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EXPLAINED: How you could benefit from Italy’s Covid-19 financial support

The Italian government has approved a long-awaited financial aid package worth €32 billion. We break down what the main measures mean.

EXPLAINED: How you could benefit from Italy's Covid-19 financial support
Italy's cabinet has approved a package of pandemic-related financial aid. Photo: Shutterstock

Italy’s prime minister Mario Draghi approved the Support Decree (Decreto Sostegni) on Friday, which outlines plans for the latest round of Covid-19 financial aid for companies, workers, families, vaccinations and schools.

“This decree is a significant, very substantial response to poverty, to the need that businesses and workers have, a partial response but the most we could do within this allocation,” Draghi said at a press conference on Friday.

READ ALSO: Covid-19: Most of Italy under lockdown again as country battles new wave of infections

From the total fund of €32 billion, €11 billion will enter the Italian economy in April, according to the prime minister.

“It is necessary to guide companies and workers in the path out of the pandemic. This is a year in which you do not ask for money, you give money. The time will come to look at the debt but this is not the time to think about [EU debt limits],” he added.

Italy’s Prime Minister Mario Draghi Photo by Alberto PIZZOLI/POOL/AFP

Here’s an overview of where those €32 billion will go. 

Cancellation of old tax bills

In order to help companies and employees, the government will cancel old debt, namely old tax bills of up to €5,000 incurred between 2000 and 2010. This is valid for people who have a maximum income of €30,000 per year – or €50,000 per year if the tax bill is owed by a company.

“It is clear that the State has stopped working on tax records – a State that has allowed the accumulation of millions and millions of tax bills that cannot be claimed. Something has to be changed”, stated Draghi.

Included in the decree, there will also be “a part that provides for a change in the collection of tax, a small reform of controls and checks. Without it, in a couple of years we would still have millions of tax debt to collect,” he explained.

By cancelling old tax bills of up to €5,000, there is also a wiping of extra debt, which “corresponds to a net of €2,500 in interest and various penalties”, said Draghi. This “allows the administration to pursue the fight against tax evasion even more efficiently”, he added.

Measures to help the self-employed

Support is granted to workers who have a partita IVA number (VAT number) if they have suffered a 30 percent loss of turnover in 2020 compared to 2019. 

Self-employed workers and seasonal workers in tourism will also receive a one-off allowance of €2,400 for three months’ pay, with a total of €900 million allocated for this group.

There is also a €3,000 bonus for VAT-registered businesses, which is calculated on the basis of annual turnover.

According to government estimates, about 800,000 professionals and around 3 million small and medium-sized enterprises will be able to benefit from the new relief.

READ ALSO: ‘Smart working’? Here’s what you need to know about going self-employed in Italy

The aid starts from a minimum of €1,000 for individuals, to €3,000 for those with VAT numbers. Up to a maximum of €150,000 is available for companies and the bonuses don’t count as taxable income.

You can calculate how much you may be entitled to by applying a percentage to the difference between the average monthly amount of turnover and fees in 2020 and the average monthly amount of turnover and fees in 2019.

Here’s a breakdown of what businesses may be eligible for:

  • 60 percent for companies with a turnover of up to €100,000;
  • 50 percent for companies with a turnover of between €100,000 and €400,000;
  • 40 percent for companies with a turnover between €400,000 and €1 million;
  • 30 percent for companies with a turnover between €1 and €5 million;
  • 20 percent for companies with a turnover between €5 and €10 million.

For example, if you earned €4,000 per month on average in 2019 and this dropped to €2,000 per month on average in 2020, you’d fall into the first category. So you would be eligible to claim 60 percent of the difference – that is, of the €2,000 shortfall. That means you could be entitled to €1,200.

Meanwhile, approximately €1.5 billion have been earmarked for the exemption of social security contributions for self-employed professionals.

Extension of the redundancy fund and a layoff freeze

The freeze on firing employees has been extended until 30th June. This is pushed further back again, until October, for companies using the Covid-19 redundancy fund. It remains valid until 31st December for a maximum of 28 weeks.

In addition, fixed-term contracts can be renewed or extended without a reason until 31st December.

Unemployment benefits

In a move to support those out of work, the new measures make claiming unemployment benefits less difficult.

READ ALSO: Poverty rises to 15-year high in Italy amid coronavirus crisis

Until 31st December, it’s not necessary to have worked at least 30 days in the last 12 months to obtain the NASPI (Nuova Prestazione di Assicurazione Sociale per l’Impiego) unemployment benefit.

Instead, to qualify a person must:

  • Be in a state of involuntary unemployment.
  • In the four years preceding the start of being unemployed, they must have at least 13 weeks of social security contributions (INPS).

This change is expected to lead to an increase in the number of claimants.

€300 million granted to support schools

The new measures contain support for schools affected by Covid-19. This includes cash bonuses to cover staff absent from school while getting their vaccinations.

“There are resources for the safe return, as soon as possible, to all activities in school. And there are resources to guide closing the school year and building a bridge to the next one, to recover skills and socialisation,” said Education Minister Patrizio Bianchi.

“We are working to further integrate the measures dedicated to enhancing education,” he added.

