European Commission approves €7.6 billion Italian tax schemes to support companies and self-employed workers affected by coronavirus outbreak

New Delhi: The European Commission has approved four Italian aid schemes to support companies and self-employed workers affected by the coronavirus outbreak. The four measures, which are part of a wider Italian support package included in the so-called “Decreto Rilancio”,were approved under the State aid Temporary Framework adopted by the Commission on 19 March 2020, as amended on 3 April and 8 May 2020.

Executive Vice President Margrethe Vestager, in charge of competition policy, said: “With this set of measures, with an overall budget of €7.6 billion, Italy will further support companies and self-employed workers that are severely affected by the coronavirus outbreak by easing their liquidity constraints through tax waivers and tax credits. The measures will also encourage the adaptation of production processes and work environments to the new sanitary requirements. We continue to work in close cooperation with Member States to find workable solutions to mitigate the economic impact of the coronavirus outbreak, in line with EU rules.”

The Italian support measures

Italy notified to the Commission under the Temporary Frameworkfour aid schemes , with an overall estimated budget measures of €7.6 billion, waiving certain taxes for and providing tax credits to companies and self-employed workers affected by the coronavirus outbreak. The measures form part of a wider package to support the Italian economy in the context of the coronavirus outbreak set out in the so-called “Decreto Rilancio”.

Under the schemes, which will be open to companies and self-employed workers, support will take the form of:

A partial waiver of the regional tax on production activities (IRAP) for companies and self-employed workers with revenues not exceeding €250 million in 2019 active in all sectors with some exceptions (such as banks and other financial institutions).
An exemption from the municipal tax (IMU) in relation to touristic properties used for commercial operations, including SPAs and sea resorts;
Tax credits to support the adaptation of production processes and work places to the new sanitary requirements;
Tax credits for certain companies and self-employed workers depending on level of revenues in relation to rents and leases for non-residential properties and business leases for the period between March and June 2020.
The measures aim at (i) easing the liquidity constraints that companies and self-employed workers are experiencing due to the negative consequences of the coronavirus outbreak and the measures that the Italian government had to take to limit the spread of the virus and (ii) encouraging the adaption of production processes and work places to the new sanitary requirements.

The Commission found that the Italian measures are in line with the conditions of the Temporary Framework. In particular, (i) the aid amount per company will not exceed €100,000 per company active in the primary agricultural sector, €120,000 per company active in the fishery and aquaculture sector and €800,000 per a company active in all other sectors, as provided by the Temporary Framework; (ii) the aid will be granted only to companies which were not in difficulty on 31 December 2019; and (iii) the aid is limited in time and will only be granted until 31 December 2020.

The Commission concluded that the measures are necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.

On this basis, the Commission approved the measures under EU State aid rules.