European Commission approves €1.5 billion government aid for companies in Southern Italy

ITALY. On Tuesday 6 October 2020, the European Commission authorised, within the framework of the temporary framework making State aid more flexible, an Italian scheme providing for a budget of €1.5 billion to support businesses in the regions of southern Italy affected by the coronavirus pandemic. The money will be used to “address the liquidity problems they face as a result of the pandemic, thereby maintaining employment levels and preserving the continuity of economic activity during and after the pandemic”, commented Margrethe Vestager, Executive Vice-President of the European Commission in charge of competition policy.

Rome will introduce tax incentives with a 30% reduction in social security contributions between 1 October and 31 December 2020. Reserved for private employers operating in southern Italy, the measure will apply to the regions of Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia and Sicily. All have a GDP below 90% of the EU average and an employment rate below the national average.

The aid may not exceed €120 K per company in the fisheries and aquaculture sector and €800 K in other sectors, with the exception of finance, agriculture and domestic work, which will not be eligible for this tax advantage.