places of culture
Following the cancellation events, events, shows of any nature, including cinema and theatrical performances, museums the institutions and places of culture, throughout Italy, it is obviously impossible to attend.
Ticket holders must submit within 30 days of 17 March I. e. 16 April 2020 a specific request for reimbursement to the seller of the ticket, attaching the relevant ticket or evidence of purchase. The ticket seller, within 30 days from the submission of the refund request, must issue a voucher of the same amount to be used within one year of the issue.