Covid-19 coronavirus – News on rental tax credit in recent Italian decrees

Rental bonus in the “Rilancio” Decree

• The tax credit for rents regarding non-residential properties and leases of going concerns was introduced by the "RIlancio" Decree which, under article 28, provided that persons carrying on business activities, whether artists or professionals, who have suffered, in the months of March, April and May 2020, a decrease in turnover or fees of at least 50%, compared to the same month in the previous tax period, may benefit from a tax credit equal to 60% of the monthly amount of the rent of properties used for industrial, commercial, craft, agricultural or tourist activities or for habitual and professional self-employment.
• If service contracts or leases of going concerns included at least one property used for industrial, commercial, craft, agricultural or tourist activities or for habitual and professional self-employment, the tax credit due is at the rate of 30% of the relevant rents.
• The bonus is due to entities with revenues or compensation not exceeding EUR5 million in the tax period prior to the entry into force of the decree (2019).
• Hotels, thermal and agritourism facilities, travel and tourism agencies and tour operators are entitled to the bonus regardless of the volume of revenues and retribution recorded in the previous tax period.
• Companies operating in the retail sector, with revenues or compensation exceeding EUR5m in the tax period prior to the ongoing one on the date of entry into force of the "Rilancio" Decree (2019), are entitled to a tax credit of 20% for rents and 10% for leases of going concerns.
• The amount of the tax credit is proportional upon the amount of the rent paid in the 2020 tax period with reference to each of the months of March, April and May.

Rental bonus in the "Ristori" and "Ristori-bis" Decrees

• Article 8 of the "Ristori" Decree has extended the tax credit also for the months of October, November and December 2020, but granting it only to entities operating in the business sectors indicated in the ATECO table in Annex 1 (the annex was then amended by the "Ristori-bis" Decree, which therefore increases the number of recipients of the credit) of the decree, affected by the restrictive measures introduced by the Prime Ministerial Decree of 24 October 2020.
• In contrast to the provisions of the "Rilancio" Decree, the right to the credit is no longer subject to the achievement of revenues or compensation not exceeding EUR5m in the 2019 tax period, but only to the decrease in turnover of at least 50% in the months of October, November and December 2020, compared to the corresponding months of 2019.
• In addition, the "Ristori-bis" Decree (article 4 of Law Decree no. 149/2020) has further extended the scope of the application of the rental bonus, namely granting a right to the same for the months of October, November and December 2020, to: (i) companies operating in the sectors listed in Annex 2 of the decree; (ii) companies that carry out activities under ATECO codes 79.1, 79.11 and 79.12 (travel agencies and tour operators); and (iii) companies that have their operational headquarters in areas of the national territory with maximum emergency and a high risk level (so-called red zones). With regard to the companies indicated in Annex 2, these are companies – other than those already included in Annex 1 to the "Ristori" Decree (which may already benefit from the credit provided for by that decree) – that have been affected by the limitations provided for by the Prime Ministerial Decree of 3 November 2020 (department stores, many retail activities, as well as itinerant trade activities and beauty salons).
• With respect to the application procedure, the tax credit (in all its editions) may, among other things, be transferred to the landlord or grantor or to other parties, including credit institutions and other financial intermediaries, with the option of a subsequent transfer of the credit. If the credit is transferred to the landlord, Circular no. 14/E/2020 has clarified that the payment of the rent shall be considered as having taken place at the same time the transfer is effective (in this case, the tenant's obligation to pay the difference between the rent due and the tax credit remains unaffected).