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Italy

Paul Hastings in collaboration with[Insert Name Here]
Insolvency
Liquidity Measures
Special Powers

Insolvency

Insolvency proceedings

Government Measure

The deadlines expiring between 23 February 2020 and 30 June 2020 for fulfilling the approved debt restructuring plans both with regard to compositions with creditors and restructuring agreements are postponed of additional six months. Furthermore, debtors are entitled to:

  • request an additional extension (max 90 days) to submit a new composition with creditors proposal or restructuring agreement;
  • file a request of deferral (not exceeding 6 months) of the deadlines for the execution of the composition with creditors/restructuring arrangement plan, together with documents supporting such request;
  • in case the deadline referred to in Article 161, paragraph 6, of the Italian Bankruptcy Law is set and such deadline has already been extended by the Court, request, within 5 days from the expiry of such deadline, a further 90 days’ extension, providing evidence of the connection of such request with the COVID-19 emergency;
  • in case the deadline referred to in Article 182-bis, paragraph 7, of the Italian Bankruptcy Law is already set, request a further 90 days’ extension, which might be granted in case such request is supported by justified reasons and all other compulsory requirements for the restructuring agreements are complied with.
 
Eligibility

Italian companies

 
Supervising Authority

Civil Court

 
Availability

From 23 February 2020 until 30 June 2020

 
 
Government Measure

No petitions for the declaration of bankruptcy or insolvency may be filed except for petitions filed by the Public Prosecutor requesting the issuance of interim or protective measures.

 
Supervising Authority

Civil Court

 
Availability

Between 9 March 2020 and 30 June 2020

Liquidity Measures

SME Guarantee fund

Government Measure

Issued by the Central Guarantee Fund for SMEs (Fondo centrale di garanzia per le PMI) (the “Guarantee Fund”):

  • the guarantee is granted free of charge;
  • the maximum amount guaranteed for each company is increased to €5m1;
  • the percentage of the coverage of the direct guarantee is increased to 90% of the amount of each financial transaction subject to prior authorization by the European Commission for financial transactions3 with a maturity of up to 72 months;
  • for financial transactions which meet the above amount and maturity requirements the percentage of the coverage for reinsurance is increased to 100% of the guaranteed amount, provided that the issued guarantees do not exceed the maximum percentage of coverage of 90%, subject to prior authorization by the European Commission, and they do not provide for the payment of a premium taking into account the remuneration for the credit risk taken;
  • the guarantee is also issued in the context of a transaction for the re-scheduling of the original debt of the relevant company at a rate equal to at least 10% of the outstanding amount of the rescheduled debt, at a rate equal to at least 10% of the outstanding amount of the rescheduled debt, with the following percentages: (a) with respect to the granting of a direct guarantee, at a rate of 80%; whilst (b) with respect to the reinsurance, at a rate of 90% of the guaranteed amount, provided that (in both cases) the guarantees issued do not exceed the maximum coverage percentage of 80%.

With respect to transactions for which banks or financial intermediaries have agreed either the suspension of payment of, respectively: (a) the entire amortization instalments, or (b) of the principal component only, or the extension of the maturity of the loan (see paragraph below), the duration of this guarantee is extended (we would assume) accordingly.

Subject to prior authorization by the European Commission, new loans made available to carry out lending in favor of SMEs whose business activity has been damaged by the COVID-19 emergency4 are also eligible for the Guarantee Fund’s guarantee, with a full coverage (i.e. 100%) with respect to both direct guarantee and reinsurance, to the extent that such loans: (a) provide for the initial repayment of the principal amount not earlier than 24 months after drawdown; and (b) have a maturity up to 72 months; and (c) have been granted for an amount not exceeding 25% of the beneficiary's annual revenues (and, in any case, not exceeding €25k), as resulting from the last financial statements or from the last tax declaration submitted on the date on which the guarantee has been requested or - for companies established after the 01 January 2019, other appropriate accounting documentation.