Prime Minister Draghi said: “As far as I’m concerned, schools will be the first to reopen when the infection situation allows – at least resuming school attendance up to sixth grade.”

Parental leave and babysitting bonus: help for families

Among the measures in the Decree to support families is the babysitter bonus – and it’s available for both employees and the self-employed.

Those who qualify for this include workers enrolled in INPS, the self-employed, personnel in the security, defence and public rescue sector employed to cope with Covid-19, doctors, nurses, laboratory and radiology technicians and health workers, with at least one cohabiting child under 14 years of age.

The maximum amount available is €100 euros per week. Essentially, the parent receives vouchers worth €100 each (up to a total of €1,200 or €2,000 depending on the profession), which they can spend to pay for a babysitter for the duration of school closures, quarantine or a Covid-19 infection.

INPS is expected to announce how to access the extra ‘babysitter bonus’ in the next few days.

Alternatively, one parent only can ask to work from home, or claim an allowance equal to 50 percent of their salary. This means one parent can take enough leave to cover the entire duration of distance learning or quarantine for children under 14 years of age.

If the child is between 14 and 16 years old, one of the parents can request total absence from work, with the guarantee that he or she cannot be dismissed and can keep his or her job. However, they will not be entitled to any pay or allowances.

READ ALSO: Italy’s ‘baby bonuses’: What payments are available and how do you claim?

More than 104,000 people have already died in Italy since the pandemic hit the country just over a year ago, according to official figures.

The latest rising case numbers caused the government to shut schools, restaurants and shops in most of Italy on Monday, for at least three weeks.

Draghi, a former president of the European Central Bank who became the head of a national unity government last month, said the only way out of the crisis is through the vaccination programme.

READ ALSO: Where to register for a Covid-19 vaccine in your region of Italy

Speaking about the overall aim of his Support Decree, he said: “The objective of this decree is to give more money to everyone, give it quickly and give as much as possible.”

For the full text, you can see all aspects of the Decreto Sostegni below.

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ITALIAN POLITICS

Will Italy’s Five Star Movement split throw the government into crisis?

After the largest party in Italy's coalition government imploded over the country's response to the Ukraine war, Prime Minister Mario Draghi on Wednesday called for unity. Is another political crisis on the horizon?

Will Italy's Five Star Movement split throw the government into crisis?

Draghi has taken a firm, pro-EU line on Russia’s invasion of Ukraine: sending weapons to Kyiv, backing sanctions on Moscow despite Italy’s heavy reliance on Russian gas, and supporting Ukraine’s hopes of joining the European Union.

But there have been rumblings of unease within his coalition government, which burst into the open on Tuesday with a split in parliament’s biggest party, the Five Star Movement.

Foreign Minister Luigi Di Maio announced he was leaving the party amid disagreements over how Italy should respond to the Ukraine war.

An estimated 60 lawmakers are following him into his breakaway group, named “Together for the Future” – just over a quarter of Five Star’s MPs.

READ ALSO: Italian government rocked by Five Star party split

The move risks upsetting the fragile balance of power in Draghi’s coalition government, a year before general elections are due and at a difficult time for Italians battling skyrocketing inflation.

A vote on Wednesday suggested parliament still overwhelmingly backs the premier, with the lower Chamber of Deputies approving by 410 to 29 a resolution supporting the Ukraine policy.

The Senate similarly approved it on Tuesday.

Luigi Di Maio (R) applauds after Prime Minister Mario Draghi (L) addresses the Italian Senate on June 21st, 2022. Photo by Filippo MONTEFORTE / AFP

“Unity is essential in these moments because the decisions that must be taken are very difficult,” Draghi said before Wednesday’s result, which came one day before an EU summit in Brussels begins.

In an uncharacteristically combative address to deputies, Draghi accused those who disagreed with his policy of effectively calling on Kyiv to surrender.

“There is a fundamental difference between two points of view. One is mine – Ukraine must defend itself, and sanctions and the sending of weapons serve this goal,” Draghi said to applause.

“The other point of view is different. Ukraine must not defend itself, we shouldn’t do sanctions, we shouldn’t send armaments, Russia is too strong, why should we take her on, let Ukraine submit.”

Di Maio had made a similar attack on members of his own party at the weekend, paving the way for Tuesday’s defection.

Five Star leader Giuseppe Conte, the country’s former premier, has argued that Italy should focus on a diplomatic solution, warning against getting involved in an escalating arms race.

Conte and Di Maio have been at odds since long before the war, however.

Five Star leader Giuseppe Conte stressed that his party still backed the coalition, saying: “Support for Draghi is not up for discussion.”

Nevertheless, some commentators believe Draghi’s coalition government – involving all main political parties except the far-right Brothers of Italy – will start to splinter ahead of 2023 elections.

The Five Star split is likely to weigh on “the entire political system, starting with Draghi, who is now more shaky than before,” wrote La Stampa columnist Marcello Sorgi.

The defections in Five Star leave the anti-immigration League of Matteo Salvini as the biggest party in parliament, but it too is struggling with waning public support.

Media reports this week suggest this could work in Giorgia Meloni’s favour in the next election – the far-right Brothers of Italy leader is now being touted as potentially becoming the country’s first female prime minister, as her party remains the only one in opposition to Draghi’s coalition.

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