Extract of the new provisions contained in Law Decree no. 104 of 14 August 2020 – so-called August Decree, not yet converted into law

The Article 110 of the so-called August Decree introduces a new option for the revaluation of company as-sets and shareholdings. The revaluation can be made for both tangible and intangible goods, as well as par-ticipations in controlled or affiliated companies, if they were already included in the financial statements as at 31.12.2019 and have not been classified as current assets. This revaluation may be applied by all capital companies, commercial partnerships, sole proprietorships, resident non-commercial entities and permanent establishments that do not apply the international accounting standards.

The revaluation may be carried out separately for each asset belonging to a category and may be of purely accounting nature or in addition attain fiscal relevance. Indeed, the higher values recorded in the financial statements may be relevant also for tax purposes if the taxpayer pays a substitute tax of 3 per cent, which can be settled with a one-off payment or in three equal instalments over a period of three years. Subjects operating in the tourism and thermal sector, according to the so-called Liquidity Decree, are exempt from the payment of the substitute tax for recognizing the revaluation of assets also for tax purposes.

With regard to the fiscal effects of the revaluation, the higher values attributed to the assets will be recog-nised for tax purposes as from the tax period following to the revaluation period (as from 2021 for entities with tax periods coinciding with the calendar year) and will be relevant for the deductibility of depreciation, the limit of deductible maintenance expenses and the regulation of shell companies.

A different course of action should be taken in the event of sale or transfer of the revalued assets, since the higher values attributed to the assets can only be recognized from the fourth financial year following the one in which the revaluation was carried out (at earliest from January 1, 2024 for solar entities).

Regarding the positive revaluation balance, i.e. the higher value attributed to the assets or shareholdings, it represents a reserve in suspension of tax, which may be released by the payment of a further 10 per cent substi-tute tax in order to avoid taxation (on the company's part) in the event of distribution.

In conclusion, it should be noted that the revaluation of assets may also be carried out for purely financial reporting purposes, with the aim of strengthening the equity of the company by creating a revaluation re-serve in the balance sheet. In this case, no substitute tax is applied, so that this reserve can already be used in the current financial year to cover the net loss in the financial statements. However, national ac-counting standards must always be taken into account, so the realizable value, production capacity and re-sidual useful life of the assets must be examined.

With the so-called August Decree, the tax credit for rents for buildings used for business and self-employment activities was extended also to June 2020 (July 2020 for rents for tourist facilities). This 60 per cent tax credit (30 per cent in the case of company leases) can be claimed by all companies and freelancers, provided that the income generated in 2019 does not exceed 5 million euros. Excluded from this limitation are hotels, spas and agritourism facilities, as well as travel agencies, tourism agencies and tour operators, which may therefore be able to benefit from the tax credit regardless of the volume of revenues recorded in the previ-ous tax period. This benefit is also granted, albeit to a reduced extent, i.e. 20 per cent (10 per cent in the case of compa-ny leases), also to companies operating in the retail trade, with revenues exceeding 5 million euros.

In order to benefit from this tax credit, lessees must verify that they have suffered a decrease in turnover of at least 50 per cent compared to the same month of the previous year. In this regard, it should be noted that the calculation of turnover for the month of June (July for tourist facilities) 2019 and 2020 must be made taking into account all the transactions invoiced in the above-mentioned months that participated in the periodic VAT settlement of the month, as well as transactions not relevant for VAT purposes made in the same month.

Finally, it should be noted that subjects who started their activities on or after January 1, 2019, as well as sub-jects with fiscal domicile or operational headquarters in a municipality affected by calamitous events with a state of emergency still in force on the date of declaration of the state of emergency by COVID-19, i.e. on January 31, 2020 (such as the Autonomous Province of Bolzano), will be excluded from this prior verifica-tion and will therefore be able to benefit from the tax credit even in the absence of the requirements.

The August Decree has introduced a further non-refundable contribution in favour of shops and restaurants located in municipalities with a high tourist presence. 

The subsidies are available to all companies that sell goods or services to the public in zone A (or equiva-lent) of provincial capitals or metropolitan cities which are characterized by an increased presence of foreign tourists:

Below is a list of the 29 municipalities that, according to the latest surveys carried out by ISTAT, should be included among those characterised by a high tourist presence:

Venice  Siena Verona La Spezia Lucca

Verbania  Pisa Milan Ravenna         Matera

Florence  Rome Urbino Bolzano         Padua

Rimini  Como Bologna Bergamo         Agrigento

Syracuse Ragusa Naples Cagliari         Catania

Genova Palermo Turin Bari

In addition, in order to be eligible for the contribution, the company must demonstrate that in June 2020 it suffered a decrease in turnover of more than 1/3 compared to the turnover in the same month of the previ-ous year. 

The contribution is calculated by applying a certain percentage to the difference between the amount of turnover for the month of June 2020 and the amount of turnover for the same month of 2019. The percent-age to be applied varies according to the amount of total revenues realised in 2019. In particular, the contri-bution is due in the amount of:

a) 15 per cent for subjects with revenues not exceeding 400,000 euros;

b) 10 per cent for subjects with revenues exceeding 400,000 euros, but less than 1 million euros;

c) 5 per cent for subjects with revenues exceeding 1 million euros.

The amount of the contribution cannot exceed the limit of 150,000 euros and is recognised in an amount not less than 1,000 euros for natural persons and 2,000 euros for subjects other than natural persons. These minimum amounts are also recognised to subjects who have started their activity as from 1 July 2019 in the A zones of the above-mentioned municipalities.

Finally, it should be noted that the measure cannot be cumulated with the contribution provided for catering companies, related to the purchase of local products.

With the so-called "Cura Italia" Decree, a series of measures have been introduced concerning the holding of shareholders' meetings in corporate entities in order to overcome the restrictions on activities involving the presence of several people in one place. These measures have been extended by the August Decree, for all shareholders' meetings convened by October 15, 2020, which can therefore:

a) be held exclusively by means of telecommunications (audio/video) and, therefore, without the physi-cal presence of the Chairman, secretary or notary in a single meeting place;

b) provide for the possibility of participating in the shareholders' meeting by means of telecommunica-tions and the expression of votes through electronic means (or by correspondence), even if this is not provided for in the company’s articles of association. As regards limited liability companies, vot-ing may also be expressed by written consultation or written consent.

Finally, it should be noted that the foregoing does not apply exclusively to shareholders' meetings but can also be extended to meetings of other corporate organs, such as the board of statutory auditors or the board of directors.