In brief

The second package of tax measures for supporting the Italian economy in the context of the COVID-19 outbreak has finally been approved. Indeed, Law Decree No. 34 dated 19 May 2020 (the so-called “Rilancio Decree“) was converted into Law No. 77 of 17 July 2020, with few amendments with respect to the prior version (which are highlighted in “bold”).

The present follow-up alert is aimed at facilitating the coordination of the final text of the Rilancio Decree with Law Decree No. 18 of 17 March 2020, converted into Law No. 27 of 29 April 2020 (“Cura Italia Decree“) and Law Decree No. 23 dated 8 April 2020, converted into Law No. 40 of 5 June 2020 (“Liquidità Decree“), with specific reference to the measures concerning tax litigation activities in a broad sense. Measures and incentives that help individuals and companies will be explored in separate follow-up alerts.

The Rilancio Decree came into effect as of 19 May 2020, while the amendments included at the time of the conversion into law highlighted in bold come into effect from 19 July 2020.


Contents

  • Extension of the automatic hypothesis of the suspension/postponement of the deadlines for tax payments provided by Articles 18 and 19 of the Liquidità Decree — Article 126

A) Amendments to Article 18 of the Liquidità Decree (suspension of tax and social contribution payments)

1. Taxpayers carrying out their business, art or self-employment activities:

  1. having their tax domicile, registered offices or operational headquarters in Italy, and
  2. having, in the fiscal year preceding the one in course as of 9 April 2020, revenues or incomes lower than EUR 50 million, and
  3. that suffer a decrease of at least 33% in the turnover of (i) March 2020 compared to March 2019, and (ii) April 2020 compared to April 2019,

may suspend the payments of the following taxes, respectively, for the months of April and May 2020 (i.e., March 2020 taxes that are due by 16 April 2020, and April 2020 taxes that are due by 18 May 2020):

  1. withholding taxes on employment income and similar incomes, as well as on regional and municipal tax surcharges levied in their capacity as withholding agents;
  2. VAT.

For the same taxpayers, social security contributions and premiums for mandatory insurance payments are suspended for the months of April and May 2020.

2. Such suspensions also apply to taxpayers carrying out their business, art or self-employment activities, with their fiscal domicile, legal seat or place of business in Italy, that:

  1. in the fiscal year preceding the one in course as of 9 April 2020, declared revenues or incomes higher than EUR 50 million and that suffer a decrease of at least 50% in the turnover of (i) March 2020 compared to March 2019, and (ii) April 2020 compared to April 2019; or
  2. started their business, art or self-employment activities after 31 March 2019.

3. For non-commercial entities, including third sector and religious entities civilly recognized, that carry out institutional activities of general interest other than business activity, the following payments are suspended:

  1. withholding taxes at source on employment income and similar incomes, and regional and municipal tax surcharges levied in their capacity as withholding agents;
  2. social security contributions and premiums for mandatory insurance.

4. In addition, VAT payments for the months of April and May 2020 are suspended for taxpayers engaged in business, art or professional activities (irrespective of the volume of revenues and remuneration perceived during the previous fiscal year), on the condition that such taxpayers:

  1. have their tax domicile, registered offices or operational headquarters in Bergamo, Brescia, Cremona, Lodi, Piacenza, Alessandria and Asti; and
  2. suffered a decrease of at least 33% in the revenues or incomes of (i) March 2020 compared to March 2019, and (ii) April 2020 compared to April 2019.

5. All the payments mentioned above will be made by 16 September 2020 (instead of 30 June 2020, as provided by Article 18, paragraphs 1-6 of the Liquidità Decree), without the application of interests and penalties, in their full amount or in four installments (instead of five installments, as provided by Article 18, paragraphs 1-6 of the Liquidità Decree), the first of which should be paid by 16 September 2020. Any amount already paid cannot be refunded.

6. For April 2020, all other suspensions of payments provided by previous decrees for taxpayers acting in the areas of business most affected by the epidemiological emergency remain valid, if they do not meet the new requirements described above. Such payments shall be made by 31 May 2020, without the application of interests and penalties, in full or in a maximum of five equal monthly installments. Any amount already paid cannot be refunded.

