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The Decreto Legge no. 35 of 14th March 2005 has partially amended the procedure for an arrangement with creditors (so-called “concordato preventivo”), provided for by articles 160 et seq. of the Law on Bankruptcy, and has defined that arrangement as an instrument by which the crisis of a business may be solved through non-judicial agreements regarding the restructuring of the business at issue. 

To take advantage of this instrument, a trader is required to file a signed application before the competent court, as well as a plan for the repayment, even partial, of creditors.

In the past, taxes (such as VAT) and social security contributions were excluded from such a settlement. According to article 182-ter of the Law on Bankruptcy, the proposal made by the debtor could not provide for the partial payment of unpaid taxes but solely for their deferred payment.

On 7th April 2016, in case C-546/14, the European Court of Justice recognized the admissibility of the partial payment of VAT debts in an arrangement with creditors.

Article 1, paragraph 81, of Law no. 232/2016, has taken into account the aforementioned position of the Court and has then amended article 182-ter of the Law on Bankruptcy.

Therefore, as from 1st January 2017, a trader in critical difficulties may apply for an arrangement with creditors and propose the partial or deferred payment of taxes (such as unpaid VAT) and social security contributions, provided that such payment be of the same amount of the payment that would be made in the event of that trader’s liquidation.