Italy: Suspension of Tax and Social Security Payments for Businesses

Italy: Suspension of Tax and Social Security Payments for Businesses

Italy has suspended all payments related to VAT, withholding taxes on employees, social and welfare contributions and mandatory insurances in a bid to help businesses that are struggling to survive the affects of Covid-19.

On 6 April 2020, Italy’s Council of Ministers approved a Decree containing urgent provisions to support cash liquidity for all businesses across the country. The content of the Decree has now been published in the Official Journal (Gazzetta Ufficiale).

The Decree states a suspension of tax and social security contributions, in particular, for those carrying out business, art or professional activities, which have their tax domicile, registered office or operational headquarters in the territory of the State and who have suffered a decrease in revenues or fees in March 2020 compared to in the same month of the previous tax period and in April 2020 compared to the same month of the previous tax period. The terms of the relative payments are suspended respectively for the months of April and May 2020:

  • Withholding taxes on employee and assimilated income and withholding taxes relating to the regional and municipal surcharge, which the aforementioned subjects operate as substitute tax;
  • VAT/ Value Added Tax;
  • Social security and welfare contributions and compulsory insurance premiums.

The suspension is applied when there is a decrease in revenues or fees equal to at least the:

  • 33% in March 2020 compared to the same month of the previous tax period and in April 2020 compared to the same month of the previous tax period, with regard to subjects with revenues or fees not exceeding 50 million euros in the tax period preceding that in progress on the date of entry into force of the Decree;
  • 50% in March 2020 compared to the same month of the previous tax period and in April 2020 compared to the same month of the previous tax period, with regard to subjects with revenues or remunerations in excess of 50 million euros in the tax period preceding that in progress on the date of entry into force of the Decree.

The same suspension also applies to all economic entities that have undertaken the exercise of the business, art or profession after March 31.

Suspended payments must be made, without the application of penalties and interest, in a single solution by 30 June 2020 or by payment in installments up to a maximum of 5 monthly installments of the same amount, starting from the same month of June 2020. It will not refund the amount already paid.