B) Amendments to Article 19 of the Liquidità Decree (withholding tax on income from self-employment and commissions relating to procurement, agency, mediation, trade representation and business solicitation)

7. Withholding agents are exempted from the obligation to levy withholding taxes, according to Articles 25 and 25-bis of DPR 600/1973 (mainly referred to self-employment income and commissions), on revenues and fees paid between 17 March and 31 May 2020, if they obtain a self-declaration of the taxpayers attesting that revenues and fees are not subject to withholding tax pursuant to the provision of the present law.

8. In particular, the exemption operates in relation to incomes paid to taxpayers:

  1. having their tax domicile, registered offices or operating headquarters in Italy; and
  2. whose revenues or fees declared in the fiscal year preceding the one in course as of 9 April 2020 do not exceed EUR 400,000; and
  3. that did not bear employment expenses, or similar expenses, in the previous month.

9. It should be noted that such suspension is not related to the payment of the withholding taxes made by the withholding agents, but rather the actual application of the same withholding taxes (upon the request of the taxpayer that suffered the withholding).

10. The taxpayer should remit the withholding tax not levied at source to the Italian tax authorities by 16 September 2020 (instead of 31 July 2020, as provided by Article 19 of the Liquidità Decree) in full or in four installments (instead of five installments, as provided by Article 19 of the Liquidità Decree), the first of which should be paid by 16 September 2020, without penalties and interests.

  • Extension of the automatic hypothesis of the suspension/postponement of the deadlines for tax payments and tax fulfillments provided by Articles 61 and 62 of the Cura Italia Decree — Article 127

11. For taxpayers that have their fiscal domicile, legal seat or place of business in the Italian territory and that operate in the sectors most affected by the epidemiological emergency (such as tourism, sport, art and culture, catering, transportation, etc.), the following payments are automatically suspended:

  1. withholding taxes at source on employment income and similar incomes expiring between 2 March 2020 and 30 April 2020;
  2. social security contributions and premiums for mandatory insurance expiring between 2 March 2020 and 30 April 2020;
  3. VAT expiring in March 2020.

Such payments should be made in full by 16 September 2020 (instead of 31 May 2020, as provided by Article 61, paragraphs 1 and 4 of the Cura Italia Decree), without interest and penalties, or in four installments (instead of five installments, as provided by Article 61, paragraphs 1 and 4 of the Cura Italia Decree) expiring on 16 September, 16 October, 16 November and 16 December 2020. The amounts already paid cannot be refunded.

For the same taxpayers, tax obligations concerning social security contributions and premiums for mandatory insurance expiring between 2 March 2020 and 30 April 2020 should be fulfilled by 16 September 2020.

12. For national sport federations, promotional sport entities, sport associations or clubs, or other entities listed under Article 61, paragraph 2, letter (b) of the Cura Italia Decree, the following tax payments are automatically suspended:

  1. withholding taxes at source on employment income and similar incomes expiring between 2 March 2020 and 30 June 2020;
  2. social security contributions and premiums for mandatory insurance expiring between 2 March 2020 and 30 June 2020;
  3. VAT expiring in June 2020.

Such payments should be made in full by 16 September 2020 (instead of 31 May 2020, as provided by Article 61, paragraph 5 of the Cura Italia Decree), without interest and penalties, or in four installments (instead of five installments, as provided by Article 61, paragraph 5 of the Cura Italia Decree) expiring on 16 September, 16 October, 16 November and 16 December 2020. The amounts already paid cannot be refunded.

For the same taxpayers, tax obligations concerning social security contributions and premiums for mandatory insurance expiring between 2 March 2020 and 30 June 2020 should be fulfilled by 16 September 2020.

13. Payments of withholding taxes on self-employment income, and similar incomes, and on revenues and fees paid by the Public Administration by means of self-employment income, and similar incomes, not levied by withholding agents that have their legal seat or place of business in Bertonico, Casalpusterlengo, Castelgerundo, Castiglione d’Adda, Codogno, Fombio, Maleo, San Fiorano, Somaglia, Terranova dei Passerini e Vo’ and expiring between 21 February 2020 and 31 March 2020 should be made in full by 16 September 2020 (instead of 31 May 2020, as provided by Article 61, paragraph 4 of the Cura Italia Decree), or in four installments (instead of five installments, as provided by Article 61, paragraph 4 of the Cura Italia Decree) expiring on 16 September, 16 October, 16 November and 16 December 2020. The amounts already paid cannot be refunded.

