Separate payment: limited impact on SMEs

The Dignity Decree (Decree No. 87/2018) abolished, as of July 14, 2018, the split payment for professionals who issue invoices to the AP. A measure desired by the government to simplify the obligations for professionals and small suppliers and providers of public administration who, without the split payment, will be able to recover VAT again, so they will no longer be Treasury creditors for the tax paid upstream. The impact of the measure was estimated at 35 million euros for the year 2018, 70 million euros for the year 2019 and 35 million euros for the year 2019 and 35 million euros for the year 2018, 70 million euros for the year 2019 and 35 million euros for the year 2018 the year 2020. Amounts allocated with the Dignity Decree to compensate for revenue delays for the state.

Impact of fractionation on SMEs

An impact very different from that estimated by the study of CRIF Ratings on the effects of fractionation on the overall level of indebtedness of SMEs Italian, or at least on the sample of 26,935 SMEs badyzed, which would have been minimal in 2015.

Analyzing the impact of split payment on the basis of MEF data, we observe that: [19659009thepart of the VAT subject to the split payment system ] amounted to 6.7 billion euros, or 9.8% of the total tax revenue of the companies in 2015, [19659010] VAT refund claims for the same fiscal period they went from 2.13 billion euros to 9.97 billion euros in total (+ 27%),

To be more affected by the impact of the split payments in 2015 were Utilities and Energy Construction and Infrastructure, Manufacturing , commerce and transport and logistics

Credit Metrics

The study also finds that the credit parameters of the observed sample have improved at a steady pace over the period 2013-2016. Compared with the first year of introduction of split payment, the median value of the gross financial debt / EBITDA indicator rose from 3.4x in 2014 to 3.3x in 2015, while In addition, the median value of the short-term financial debt to total ratio decreased slightly (67.8% in 2015 compared with 71.3% in 2014). 19659007] Christian De Rose, Partner of CRIF Ratings, author of the study, explains:

We did not observe a significant difference for companies belonging to the sectors most affected by split payment (such as as defined above) or even a better trend in terms of leverage indicator. The improvements are mainly attributable to a number of favorable factors over the 2013-2016 period. First of all, the low price of oil that has supported operating margins has allowed for EBITDA growth in absolute terms. Secondly, tax incentives on staff costs and investments have allowed companies to limit the absorption of cash arising from the payment of taxes. Finally, the ECB's monetary policy has led to a general reduction in the cost of debt and facilitated the disbursement of new longer-term financing.

Extension of the installment payment

The extension of the directive to the list of public bodies, the companies controlled by the Italian public administration and the companies listed on the Italian stock exchange identified by the MEF in December 2017 could nevertheless have a negative impact on the cycle of working capital of Italian SMEs in 1945, mainly due to the accumulation of VAT loans. But the resulting lack of liquidity will be reabsorbed in the dynamics of working capital in 2019. The Agency also recalls that companies have different alternatives to finance working capital needs in 2018: liquidity reserves, advances Banking, factoring and securitization, Solutions whose effects on debt levels are highly variable

For this reason also, explains De Rose:

We do not consider probable a new extension of payment Fractional after June 30, 2020. The European Union has already granted the exemption for the second time in 2017, despite Italy's initial commitment not to ask further. At the same time, the introduction of e-invoicing would be more effective in combating tax fraud and, furthermore, it would have no impact on the management of working capital.

Expiry of the effectiveness of the split payment in 2020 or a possible early elimination of the same, would have a positive one-off effect on the cycle of the working capital, which would not be significant compared to the overall financial debt of SMEs, so this would have no positive effect on merit. companies exposed to public entities as a whole