Covid-19. Liquidity decree, 400 billion support for companies and professionals

The so-called liquidity decree, in following up the ‘Cura Italia’, allocates a total of 400 billion euros in favor of companies and professionals. In addition to introducing a series of measures aimed at mitigating the impact of Covid-19 on the country's economy. (1)

State guarantees for access to credit for companies and professionals, support for export and internationalization,  Golden Power, suspension of tax and social security payments and deadlines for civil and criminal proceedings.

The amount is divided into a series of measures aimed at facilitating and guaranteeing access to credit for these subjects, as well as supporting exports and internationalization and business continuity.

State-guaranteed loans

All companies  with headquarters in Italy, until 31.12.20, can request loans in any form, with a duration not exceeding 6 years, with a pre-amortization option up to 24 months. Of the 200 billion made available by the State for loan guarantees, 30 billion are exclusively intended for SMEs, freelancers and self-employed professionals with VAT numbers, who have fully used their access capacity to the Central Guarantee Fund.

The state guarantee – explicit, unconditional and irrevocable – is issued by 31.12.20, through SACE S.p.A., a company participated by Cassa Depositi e Prestiti. It covers all loans granted to the company following the entry into force of the decree. For principal, interest and ancillary charges, up to the maximum guaranteed amount.
Guarantees are however excluded for companies registered as in difficulty, as of 31.12.19, as well as for non-performing exposures.

The coverage of guarantees, which ranges between 70 and 90%, is structured as follows:

– 90% of the amount of financing requested by companies with

– 80% for companies with >5,000 employees and turnover in the range €1.5-5 billion,

– 70% for companies with turnover above 5 billion.

The guarantee  directly also receives maximum coverage (90%) in the case of financial operations with a duration of up to 72 months, provided that the total amount of the operations does not exceed the maximum ceiling established in the liquidity decree.

Constraints. The financing covered by a state guarantee is bound to purposes related to personnel costs, investments, and working capital for production facilities and business activities located in Italy.

SME Fund

SMEs (

– the guarantee in favor of SMEs is granted free of charge,

– the maximum amount guaranteed for each company is raised to 5 million euros.

To the SME Fund €1.729 billion are allocated for the year 2020. Additionally, 100 million euros are made available to ISMEA for covering guarantees issued to the agricultural sector.

Other measures

There is added then a miscellany of provisions, ranging across various areas of:

• support forexport of Italian products and the internationalization of companies (see next paragraph),
• Tax obligations and contributions, judicial and administrative procedures. Suspensions and extensions of deadlines,
• Golden Power. Extension of state prerogatives on mergers and acquisitions of companies operating in sectors of strategic importance.

Export and internationalization

Insurance and guarantees so far offered by SACE –  Foreign Trade Insurance Services – to promote theexport of Italian products and the internationalization of companies are strengthened as follows:

– State intervention on each commitment. Substantially at 90%, on capital and interest, leaving SACE the residual share of 10% and without joint liability,

– derogation to the previous provisions on insurance and guarantees for risks different from those of the market.

Committee for public financial support for export

The Committee for the support for public financial export support is established at the Ministry of Economy and Finance (MEF). Among its entrusted functions are noted:

– evaluation on the operations to insure or to submit to prior authorization by the MEF,

– examination of operations that may determine high concentration risks,

– report to the government on financial risks, management procedures, programmatic proposals.

Tax obligations

Tax payments  (VAT and other self-assessed payments) due in April and May 2020 are suspended in favor of certain companies and persons exercising arts or professions, with tax domicile or legal or operational office in Italy, subject to the following conditions:

– reduction >33% of turnover or fees (in March and April 2020 compared with the same months of 2019), in case of revenues or fees

– decrease >50% of turnover or fees (in March and April 2020 compared to the same months in 2019), for subjects with revenues or fees >50 million.

The suspension also applies to those who started the activity after 31.3.19.

Social security and welfare contributions

Social security and welfare contributions, as well as the premiums related to compulsory insurance, are similarly suspended.
The suspension also applies to non-commercial entities that carry out institutional activities of general interest outside the business regime.