14. The following payments, expiring between 8 March 2020 and 31 March 2020, that should be made by corporate entities or professionals that have their fiscal domicile, legal seat or place of business in the Italian territory and whose revenues or fees for FY 2019 do not exceed EUR 2 million are automatically suspended:

  1. deductions at source of income from employment;
  2. VAT;
  3. social security contributions and mandatory insurance premiums.

Such payments should be made in full by 16 September 2020, without interest and penalties (instead of 31 May 2020, as provided by Article 62, paragraph 5 of the Cura Italia Decree), or in four installments (instead of five installments, as provided by Article 62, paragraph 5 of the Cura Italia Decree) starting from 16 September 2020 (instead of May 2020). The amounts already paid cannot be refunded.

15. With specific reference to the VAT payments of taxpayers that have their fiscal domicile, legal seat or place of business in Bergamo, Brescia, Cremona, Lodi and Piacenza provinces, the suspension will apply regardless of the thresholds mentioned above.

Such payments should be made and such obligations should be fulfilled by 16 September 2020 (instead of 31 May 2020, as provided by Article 62, paragraph 5 of the Cura Italia Decree), without interest and penalties, in their full amount or in four installments (instead of five installments, as provided by Article 62, paragraph 5 of the Cura Italia Decree) starting from 16 September 2020 (instead of May 2020). The amounts already paid cannot be refunded.

16. With specific reference to taxpayers that have their fiscal domicile, legal seat or place of business in Bertonico, Casalpusterlengo, Castelgerundo, Castiglione d’Adda, Codogno, Fombio, Maleo, San Fiorano, Somaglia, Terranova dei Passerini and Vo:

  1. Tax payments and tax obligations expiring between 21 February 2020 and 31 March 2020 are suspended.
  2. Deductions at source of income from employment are suspended.

Such payments should be made and such obligations should be fulfilled by 16 September 2020 (instead of 31 May 2020, as provided by Article 62, paragraph 5 of the Cura Italia Decree), without interest and penalties, in their full amount or in four installments (instead of five installments, as provided by Article 62, paragraph 5 of the Cura Italia Decree) starting from 16 September 2020 (instead of May 2020). The amounts already paid cannot be refunded.

  •  Hearings before tax courts and court stamps — Article 135

1. For determining the amount of penalties for omitted or insufficient payments of court stamps (even those imposed with a notice issued pursuant to Article 248 of the Presidential Decree of 30 May 2002, No. 115), the period between 8 March 2020 and 31 May 2020 should not be considered.

2. Both the parties and the judge can participate in tax hearings (both public or in chamber) remotely. To this extent, the director-general of finance, the authority for personal data protection, the Tax Bureau and the Italian Agency for Digitalization will issue appropriate provisions and identify the tax courts that can manage hearings remotely. This measure will mainly affect the hearings held between 12 May 2020 and 31 July 2020 (the period within which Article 83 of the Cura Italia Decree allows the heads of judicial offices to adopt measures, such as the hearings being held remotely, to minimize the spread of COVID-19).

A specific request for the hearings to be held remotely can be filed by each of the parties together with their appeal briefs (i.e., the main or secondary appeal) or first defensive briefs (such as counter-brief or counter-appeal), or as a separate request. In both cases, the request should be served to the counterparty and filed with the tax court before the issuance of the notice for the scheduling of the hearing.

  • Automatic extension of deadlines for payments of higher taxes due for violations resulting from the automatic and formal inspections of VAT and CIT returns — Article 144

1. Payments of higher taxes due for violations challenged after the automatic and formal inspections of VAT and corporate income tax (CIT) returns, pursuant to Articles 36-bis and 36-ter of the Presidential Decree of 29 September 1973, No. 600, and Article 54-bis of the Presidential Decree of 26 October 1972, No. 633, expiring between 8 March 2020 and 18 May 2020, are considered to be made in a timely manner if they occur by 16 September 2020.

