Following its initial enactment in May, Italy revamped its Law Decree No 34, or the ‘Rilancio Decree’ – that introduced a number of economic measures in response to the COVID-19 crisis – this month. The law now includes amendments to provide corporate and tax measures to support Italian companies in light of the sweeping manufacturing disruptions and greater market volatility cased by the COVID pandemic. Among the new additions to the law is a specific provision that aims to provide tax credits for entities in the textile, fashion and accessories sectors in connection with their final stock inventories.”

According to Baker McKenzie’s Mariassunta Pica, Bianca Bagnoli, and Marzio Bucciol, the July 19, 2020 amendments include a new tax credit equal to 30 percent of the value of the unsold inventory at the year-end that exceeds the average of the inventories booked in the three previous fiscal years.

In order to be eligible for this tax credit, companies need to evaluate inventories by sing the same methodology and criteria both in the 2020 tax period and in the three previous tax periods.