EU Signs Off On Italy's $8.5B Tax Relief Plan

By Natalie Olivo
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Law360 (June 26, 2020, 6:58 PM EDT) -- European Union antitrust officials on Friday approved the Italian government's €7.6 billion ($8.5 billion) package of tax relief measures designed to ease the financial constraints on companies affected by the novel coronavirus pandemic.

The European Commission said it greenlighted Italy's measures — a mix of tax exemptions and credits — designed to help cash-strapped businesses impacted by steps the Italian government had taken to limit the spread of the virus, which causes the respiratory disease COVID-19. As the EU's competition watchdog, the commission approved Italy's aid package under its temporary framework to review state aid issued in response to the pandemic.  

"With this set of measures … Italy will further support companies and self-employed workers that are severely affected by the coronavirus outbreak by easing their liquidity constraints through tax waivers and tax credits," EU competition chief Margrethe Vestager said in a statement.

According to the commission, Italy's aid package partially waives local taxes on production activities for businesses making less than €250 million, with some exceptions, and provides tax credits to encourage workplaces to adopt new sanitary requirements. The relief measures also include an exemption from municipal taxes related to tourist properties, such as sea resorts, and tax credits for companies and self-employed workers depending on revenue levels in relation to rent, the commission said.

The commission noted the measures are part of a wider package to support the Italian economy in the context of the coronavirus outbreak, set out in the so-called Decreto Rilancio, or Relaunch Decree. The program includes urgent health measures, support for businesses and workers and other social policy measures, according to the Italian government.

In explaining its approval of Italy's measures under the temporary framework, the commission said the aid wouldn't exceed €100,000 per company active in the primary agricultural sector and would only be granted to companies that weren't struggling in late December, among other factors.

The commission adopted its temporary framework in March, announcing at the time that the system allows member states to "use the full flexibility foreseen under state aid rules to support the economy in the context of the COVID-19 outbreak." The framework includes safeguards to keep a level playing field among countries, including requirements that subsidized business loans be linked to the scale of companies' economic activity, according to the commission.

EU antitrust officials have since signed off on over €2.19 trillion in state aid measures proposed by member countries. As of June 9, the commission counted 157 decisions clearing 195 measures proposed by 26 member countries and the United Kingdom, which is still bound by EU state aid rules until it completes its exit from the bloc.

Representatives for the commission and the Italian government couldn't be reached for comment late Friday.

--Additional reporting by Bryan Koenig. Editing by Vincent Sherry. 


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