2. If the term for making such payments expires between 19 May 2020 and 31 May 2020, the above-mentioned payments can be made by 16 September 2020 without the application of penalties and interests.

3. The amounts due can be paid in full by 16 September 2020 or in four installments expiring on 16 September, 16 October, 16 November and 16 December 2020. The amounts already paid cannot be refunded.

  • Expediting of refund procedures by avoiding the advanced request to offset tax credit with pending tax debt — Article 145

For FY 2020, tax refunds will be expedited by avoiding the advanced proposal to offset tax credit with pending tax debt.

  • Increase of the amounts of tax credits and social contribution that can be off-set by using F24 Forms or refunded via telematics tax accounts — Article 147

For FY 2020, the threshold for tax credits and social contributions that can be offset with tax/social contribution debts or, alternatively, refunded on the telematics tax account (the so-called Conto fiscale) becomes EUR 1 million (instead of EUR 700,000).

  • Postponement of the deadlines for paying amounts due based on: (i) settlement agreements; (ii) in-court or out-of-court settlements; (iii) settlements pursuant to Article 17-bis, paragraph 2 of Legislative Decree No. 546/1992; or (iv) certain tax assessments, as well as the deadline for filing certain appeals before provincial tax courts — Article 149

1. Deadlines for making the following payments, expiring between 9 March 2020 and 31 May 2020, are automatically postponed to 16 September 2020:

  1. payments of the full amounts due based on settlement agreements
  2. payments of the amounts due based on in-court or out-of-court settlements
  3. settlements concluded under the mandatory mediation regime (pursuant to Article 17-bis, paragraph 2 of Legislative Decree No. 546/1992)
  4. notices of assessment for registration tax, inheritance tax or donation tax for immovable property without cadastral income or with so-called presumed cadastral income
  5. notices of assessment for the omitted registration of tenancy agreements or other agreements issued pursuant to Articles 10, 15 and 54 of Presidential Decree No. 917/1986
  6. notices for recovery of the tax credits to be declared under Line RU of the CIT tax return
  7. notices of assessment issued in case of omitted, insufficient or late payment of the registration tax or of the mortgage and cadastral taxes at the time of the estate declaration

Such payments should be made in full by 16 September 2020, without interest and penalties, or in a maximum of four monthly installments expiring on 16 September, 16 October, 16 November and 16 December 2020. The amounts already paid cannot be refunded.

2. The automatic postponement also applies to the installments that should be paid between 9 March and 31 May 2020 based on: (i) settlement agreements; (ii) mediation agreements; (iii) in-court or out-of-court settlements; or (iv) self-acknowledgment of the tax assessments (so-called Acquiescenza), as well as installments due for settling tax audit reports, deeds of assessment or tax court proceedings according to the tax amnesty program launched in Italy by Law Decree No. 119 dated 23 October 2018.

3. The deadline for taxpayers to serve the Tax Administration with an appeal against the notice falling within the provision described under point 1 (with the sole exception of those listed under letters (a), (b) and (c) not being subject to appeal before tax courts) and the notice that is potentially subject to self-acknowledgment (so-called Acquiescenza) is automatically postponed to 16 September 2020.

Tax assessments for which taxpayers filed a settlement request do not fall within the present provision, not being subject to self-acknowledgment (so-called Acquiescenza), as well as the notice for penalties. Tax assessments issued by the Italian Revenue Agency, customs authorities and local authorities that are immediately effective should not fall within the present provision, as the relevant payments should be made by 31 August 2020 according to Article 154 of the Rilancio Decree.

  • Expediting of refund procedures (unlocking of credits due from the Public Administration) by avoiding the advanced check of existing pending debts — Article 153

1. Tax refunds are expedited by avoiding advanced checks of existing pending debts equal to or higher than EUR 5,000 in case they are made during the following periods:

  1. for all taxpayers, during the period between 8 March 2020 and 31 May 2020;
  2. for individuals who have their residence or place of business in Bertonico, Casalpusterlengo, Castelgerundo, Castiglione d’Adda, Codogno, Fombio, Maleo, San Fiorano, Somaglia, Terranova dei Passerini e Vo’ as at 21 February 2020, as well as for corporate entities that have their legal seat or place of business in such towns during the period between 21 February 2020 and 31 May 2020.

