Changes in the obligations of companies and workers

During the months of March, April and May, employers will only deduct Social Security contributions based on one third of the earnings paid to employees. Whatever is missing can then be paid in instalments (three or six months) in the second semester. This is a measure aimed at improving liquidity, which may have greater impact because some workers who are at home accompanying children (due to the closing of schools) will receive a smaller paycheck (based on two thirds of their salaries) with the companies delivering only one third of social contributions in these cases. The government has not yet explained whether the announced reduction will also override these cases or exclude them.

In addition, companies with work suspended based on the lay-off regime will be exempt from contributions for the workers covered in a period that will be at least two months (the suspension from work and the following), and may go up to seven months if it continues to be renewed.

Several details remain unclear, namely, whether the reduction of contributions by two thirds is dependent on the fulfillment of criteria or is generalized. The same is applicable to the new tax measures.

On Wednesday, the Minister of Finance had indicated that the temporary reduction in social contributions, to one third, applied to companies with up to 50 jobs. “Companies with up to 250 jobs can access this mechanism to reduce and split the payment of social contributions in the second quarter if they have seen a drop in turnover of 20%,” he explained.


A new order is expected to be published by the Secretary of State for Tax Affairs to clarify the conditions for access to the measures.

According to the communiqué of the Council of Ministers, in the months of April, May and June, the delivery of VAT and withholding income tax can be paid in three or six instalments.

The tax enforcement proceedings in progress or that may be instituted by the Tax Authority and Social Security are also suspended until June 30.

But it is also not entirely clear who can benefit from these postponements. On Wednesday, the Minister of Finance had announced that the flexibility in terms of VAT, IRC and IRS – with the possibility of paying in instalments (three or six months, with late payment interest in the last three instalments for the second case) without need a Guarantee – applied to companies “with a turnover of up to €10 million in 2018, or starting from 01 January 2019”. Or, in larger businesses, in view of “a decrease in turnover of at least 20% in the average of the three months prior to the month in which this obligation exists compared to the same period of the previous year”.

Previously, the government had postponed until July 31 the submission of the declaration of Modelo 22 of the IRC, the special payment on account to June 30 and the first payment on account and the first additional payment on account to 31 August.

At the same time, the Tax Authority determined that “sufficient conditions for the application of the figure of the just impediment in the fulfillment of the tax declaratory obligations in relation to certified taxpayers or accountants must be considered the situations of infection or prophylactic isolation declared or determined by health authority “.

However, in other announced measures, the delivery of the single report of the companies, whose delivery deadline started last Monday, may also be postponed. “Following the state of alert we are in due to the Covid-19 epidemic, the report’s final delivery date is being considered and will be readjusted in due course,” warned the Ministry of Labor.

Changes to green receipts and sole proprietors

Social Contributions

The flexibility announced for companies also applies to self-employed workers, according to the indications given by the Ministry of Finance. In the months of March, April and May, freelancers will be able to deduct on only one third of income. The remainder can then be paid in instalments (three or six months) during the second half of the year. Once again, it is unclear under what access conditions are foreseen, which, at the outset, assumed a 20% reduction in turnover, and is also applied to companies with up to 50 workers.

In addition to this situation, Social Security support for workers when there is a proven stop in the activity of their own or their sector (up to €438.81 monthly, in a renewable measure for up to six months) will also see social contributions postponed to 100% while they are enjoying support.


There is also provision for the option of instalment plans for the delivery of VAT and of withholding taxes of three or six months (at the beginning, with interest on arrears in the last three months if the option is the second), during the months of April, greater and June.

The criteria announced on Wednesday provided, without detailing different conditions for these workers, access to those with a turnover of less than €10 million or a 20% drop in turnover from that amount.

Changes for employees

For now, there are no significant changes in the payment of taxes or social contributions with an impact on the obligations, and on disposable income, of employees.

From the outset, the deadlines for submitting the IRS declaration are maintained as of April 1, and if there is payment in instalments of the withholding tax on salaries, these will be changed only with an impact on the companies’ treasuries (without change in the net salary, on departure).

There is also no provision for reducing or postponing the payment of social contributions due by workers (11%). Although the matter was not clarified, the government announced on Friday that the changes are aimed at “improving the liquidity of companies” and not that of families.

However, in some cases, there may be an impact on net wages for workers who see reduced gross wages (due to lay-offs or having stayed at home accompanying minors with schools closed, seeing their wages drop to two-thirds). With half of the national workers earning below €855 (February figures), many may end up with IRS exempt earnings during this period. According to the 2020 withholding tax tables, in the case of a couple with two children, income up to €686 is exempt. Singles without children are exempt up to €659 of gross monthly remuneration.