With significant measures in place to combat the spread of coronavirus across Italy, the government has introduced a range of support measures to help businesses. The support measures are mandated by the Presidential Decree (DPCM) of 9 March 2020 and broadly entail tax relief and simplified requirements for access to social welfare funds. The measures are in legal effect and may be adjusted in the future as the situation evolves.
Employers in Italy should understand the details of the new support measures, and how they will affect their business.
Tax and Social Security
Suspension of tax payments: The measures suspend all tax payments by businesses in Italy. This includes withholding taxes on employee wages, withholding taxes on assimilated wages, and taxes on income paid by the state.
Tax obligations are also suspended in Italy’s coronavirus ‘red zone’ between 21 February and 31 March 2020. This suspension affects all citizens, professionals, businesses, and entities that maintained residence or legal or operational headquarters within the red zone from 21 February 2020. Taxpayers who reside outside the red zone but who use intermediaries who live within it, are also eligible for the suspension.
The municipalities inside the red zone are: Codogno, Castiglione d'Adda, Casalpusterlengo, Fombio, Maleo, Somaglia, Bertonico, Terranova dei Passerini, Castelgerundo and San Fiorano, in the Province of Lodi, and of the Municipality of Vo 'Euganeo, in the Province of Padua.
Suspended tax payments must be made in the month following the end of the suspension (up to 30 April 2020). Further support measures are available for businesses in the tourism and hotel sectors.
If payments have already been made in the suspension period reimbursements will not be offered.
Suspension of social security payments: In the red zone municipalities (listed above) social security and welfare payments, and premium payments for compulsory insurance expiring between 23 February and 30 April 2020, have been suspended. Taxpayers may voluntarily continue the payments.
Payment obligations can be resumed from 1 May 2020. Payments can be made by installment without penalty or interest charge, up to a maximum of 5 monthly installments.
If payments have already been made in the suspension period, reimbursements will not be offered.
The coronavirus outbreak is forcing many employees to be absent from work. Employers should be familiar with the measures in place to manage workplace absences and protect employees’ remuneration.
Quarantine orders: Employees may be absent from work as a result of quarantine orders from the authorities. There are two types of quarantine:
- Mandatory quarantine: Some employees may be ordered into mandatory quarantine by the authorities. Mandatory quarantine may involve active surveillance and observation if the employees have coronavirus symptoms. Employees may also be placed in mandatory quarantine if they have had close contact with confirmed cases of infection. Since mandatory quarantine is applicable to other cases of infectious disease, provisions of law already exist to help employers manage this type of absence.
- Voluntary quarantine with fiduciary isolation: Competent health authorities can issue a voluntary home isolation or to employees pending a check for symptoms of the virus. The absence is justified by health needs and certified by a health authority so employers must follow the existing process for handling this type of absence.
Absence orders: Public authorities may issue orders to forbid workers from leaving their homes. Since their absence is enforced by the authorities, employees will retain their right to remuneration. In this situation, the government has implemented a range of social welfare measures to ensure workers are paid. These measures, sometimes referred to as ‘social shock absorbers’, include funds such as CIG, CIGS, FIS, and Cassa in Deroga.
Absent workers’ remuneration can also be delivered through Smart Working (SW) but where that is not possible, and where social insurance is absent or insufficient, other strategies to manage the absence and guarantee worker’s remuneration must be considered. These strategies may involve placing workers unilaterally on annual leave under ROL and EX-FEST permits.
Where it is impossible to implement any of the above solutions, employee absence may have to be unpaid and managed through provisions in employees’ employment contracts. Legal provisions for unpaid suspension for reasons of major force are set out in national trade agreements from various industry bodies such as Confcommercio and Metalmeccanica.
Business suspension: Some businesses may be prohibited from carrying out normal activities by public authorities. Since workers’ absences are again out of their control, in this instance their remuneration must be guaranteed even though their employer’s business is suspended. Here, social shock absorbers may again be implemented to guarantee workers’ remuneration, these include CIG, CIGS, FIS, and Cassa in Deroga.
Similarly, Smart Working or unilateral placement on annual leave may also be implemented to guarantee workers’ remuneration if their place of work is closed. Where that is not possible, unpaid suspension may be necessary under legal provisions in national trade agreements.
For more information on Italian tax and social security measures, consult our Global Insight Guide to Italy.