The guarantee may also be requested with respect to financial transactions already carried out and drawdown no longer than 3 months after the date on which the request was submitted and, in any case, after 31 January 2020. In such cases, the lender must deliver a declaration to the manager of the Fund certifying the reduction of the interest rate applied, on the guaranteed loan, to the beneficiary as a result of the supervened issuance of the guarantee.

1 Subject to compliance with the maximum guaranteed amount (€5m), for the purposes of the Guarantee Fund issuing the guarantee, outstanding guaranteed amounts for each borrower on date of entry into force of the Decree are not taken into account.

3 The total amount of the above financial transactions may not exceed, alternatively: (1) twice the beneficiary's annual wage bill (including social security contributions and the cost for personnel working on the company's site but formally on the payroll of sub-contractors) for 2019 or the last available year. In the case of enterprises established on or after 1 January 2019, the maximum amount of the loan may not exceed the forecasted annual wage costs for the first two years of activity; (2) 25% of the beneficiary's total turnover in 2019; (3) the need (fabbisogno) for working capital costs and investment costs (certified by means of a self-certification issued by the beneficiary pursuant to Presidential Decree No 445 of 2000) in the following 18 months, in the case of SMEs, and in the following 12 months, in the case of companies with no more than 499 employees.

4 As per the self-certification pursuant to art. 47 of Presidential Decree no. 445 of 2000.

 
Eligibility

Small and medium-sized enterprises (SMEs)2 and companies with no more than 499 employees (based in Italy).

The guarantee is also issued in favour of:

  • final beneficiaries that, at have exposures towards the lender classified as “unlikely to pay exposures”, or “overdrawn and/or past-due exposures” provided that the above classification has not occurred before 31 January 2020;
  • companies which, after 31 December 2019: (i) have been admitted to the composition with creditors procedure on a going concern basis (concordato in continuità), (ii) have entered into debt restructuring agreements; or (iii) have submitted to their creditors a restructuring plan, provided that, on the date of entry into force of the Liquidity Decree, (a) their exposures are no longer in a condition that would determine their classification as "non-performing exposures"; (b) they do not have any amounts in arrears after the application of the measures at hand; and (c) the bank can reasonably assume that the exposure will be, likely, fully extinguished at maturity.
  • banks, financial intermediaries and other entities authorized to carry out specific loans (see loan features) in favor of SMEs whose business activity has been damaged by the COVID-19 emergency are also eligible for the Guarantee Fund’s guarantee, with a full coverage (i.e. 100%).

Applies to requests submitted after 17 March 2020.

2 SMEs for these purposes (in accordance with the Recommendation of the European Commission No 2003/361/EC of 6 May 2003 (“Recommendation”)) Recommendation”)) are: (i) enterprises with fewer than fifty employees and with an annual turnover or total annual balance sheet not exceeding €10m (small enterprises); (ii) companies with fewer than two hundred and fifty employees and an annual turnover not exceeding €50m or an annual balance sheet total not exceeding €43m (medium-sized enterprises).

 
Supervising Authority

Economic Development Ministry (Ministero dello Sviluppo Economico)

Applications may be made here.

 

 
Availability

From 17 March 2020 until 31 December 2020

SACE (and CDP)

Government Measure

SACE S.p.A. will grant specific guarantees in favour of banks, national and international financial institutions and other entities authorized to carry out lending in Italy to secure loans made available in any form to the aforementioned institutions, as follows:

  • by 31 December 2020, to cover loans with a maturity not exceeding 6 years, with the possibility for companies to benefit from a pre-amortization period of up to 24 months;
  • as of 3 December 2019, the beneficiary company did not fall within the category of "undertakings in difficulty“5 and as of 29 February 2020, the related exposure was not included among the so called "non-performing exposures", as defined under EU law;
  • the amount of each guaranteed loan shall not exceed the higher of6:
    1. 25% of the company’s annual turnover in FY19;
    2. 200% of the overall payroll costs for FY19;
  • the guarantee shall be subject to the following thresholds (meaning losses arising due to default of the are borne pro-rata between the guarantor and the guaranteed entity7
    • 90% of the loan value for companies with fewer than 5,000 employees in Italy and annual turnover up to €1.5bn;
    • 80% of the loan value for companies with an annual turnover between €1.5bn and €5bn or with more than 5,000 employees in Italy;
    • 70% for companies with an annual turnover of more than €5bn

The above percentages apply to the residual outstanding amount, when the loan is subject to an amortization method (ammortamento progressivo).