The suspended payments must still be paid by 30.6.20. Payment can be made by this date, without applying penalties and interest, in a single solution. Or through installments, up to a maximum of 5 equal monthly installments, starting from June 2020.

Withholding tax. Subjects with tax domicile (or legal or operational office) in Italy and revenues or fees

Unique Certification 2020, remote tax assistance, DURF

Unique Certification 2020. The deadline for the telematic sending of the Unique Certification to the Revenue Agency is extended to 30.4.20.

Remote tax assistance. It is possible to electronically submit the 730 income tax return for the 2019 tax period.

Contracts and DURF. The validity of tax compliance documents (Durf) issued in February 2020 is extended until 6/30/20.

Protective and safety devices, sanitization

A tax credit supplementary, amounting to 50% of expenses incurred until 12/31/20, is established for:

– purchase of devices  of personal protection (e.g. surgical masks, FFP2 and FFP3, gloves, protective visors and goggles, protective suits and shoe covers) and safety in the workplace,

– sanitation activities of environments and work equipment for the prevention of COVID-19 contagion. (2)

The maximum amount payable to each beneficiary amounts to 20 thousand euros, within a total availability ceiling of € 50 million.

First home bonus

The requirements necessary to apply for the so-called 'first home bonus' are relaxed. By suspending, for the period from 2/23/20 to 12/31/20, some prerequisites previously established under penalty of forfeiture:

– relocation of residence within 18 months,

– repurchase within one year, in case of sale within 5 years of the first purchase.

Justice, acts and administrative proceedings

Justice. all procedural deadlines shift from 4/15/20 to May 11.

Acts and administrative proceedings. Regarding administrative acts expiring and administrative proceedings, the deadline of April 15, 2020 has been extended to May 15, 2020.

Golden Power

The  Golden Power – a regulatory shield aimed at maintaining control over acquisitions, even partial, of Italian companies by foreign companies and investors – is extended to additional economic sectors beyond those previously provided. (3) To allow the Government to exercise special prerogatives for market intervention. In relation to companies, both public and private, carrying out activities of strategic importance.

The interested sectors from the exercise of said special powers by the Government:

• defense, national security, transport, energy and communications (since 2012),
• broadband electronic telecommunications networks with 5G technology (since 2019),
• food and health, insurance and financial (with the ‘liquidity decree’, DL 8.4.20 no. 23).

This measure aims to safeguard Italian companies against the risk that investors may take advantage of the current vulnerability of Italian companies, particularly affected by the effects of the COVID-19 spread, by making proposals to purchase or sell branches of companies.

Selena Travaglio and Dario Dongo

Notes

(1)  liquidity decree. DL 8.4.20 no. 23.  Urgent measures regarding access to credit and tax compliance for businesses, special powers in strategic sectors, as well as interventions in health and work matters, extension of administrative and procedural deadlines. In Official Gazette General Series no. 94, 8.4.20  https://www.gazzettaufficiale.it/eli/id/2020/04/08/20G00043/s)

(2)  Protocol 14.3.20 for the containment of Covid-19 in workplaces. See https://www.greatitalianfoodtrade.it/sicurezza/coronavirus-misure-di-contenimento-negli-ambienti-di-lavoro-protocollo-14-3-20

Worker safety and employer responsibilities. See https://www.greatitalianfoodtrade.it/sicurezza/covid-19-sicurezza-dei-lavoratori-e-responsabilità

FFP2, FFP3 (N95) masks and respirators, insights. See https://www.greatitalianfoodtrade.it/salute/covid-19-mascherine-chirurgiche-e-respiratori-ffp3-n95-e-ffp2-approfondimento

(3)  Golden Power. D.L. 15.3.12 no. 21, converted into law 11.5.12 no. 56 (and subsequent amendments), EU reg. 2019/452. See  http://www.governo.it/it/dipartimenti/dip-il-coordinamento-amministrativo/dica-att-goldenpower/9296