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Law360 (August 10, 2020, 8:32 PM EDT) -- Italy is allowing tax payments that were suspended during the country's COVID-19 lockdown this spring to be repaid by the end of 2022 rather than by year's end, according to a government decree.
The decree, issued Saturday, outlines a new pandemic relief package worth €25 billion ($29.3 billion) that Italy's cabinet, the Council of Ministers, passed late Friday. The spending proposal, which will eliminate some social security contributions for sectors hit especially hard by the novel coronavirus pandemic, including tourism, is effectively a request to draw funds from a European Union unemployment support program.
"With this important tool, a sign of solidarity between European countries, workers are protected and the impact of the COVID-19 crisis is mitigated," Roberto Gualtieri, Italy's minister of economy and finance, said in a Twitter post.
Tax payments for March, April and May are still subject to the Sept. 16 start date the government previously approved, the decree said. The original cutoff had been June 30. However, companies and individuals will be allowed to pay the first 50% in four monthly installments from September through December, and the final 50% in 24 installments over the next two years, instead of the full amount being due in four installments from now until Dec. 31.
The decree, which took effect Monday and runs through Sept. 7, is the latest in a series of Italian government directives issued under an ongoing COVID-19 state of emergency that has produced some of Europe's strictest lockdowns. The document sets out how Italy will continue fighting the pandemic in the months to come.
It specified that certain industries, including seasonal tourism concentrated in southern Italy, that have reopened but are harmed by the reduction of international visitors this year will get a 30% cut in employee pension contributions from Oct. 1 to Dec. 31.
People who rely on unstable, seasonal work will be able to apply for a one-off payment of €1,000. The plan differs from previous payouts to the self-employed in that it is designed mainly for those in sectors hit hardest by the pandemic, such as tourism, hospitality, entertainment and the arts.
In addition, the decree extends, for 18 weeks, an Italian government program to prevent businesses from laying off employees by covering part of their salary, similar to furlough measures enacted in the U.K. and elsewhere. About 12.6 million people in Italy are currently enrolled in the program.
The new decree also maintains Italy's travel restrictions for most non-Europeans. Only essential travel to Italy, but not tourism, is allowed from the U.S., India, Russia and most other countries, while even essential travel is restricted from 16 countries on a so-called risk list.
The latest measures aimed at supporting businesses and workers bring Italy's pandemic stimulus spending to €100 billion, Prime Minister Giuseppe Conte said Friday.
The decree approved by the Council of Ministers had been proposed by Conte and Gualtieri. In an interview published Saturday, Gualtieri said the government would work on cutting personal income and other taxes in fiscal 2021.
The minister told the Italian newspaper La Repubblica that he favors the German progressive tax model, but the government hadn't yet made a decision on whether to adopt the same system. Gualtieri was cited by the newspaper as saying Italy's economy is having a strong rebound as indicated by recent industrial production data.
--Editing by Neil Cohen.
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