The annual fees due by companies for the issuance of each guarantee varies depending on the nature of the company.

The State guarantee is unconditional and irrevocable and covers repayment of the principal, payment of interests and any other accessory charges, net of fees received for the same guarantees.

5 In particular, “undertaking in difficulty” means an undertaking in respect of which occurs at least one of the circumstances listed at Art. 2, par. 18, of the Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the TFEU.

6 To be considered on a consolidated basis, assuming there is a group.

7 To be considered on a consolidated basis, assuming there is a group.

 
Eligibility

Italian based companies.

 
Supervising Authority

Economic and finance ministry (Ministero dell’Economia delle Finanze)

 
Availability

Until 31 December 2020

Extraordinary Moratorium

Government Measure

Upon request by the borrower to be delivered to the relevant bank:

  • existing overdraft credit facilities and loans granted against advances on receivables (including factoring): lenders may not revoke or recall funds made available;
  • non-installment existing loans (bullet loans) falling due before 30 September 2020: extended (without any formality) until 30 September 2020, under the same conditions; existing loans and other installment loans (including lease agreements) falling due before 30 September 2020: payment of installments suspended until 30 September 2020. The beneficiaries of these financing relationships shall have the right to limit the suspension of repayment to the amounts due as principal component.
  • existing loans and other installment loans (including lease agreements) falling due before 30 September 2020: payment of installments suspended until 30 September 2020. The beneficiaries of these financing relationships shall have the right to limit the suspension of repayment to the amounts due as principal component.
 
Eligibility

Micro enterprises8 based in Italy and SMEs.

The moratorium only applies to loans made available before the date of entry into force of the Decree.

8 Enterprises with fewer than ten employees and with an annual turnover or total annual balance sheet (by reference to the most recent financial statements) not exceeding €2m.

 
Supervising Authority

N/A (enterprises shall send requests to specific banks)

 
Availability

Until 30 September 2020

Suspension of tax obligations and social security obligations

Special Powers

Deferral for all tax deadlines expired on 16 March 2020 to 16 April 2020.

  • withholding taxes on employment and similar income;
  • withholding taxes due in relation to the additional regional and municipal taxes;
  • VAT; and
  • social security and welfare contributions and compulsory insurance premiums.
 
Eligibility

All businesses registered in Italy.

Taxpayers with revenues lower than €50m in 2019 who record a reduction in revenues of at least 33% in March 2020 compared to March 2019 (in order to suspend payments due in April 2020) as well as in April 2020 compared to April 2019 (in order to suspend payments due in May 2020);

Taxpayers with revenues higher than €50m in 2019 who record a reduction in revenues of at least 50% instead of 33%.

 
Supervising Authority

Italian Tax Agency

Automatic, with no application required

 
Availability

New term for the filing is 16 April 2020

Payments to be made, without the application of penalties or interest: (i) in a lump sum by 30 June 2020; or (ii) in a maximum of 5 equal monthly instalments as of June 2020

Suspension of payment of withholding taxes on self-employment income and fees

Special Powers

Right to instruct clients not to apply withholding taxes, self-employment income and fees received between 17 March 2020 and 31 May 2020. Withholding taxes to be directly paid by the taxpayers: (i) in a lump sum by 31 July 2020; or (ii) in a maximum of 5 equal monthly instalments as of July 2020 (see Availability date(s)).

