Tax credit on commissions related to electronic payments: Revenue Agency and Bank of Italy Regulations

In particular, Italian fiscal resident individuals and enterprises exercising business, artistic or professional activity ("Beneficiaries") with revenues not exceeding 400,000 euros can enjoy a tax credit equal to 30% of the fees charged by payment services providers ("PSPs") for the acceptance of electronic payment transactions made by private customers (see art. 22 of the Legislative Decree n. 124/2019, i.e., "Tax Decree", as amended by the conversion law of 19 December 2019, no. 157). The Tax Credit applies to transactions concluded from 1 July 2020 onwards.

To allow the Beneficiaries to take advantage of the Tax Credit, the law has shifted to PSPs the compliance of a number of formalities.

In particular, all authorised PSPs which conduct business in Italy (either under a cross-border regime or by a permanent establishment) and have entered into a contract which allows the acceptance of electronic payments vis-à-vis the supply of goods and services vis-à-vis consumers are obliged to comply with the formalities outlined in two implementing measures, one issued by the Bank of Italy and the other from the Revenue Agency.

In particular:

• The Bank of Italy issued a regulation on April 21, 2020 ("Bank of Italy Regulation" https://www.bancaditalia.it/compiti/sispaga-mercati/strumenti-pagamento/normativa/Provvedimento-attuazione-art-22-comma-5-Decreto-legge-26-ottobre-2019-n-124.pdf), identifying the procedures and criteria by which the PSPs (or acquirers) must provide merchants, on a monthly basis and by electronic means, with the list of transactions and information relating to the fees paid;
• The Revenue Agency issued regulation on April 29, 2020 (https://www.agenziaentrate.gov.it/portale/provvedimento-del-29-aprile-2020), giving indications as to the procedures for the PSPs to communicate the Revenue Agency – at the expense of PSPs – the data related to the fees applied on which the tax credit shall be calculated. Communications should refer to fees recorded as of 1 July 2020.

In order to be granted with the tax credit, relevance is given to the conclusion of contracts between the PSPs and Italian fiscal resident merchants, while the nationality of PSPs issuing a payment card or other offers traceable electronic payment instruments is not relevant. For example, the commission relating to a transaction carried out with a payment card issued by an Irish PSP and spent by the final consumer (consumer card) at an Italian merchant may be considered relevant for the tax credit purposes.

As a result, all PSPs that have signed an agreement with a merchant must comply with the reporting obligations in order to accept an electronic payment instrument. In case of non-resident PSPs, they can comply with the formalities before the Revenue Agency by obtaining a fiscal code and asking for the registration with the SDI (i.e., the electronic portal of the tax administration).

With respect to the calculation of the tax credit, the commissions paid to the acquirers (i) may be calculated as a percentage value of the transaction (or on the individual transactions carried out) without fees for the provision of the acceptance service (e.g. the rental fee for the terminal), (ii) as a percentage of the transaction, as well as the amount due for the monthly fee for the provision of the acceptance service, and also (iii) those determined "as a package" which provide for a fixed periodical cost (to be considered "commission") in which, in addition to the eventual provision of the acceptance service, a number of transactions are also included, after which fees are charged on the transaction.

Moreover, the tax credit applies not only in case of use of payment cards, but also encompasses all cases in which the contracting party offers value-added services to the merchant for acceptance of electronic payment instruments: for example, when the contracting party makes available to the merchants applications (apps) capable of enabling the merchant and the payer to interact, or systems capable of generating two-dimensional codes, i.e., QR code (quick response code), containing payment information and readable through devices (including smartphones) supplied to the operator and/or the payer.

With regards to payment cards, tax credit applies only in case of payment transactions carried out by the merchant's customers using consumer cards (i.e. card issued in to an individual) and not using corporate/business payment cards issued to companies or self-employed persons.

What happens next?

Following the provisions of the Bank of Italy and the Revenue Agency, PSPs are obliged to:

1. communicate to the Revenue Agency, through the SDI system, within the 20^th day of the month following each reference period, certain specific information relating to the transactions made and the commissions paid by the merchant during such a period;
2. provide merchants with certain information relating to the transactions made and the commissions paid by the merchant within the 20^th day of the month following each reference period by means of electronic communication, such as via certified e-mail (PEC) or by publication in the merchant's online banking/private area of the PSP's website.

For the above, the first reference period will commence on 1 July and by the next 20 August each PSP must comply with the reporting obligations described above. In case the fees have already been deducted by the time the transaction takes place, the amount shall have to be communicated in the month following that in which the transaction (and the relevant payments) occurred.

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