2. Advanced checks that have already been performed, even before the above-mentioned period, do not have any effect and, therefore, tax refunds will be paid to the beneficiary, irrespective of the existence of pending debts, on the condition that the collector agent did not serve the taxpayers with any payment request pursuant to Article 72-bis of the Presidential Decree of 29 September 1973, No. 602.

  • Extension of the suspension for notices of payments issued by collector agents — Article 154

1. The terms for paying tax amounts indicated in (i) notices of payments issued by collector agents, (ii) tax assessments issued by the Italian Revenue Agency, customs authorities and local authorities that are immediately effective, (iii) debit notices issued by social security institutions, and (iv) injunctions of the local authorities, expiring between 8 March 2020 and 31 August 2020 (instead of 31 May 2020, as provided by Article 68, paragraph 1 of the Cura Italia Decree), are automatically suspended and should be made in full by 30 September 2020 (instead of 30 June 2020, as provided by Article 68, paragraph 1 of the Cura Italia Decree).

2. Taxpayers admitted to pay their pending debts in installments, based on installment plans in place as at 8 March 2020 or based on notices for admission to installment plans issued by the collector agents vis-a-vis taxpayer requests filed by 31 August 2020, lose such benefit in case of omitted payments of 10 installments (even non-sequentially).

3. All payments of the amounts due under the so-called “rottamazione-ter” and/or the so-called “Saldo e Stralcio” expiring during FY 2020 are postponed to 10 December 2020. Such deadline cannot be extended by five days according to Article 14-bis, paragraph 3 of Law Decree No. 119 dated 23 October 2018.

4. Taxpayers may ask to pay the amounts due under the so-called “rottamazione-ter” and/or the so-called “Saldo e Stralcio” in installments even in case of delayed payments of the amounts due by 31 December 2019.

  • Automatic extension of the deadline for the Tax Office to serve taxpayers with tax assessments and notices for penalties — Article 157

1. An automatic extension of the deadline for the Tax Administration to serve taxpayers with tax notices and notices for penalties expiring between 9 March 2020 and 31 December 2020, as well as the deadline for the Tax Office to serve taxpayers with certain notices of payments, is provided. Such tax notice will be issued by the Tax Administration by 31 December 2020 but can be served to taxpayers during the period between 1 January 2021 and 31 December 2021, without application of interests running as of 1 January 2021.

Tax notices falling within the scope of such provision include:

  1. tax assessments
  2. notices for penalties pursuant to Articles 16 or 17 of Presidential Decree No. 472/1997
  3. notices for recovery of tax credits
  4. liquidation deeds
  5. amendment and liquidation deeds

Such extension does not apply to tax notices that challenge the existence of a tax fraud or potential criminal ramifications of the tax challenges raised, or those issued after the application of precautionary measures, such as preservation and mortgage.

2. The period for the Tax Administration to serve taxpayers with certain notices, communications and invitations, such as notices for violations issued after the automatic and formal inspections of the VAT and CIT returns, is 1 January 2021 to 31 December 2021, with the sole exception of those involving tax frauds, potential criminal ramifications of the tax challenges raised or those issued after the application of precautionary measures, such as preservation and mortgage.

3. The deadlines for the Tax Administration to serve taxpayers with notices of payments are extended by one year for the following:

  1. higher taxes challenged after the automatic inspections of the 2017 VAT and CIT returns, pursuant to Articles 36-bis of the Presidential Decree of 29 September 1973, No. 600, and Article 54-bis of the Presidential Decree of 26 October 1972, No. 633;
  2. amounts of severance indemnity or incomes from retirement resulting from the so-called 770 Model filed by withholding agents for FY 2016;
  3. higher taxes challenged after the formal inspections of the 2016 and 2017 CIT returns, pursuant to Articles 36-ter of the Presidential Decree of 29 September 1973, No. 600.

For the period between 1 January 2021 and the date of notification of such notices of payments, no interests apply.

