Italy Seeks to Revitalize Battered Economy With Tax Measures

Italy is offering tax cuts, delays, and incentives aimed at jump-starting the economy as the country slowly emerges from a two-month coronavirus lockdown.

The measures are part of a new Italian stimulus package, whose details were released Thursday. The package includes a tax credit worth 60% of the costs businesses incur to reopen in compliance with new safety guidelines; tax assistance for companies that have been hit hard by the pandemic; and measures aimed at increasing demand in key sectors. The measures are intended to help businesses that have been closed since March 11 because of the national lockdown.

A key provision of the law, which was approved by the Italian cabinet Wednesday and now goes before the lower house of Parliament, provides tax deductions worth 110% of costs for energy efficiency and seismic retrofit improvements.

“We want to achieve two objectives: restart the economy in an important sector—construction—but also realize an increase in quality in terms of energy and seismic safety,” Minister of Finance Roberto Gualtieri said in a televised interview Thursday.

Italian families with a dependent child will also receive a 500-euro vacation tax credit that can be used in hotels and bed and breakfasts to help boost tourism, which has come to a standstill due to business closures, and international and domestic travel restrictions.

Tax Cuts, Delays

The law also blocks an increase in value-added tax, from 22% to 25%, that was scheduled to take effect in 2021.

Medical equipment, such as masks and ventilators, will be exempt from VAT for 2020 and will have a 5% VAT in 2021.

New taxes on production of single-use plastic, 45 cents per kilo, and beverages with added sugar, 10 euros per gallon, that were supposed to take effect in 2020 will be delayed until Jan. 1, 2021.

Tax payments deadlines, which had already been suspended for March, April and May, will also be extended from June 30 to Sept. 16.

Check out Bloomberg Tax’s country-by-country roadmaps covering direct and indirect tax developments.