Our goal is to help entrepreneurs from all over Europe look further forward to achieve top-level results and performance. For this reason, we report the main tax, legal and business news implemented in Italy, the Czech Republic, and Romania. The aim is to update our clients with all the opportunities offered by the different states to be competitive in a globalized economic environment.

Italy – Fulfilment of half-yearly report in capital companies also during Covid

Following the introduction last year of Article 2475, section 6, of the Italian Civil Code by the “Code of Business Crisis and Insolvency” (Codice della crisi) which refers to Article 2381, section 5, of the Italian Civil Code, also limited liability companies (S.r.l.) shall apply the rule on the half-yearly reporting of managing directors on the performance of operations.

Since this is still a relatively new obligation, first of all we would like to remind you that, pursuant to Article 2381, section 5 of the Italian Civil Code, “the delegated bodies […] shall report to the Board of Directors and the Board of Auditors, with the frequency set out in the articles of association and in any case at least every six months:

• on the general performance of operations;
• its foreseeable evolution; as well as
• on the most significant transactions – due to their (i) size or (ii) characteristics – carried out by the company and its subsidiaries”.

The six-monthly term (or the shorter one if provided for in the Articles of Association) is calculated from the last meeting of the administrative body that approved the draft of the financial statements. It follows that in companies which approved the draft of the financial statements within the Board of Directors in April 2020, the half-yearly monitoring period ends in October 2020.

The application of this provision also to limited liability companies was introduced in the first place to guarantee, with more frequent and fixed deadlines in a much larger number of companies, a stronger monitoring and control of the performance and the economic-financial situation and to prevent possible crisis situations through the eventual obligation of the administrative body to inform shareholders in case of losses pursuant to Articles 2482-bis and 2482-ter (for Italian limited liability companies) or Articles 2446 and 2447 (for Italian joint stock companies) of the Italian Civil Code.

Although the shareholders’ recapitalization obligation in order to carry on a loss-making business has been suspended by Article 6 of the Decreto Liquidità, the abovementioned reporting obligation (including the directors, who do not form a board and the sole directors) remains unchanged.

We therefore underline the persistent obligation of the directors to ascertain the existence of a possible loss and, if this should exceed one third of the capital, to call the shareholders’ meeting “without delay” and in any case within thirty days.

In good time before the entry into force of the further provisions of the Codice della Crisi on 1  September 2021, we will further examine this obligation for an even more stringent control of the company’s economic-financial situation.

 Partner of Horizon Consulting in Italy – www.studiomoretti.net

Czech Republic – Tax relief package

The Ministry of Finance announced tax relief for those operating in the retail and services sectors and that had to close their business premises beginning 22 October 2020. The tax relief relates to the road tax, income tax prepayments, and default interest related to value added tax (VAT). To claim the tax relief, more than half of the taxpayer’s income must derive from activities that were banned or curtailed by the government’s emergency measures. Taxpayers to which the relief applies must notify the appropriate tax authority about meeting the conditions for the relief. Requests for relief concerning the road tax and income tax prepayments do not waive the tax itself, and the relief concerning VAT does not cover the late filing of a tax return—both VAT returns and VAT ledger statements still have to be filed within the statutory deadlines.

Partner of Horizon Consulting in Czech Republic – www.kampacons.cz

Czech Republic – Rent programme launched

Following the reintroduction of measures restricting retail and the provision of certain services, the government launched a rent relief program as support for certain lease expenses. Lessees meeting the definition of eligible applicant will be entitled to compensation equal to 50% of rent for the period from 1 July 2020 to 30 September 2020. A key condition for obtaining this support is that the applicant was forced to close the premises due to the October government resolutions. Applications may be submitted until 21 January 2021.

Partner of Horizon Consulting in Czech Republic – www.kampacons.cz

Czech Republic – Extension of deadline for meeting general terms and conditions

The Ministry of Industry and Trade introduced a measure intended to help investors in response to the COVID-19 situation. In particular, they may apply for an extension of the deadline for meeting general terms and conditions by two years. A deadline may therefore be extended from the existing three years to five years. Applications for extensions will not be approved automatically. Applicants will have to prove that they have been unable to meet the selected statutory conditions within the original statutory deadline as a result of the COVID-19 situation.

Partner of Horizon Consulting in Czech Republic – www.kampacons.cz

Romania – New tax facilities

Emergency Government Ordinance no. 181 published in the Official Monitor on 26 October 2020 brings some new tax facilities, as follows:

• Payment of taxes due by legal entities or individuals from 21 March 2020 is postponed until 25 December 2020. No interest or late payment penalties will be due for these amounts;
• VAT refunds will be decided upon in a subsequent tax audit by 25 January 2021;
• Payment of specific tax (e.g. restaurants, hotels) is cancelled for the period between 26 October and 31 December 2020. If the taxpayer has already submitted a tax return, a rectifying one should be submitted;
• The expenses incurred by companies for Covid-19 tests for their employees are deductible for profit tax purposes. At the level of the employee, these amounts are exempt from income tax and social insurance contributions;
• Local councils and the Bucharest city council can permit a reduction of up to 50% in the annual building tax for non-residential buildings until 2 December 2020, provided certain criteria are met. The initial deadline was 14 August 2020;
• The deadline for notification of the tax authorities by taxpayers who apply for the restructuring of their budgetary obligations according to GO 6/2019 has been extended until 31 March 2021. At the same time, the deadline for submitting their restructuring application has been postponed until 30 June 2021;
• There will be no penalties for companies that fail to ensure the remote connection of their electronic fiscal cash registers until 31 December 2020.
• There is a new simplified debt rescheduling procedure for tax obligations due for payment after the start of the state of emergency (i.e. 16 March 2020) and not yet paid until issuance of the fiscal certificate. These tax obligations may be paid in instalments for a maximum period of 12 months, provided certain criteria are met. The amounts subject to the simplified debt rescheduling procedure should not be lower than RON 500 for individuals and RON 5,000 for legal entities.

Partner of Horizon Consulting in Romania – www.hirzaconsult.ro & www.contamar.ro

„Estonian” CIT (Company Income Tax) in Poland from 1st of January 2021

Starting from January 1, 2021, significant changes will be introduced in the taxation of limited liability companies and joint stock companies in Poland that meet the criteria specified in the act (details below), the so-called “Estonian CIT”. The essence of this solution consists in deferring the necessity to pay income tax  which will be paid only when the profit is paid out (dividends). So there will be no need to pay CIT monthly or quarterly advances.  The company’s income will not be taxed as it is earned but only when it is spent for consumption purposes constisting in an obligation to pay the tax. This solution simplifies the issues related to tax settlement, in the event of choosing the “Estonian CIT”, there will be no need to keep separate records for tax purposes and the need to determine taxable income on an ongoing basis. Financial accounting will be sufficient to calculate the tax amount.

The favorable tax solutions will be available to companies which at the same time:

• revenues do not exceed PLN 50,000,000 (about 12 mln of EUR);
• shareholders are only natural persons;
• employ at least 3 employees (annual average) in addition to shareholders;
• do not have shares in other entities;
• passive income does not exceed operating income;
• show investment outlays.

The above solution should affect Poland’s investment attractiveness – the Estonian CIT is a very beneficial solution for investors. It provides not only the possibility of tax deferral at the level of the company, but also lower taxation at the shareholder level and favorable tax settlement rules when leaving the Estonian system.

At present, the standard rate of corporate income tax (CIT) is 19%, in case of application of the „Estonian” CIT it will be 0%.

Partner of Horizon Consulting in Poland– www.md-partners.pl

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