 
Eligibility

Italian taxpayers whose revenues or fees did not exceed €400k in FY 2019 and who did not incur any employment cost in the previous month.

 
Supervising Authority

Italian Tax Agency

Automatic, with no application required

 
Availability

Relevant withholding taxes to be directly paid by the taxpayers: (i) in a lump sum by 31 July 2020; or (ii) in a maximum of 5 equal monthly instalments as of July 2020

Forecast method for IRPEF, IRES and IRAP advance payments

Special Powers

Under certain conditions, penalties will not apply in case of insufficient advance payments of direct taxes made in 2020 (those payments will be due for most taxpayers in June and November 2020).

Only for the advance payments made in 2020, neither penalties nor interest will apply if those payments will deviate by no more than a 20% margin from the amount due on the basis of the income tax return and IRAP tax return.

 
Eligibility

Italian taxpayers

 
Supervising Authority

Italian Tax Agency

Suspension of deadlines relating tax collection

Government Measure

Suspension of the deadlines of payments due between 8 March 2020 and 31 May 2020, deriving from payment notices issued by collection agents, as well as from executive tax assessment notices and debit notices.

 
Eligibility

Italian taxpayers

 
Supervising Authority

Italian Tax Agency

 
Availability

From 17 March 2020

New deadlines for the tax assessment activities regarding fiscal year 2015

Government Measure

The ordinary statute of limitations for fiscal year 2015, which would have ordinarily expired at the end of 2020, is extended by 2 additional years.

 
Eligibility

Italian taxpayers

 
Supervising Authority

Italian Tax Agency

 
Availability

From 17 March 2020

Conversion of DTAs into tax credits

Government Measure

Right to convert into tax credits the deferred tax assets (“DTAs”) that derive from: (a) carried-forward tax losses; (b) so called “ACE” surplus

The amount of DTAs to be converted into tax credits may not exceed 20% of the nominal value of the receivables. Moreover, for the purpose of the conversion, the assigned receivables may be considered up to a maximum amount of €2bn. For groups of entities, this limit is calculated by taking into account all assignments made by entities belonging to the same group.

 
Eligibility

Companies that transferred for consideration distressed receivables before 31 December 2020.

Regime does not apply if the sales of distressed receivables are made: (i) among companies that are part of the same group; (ii) by companies for which a state of bankruptcy or risk of bankruptcy has been ascertained.

 
Supervising Authority

Italian Tax Agency

 
Availability

From 17 March 2020

Special Powers

Golden Power

Government Measure

Application of the Golden Power, legislation will be extended to various relevant sectors (Article 4 of the European Regulation no. 452/2019) and will be subject to the obligation to notify: resolutions, acts or transactions, adopted by a company holding assets and relationships in the Strategic Sectors, which would result in changing the ownership, control or availability of the assets and relationships themselves or in modifying their destination.

The obligation to notify will be applicable to:

  • purchases in any form of participation by foreign entities, including those in the European Union, leading to the acquisition of the control of an Italian entity;
  • purchases by foreign entities not belonging to the European Union which allocate a share of voting rights or capital of at least 10% if the total value of the investment is equal to or greater than one million euros, as well as acquisitions which result in the thresholds of 15%, 20%, 25% and 50% being exceeded.
 
Eligibility

Italian companies operating in “strategic sectors”.

Sectors of strategic importance:

  • critical infrastructure, whether physical or virtual, including energy, transport, water, health, communications, media, data processing or storage, aerospace, defence, electoral or financial infrastructure, and sensitive facilities, as well as land and real estate crucial for the use of such infrastructure;
  • critical technologies and dual use items, including artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, defence, energy storage, quantum and nuclear technologies as well as nanotechnologies and biotechnologies;
  • supply of critical inputs, including energy or raw materials, as well as food security;
  • access to sensitive information, including personal data, or the ability to control such information;
  • the freedom and pluralism of the media.
 
Supervising Authority

Italian Government

 
Availability

Until 31 December 2020