4. These provisions do not apply to taxes belonging to regions, provinces and municipalities.

  • Possibility to cumulate the 90-day suspension in case of the filing of settlement requests with the judicial suspension between 9 March 2020 and 11 May 2020 set forth by the Cura Italia Decree and the Liquidità Decree — Article 158 (to be coordinated with Article 83 of the Cura Italia Decree and Article 36 of the Liquidità Decree)

1. In order to avoid the risk that taxpayers’ appeals are declared inadmissible if they are not filed by the appropriate deadline, it has been clarified that the 90-day suspension, applicable in case of the filing of a settlement request with respect to tax assessments, should be cumulated with the 64-day suspension provided by the Cura Italia Decree (to be coordinated with the Liquidità Decree).

Indeed, based on Article 83, paragraph 2 of the Cura Italia Decree and Article 36, paragraph 1 of the Liquidità Decree, terms for the notification of appeals against any act falling within the jurisdiction of the provincial tax courts (including those subject to a mandatory attempt to reach a settlement pursuant to Article 17-bis, paragraph 2 of Legislative Decree No. 546/1992) are suspended between 9 March 2020 and 11 May 2020.

2. In practice, the present provision only affects tax assessments served to taxpayers between 9 October 2019 and 8 March 2020 whose deadline to appeal could benefit from the 64-day suspension provided by the Cura Italia Decree and the Liquidità Decree. Therefore, the effective term for filing an appeal against such tax assessments, in case of the filing of a settlement request, would last 214 days from the date of notification to the taxpayer (60 days is the ordinary term for filing appeals + 90-day suspension for having filed a settlement request + 64-day suspension due to COVID-19 legislation).

It is not clear whether the suspension provided by the Italian procedural rules between 1 August and 31 August of each year (the so-called summer suspension) could be added to the 64-day suspension. Based on Italian case law, the more prudent approach is not to cumulate the summer suspension with the 64-day suspension. Therefore, if the 214-day term expires during the summer suspension, the ultimate deadline for filing an appeal is 1 September 2020.

  • Amendment to Article 83 of the Cura Italia Decree and extension of the precautionary measures for managing judicial proceedings — Article 221 (to be coordinated with Article 83 of the Cura Italia Decree)

1. The present article provides detailed rules for managing criminal and civil judicial proceedings during COVID-19 outbreaks. However, some provisions might also be applicable to tax litigation proceedings.

2. In particular:

  1. Based on paragraph 2 of Article 221 of the Rilancio Decree, until 31 October 2020, the heads of judicial offices have the possibility to adopt measures aimed at minimizing the risks arising from the epidemiological emergency, such as limiting physical access to tax courts, conducting the pleading of hearings remotely and asking for the discussion of the hearing to be replaced by the exchange of final notes.
  2. Based on paragraph 3 of Article 221 of the Rilancio Decree, until 31 October 2020, the payment of court stamps and the filing of court briefs will be made by electronic means only.
  3. Based on paragraph 5 of Article 221 of the Rilancio Decree, until 31 October 2020, the filing of briefs or notes before the Supreme Court will be made in a telematics manner, as well as the payments of court stamps at the time of the constitution in court. To this extent, the director-general of information systems and the minister of justice will issue the appropriate provision.

3. It is not clear whether the provisions included under paragraphs 4 and 6 of Article 221 of the Rilancio Decree should be applicable to tax litigation proceedings. Absent of any specific provision with respect to tax litigation proceedings and waiting for clarifications, there is room to consider that such proceedings are included under the new rules.

The first provision describes how the courts may ask for the final hearing to be replaced by the exchange of final notes. In particular, the court may communicate to the parties that the hearing is replaced by the exchange of written notes 30 days before the hearing’s date. The parties can file a request for the discussion of the hearing within five days from the communication of the court. In case they decide not to discuss the hearing, the written notes will be filed before the court no later than five days before the hearing. In case both parties fail to file written notes, the hearing will be postponed. If neither party attends the second hearing, the case will be removed from the register.

The second provision describes how to participate in the hearing remotely. In particular, both the taxpayer and attorney-at-law may attend the hearing remotely by filing a specific request 15 days before the hearing’s date. The court will communicate detailed instructions on how to participate in the hearing five days before the hearing’s date.

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