Italian law amendment offers tax break for fashion firms

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Italy's Law Decree No. 34 (Rilancio Decree), published in the Official Gazette on May 19 and entered into force on the same day, introduced a number of economic measures in response to the COVID-19 crisis. It was recently amended and has a specific provision to offer tax credits for entities in the textile, fashion and accessories sectors in connection with their final stock inventories.

The July 19 amendments include one that states that for the 2020 fiscal year, “taxpayers carrying out business activities in the textile, fashion and accessories sectors may benefit from a new tax credit equal to 30 per cent of the value of their unsold inventory at the year-end that exceeds the average of the inventories booked in the three previous fiscal years.”

The law requires that in order for a company to be eligible for such a tax credit, which will offset tax and social security liabilities pertaining to the fiscal year, “the inventories must be evaluated by using the same methodology and criteria both in the [2020] tax period and in the three previous tax periods.”

The new amendment is the result of efforts by major Italian apparel industry trade organisations and lobbying groups to push the country’s government to enable fashion and luxury brands to resume work on the basis of the ‘lasting damage’ that could be caused to the county’s economy and the viability of its apparel sector as a result of a potential economic epidemic, according to a global newswire.