Why to invest capital in Italy

Italy, a competitive business environment:

  • Italy offers an increasingly dynamic environment thanks to a wave of government reforms.

  • The labour market has seen significant changes, with new legislation making the market more flexible and streamlining legal proceedings.  Less tax pressure means companies have a real incentive to make new investments.
  • Italy is a solid player in the manufacturing and international trade field, with a huge focus on R&D and innovation and unparalleled talent and know-how when it comes to human resources.

Individual taxation:

  • No property tax on main dwellings
  • 8% inheritance tax
  • Tax exemption on income from investments in long-term savings plans ("PIR")

Individual taxation - highly talented resources

Significant tax incentives for high-qualified personnel moving to Italy:

  • 3-year tax exemption on 90% of professors’ and researchers’ remuneration

  • 5-year tax exemption on 50% of managers’ and professionals’ remuneration

  • 15-year substitute tax of €100,000 on all foreign source income

Labour market:

  • The labour cost of permanent employees is entirely deductible from Regional Business Tax (“IRAP”) taxable income
  • Progressive employment protection accrued with length of service
  • Simplified unemployment benefits
  • 10% substitute tax on employee bonuses
  • Standard compensation in the event of redundancies with caps defined by law

Civil justice:

  • Insolvency Law (currently under Senate discussion) means streamlined and faster debt restructuring, bankruptcy and liquidation proceedings, as well as quicker interim financing of insolvent businesses
  • More effective dispute resolution thanks to digitalized civil and administrative proceedings, dissemination of best practices, business courts with specific skills for FDI, incentives for out-of-court settlements
  • Credit losses are automatically tax relevant (and deductible) either in the case of debtor’s bankruptcy or specific debt restructuring or crisis resolution procedures according to Italian Insolvency Law

  • Possibility of agreements for tax and contribution liabilities under debt restructuring procedures

Easier relationship with Tax Authority

The recent reforms allow greater law certainty and predictability for domestic and international investors, increasing trust in Tax Authority. In particular:

  • A notion of abuse of law has been defined, with a clear scope of application
  • A good distinction between criminal and civil law liabilities
  • Cooperative compliance has been introduced, with the objective of identifying, assessing and managing tax risks
  • New International Ruling addressed to companies with international business scope regarding proper tax treatment of cross-border transactions
  • Rulings for qualified investments makes it possible to know in advance the Tax Administration opinion with regard to various critical issues of planned investments
  • Post BEPS, arbitration on international tax disputes will soon be introduced in the domestic treaty network

Lighter corporate taxation encouraging investments:

Corporate taxation encouraging innovation:

  • 50% Hyper-depreciation for high-tech machinery and 4.0 equipment
  • 50% R&D tax credit for all related expenses (including staff)
  • Patent Box on all intangible assets (except trademarks), cutting corporate taxation by 50%
  • Stronger tax relief for investments in Innovative SME and startups

Focus on the “Italia Startup Visa”:

  • It introduces leaner and faster procedures to facilitate entry self-employment visa approval for non-EU innovators who wish to establish their innovative startup in Italy.
  • In particular, such procedure is completely centralized (the applications evaluation is attributed to a unique technical Committee), digitalized and much more efficient (the Certificate of no impediment for Italia Startup Visa is released within 30 days).
  • The application has to be accompanied by all the relevant information (i.e. the applicant’s curriculum vitae, a description of the business idea, a proper business plan). Specific requirement: financial means of at least 50.000.
  • Moreover, Italia Startup Hub extends such simplified procedures to non-EU innovators who are already in Italy and wish to prolong their stay in order to establish an innovative startup. It is possible to convert the residence permit to the “startup-entrepreneur status”, under the above mentioned conditions.

Opportunities for investors:

  • Horizontal consolidation means both Italian “sister” companies and Italian permanent establishments of EU companies, held by a common parent residing in any EU countries, to opt for the fiscal unity regime under specific conditions
  • A new VAT grouping facility makes it possible to offset VAT credits and debts of companies that are part of the same group

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