Tax incentives which came into force in the middle of 2020

published on 16 September 2020 | reading time approx. 4 minute

The following article tries to provide an overview of the main changes, facilitations and simplifications that have been introduced in order to contain the negative effects of the epidemiological emergency caused by COVID-19.

Tax credit in case of capital strengthening

The so-called "Decreto Rilancio" has introduced a tax incentive in order to favour the strengthening of the equity of small and medium sized enterprises, with a tax credit for both the parties making the contribution and the transferee company.

In detail a tax credit of 20 per cent of the invested amount is granted to subjects (natural and legal persons) who make cash payments in execution of a capital increase in one or more capital companies or cooperative societies having their registered office in Italy and which:

have an amount of income relating to the 2019 tax year between 5 and 50 million euros;
have suffered a reduction in revenue in March and April 2020 of at least one third with respect to the same period of the previous year;
have deliberated and carried out a paid-in capital increase with full payment between May 20, 2020 and December 31, 2020.

If the company belongs to a group, the requirements of points 1 and 2 must be met with reference to the value of revenues on a consolidated basis, at the highest level of consolidation, without taking into account the revenues which originate from intragroup transactions.

The regulations also provide for further requirements with reference to the recapitalised company:

it must not fall within the category of companies in difficulty as at December 31, 2019;
it must be in a regular contribution and tax situation;
it must be in compliance with current regulations on building and urban planning, work, accident pre-vention and environmental protection;
it must not be among the companies that have received and, subsequently, not reimbursed any aid deemed illegal or incompatible by the European Commission;
it must not be in the impeding conditions referred to in Article 67, Legislative Decree no. 159/2011 (anti-mafia prevention measures);
the directors, shareholders and the beneficial owner of the company must not have been definitively convicted in the last five years.

The minimum amount of the capital increase in order to benefit from the tax credit is 250,000 euros, while the maximum amount of the investment is 2 million euros, corresponding to a maximum tax credit of 400,000 euros. Furthermore, investors are required to hold the investment and not to distribute reserves until December 31, 2023, under penalty of forfeiture and restitution of the benefit together with legal interest.

The recapitalised company shall instead receive a tax credit equal to 50 per cent of the losses exceeding 10 per cent of the net equity, up to 30 per cent of the capital increase.

It should also be noted that this benefit is not available to companies that directly or indirectly control the transferee company, or that are subject to common control or are associated with it or controlled by it. Fur-thermore, financial intermediaries and non-financial and financial holding companies and those carrying out insurance activities are excluded from this incentive.

The objective of the measure is to promote the strengthening of capital by natural persons or shareholders with a participation below 20 per cent.

To obtain recognition of the tax credit, it is necessary to submit an appropriate application to the tax office, and within 30 days of submission of the application the result, as well as the amount of the tax credit actually due, should be communicated.

Tax credit on electronic payment commissions

With the enactment of Decree Law 124/2019, subjects carrying out business activities, art or professions can benefit from a tax credit equal to 30 per cent of the commissions charged for transactions made by debit, cred-it or prepaid cards or other traceable electronic payment instruments as of July 1, 2020. The tax credit can be used only to offset tax payments through the Form-F24 from the month following that in which the ex-penses were actually incurred, by using the tax code 6916. This credit is due on condition that:

the applicant had a turnover of less than 400,000 euros in the previous tax period;
the commissions charged concern supplies of goods or services rendered to final consumers.

The amount of the credit must be indicated in the tax return for the tax period in which the credit accrues, although it does not contribute to the tax base for income and regional trade Tax.