Post on 01-Jun-2020
transcript
Italy’s new policy outlook
for attracting foreign investment
Stefano Firpo General Manager MEDIOCREDITO ITALIANO
Destination Italy: opportunities for HNWI and companies Embassy of Italy in Buenos Aires Consulate General of Italy in San Paolo
September 3-5, 2019
1. A new Investor Visa for Italy a smart visa for investors and philantropists
2. A success story: Italia Startup Visa a visa for innovative entrepreneurs from all over the world
3. Measures to boost and attract investments in Italy National Plan on Industry 4.0, the Italian Startup Act
4. Special tax regimes for new residents and investors
new solutions for HNWI, large investors, pensioners…
Contents
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The 2017 Budget Law introduced in Italian immigration law
(Consolidated Text of Immigration Law)
a new type of visa, valid for 2 years,
for non-EU citizens who make an investment in
strategic assets for the Italian economy and
society, or that wish to make a
philanthropic donation.
The investment must be made within
3 months of the visa issuing, and maintained for its entire duration.
The legal provision was further defined by the following implementing acts:
• Interministerial decree of the Minister of Economic Development,
with the Minister of Interior and the Minister of Foreign Affairs,
published on 21 July 2017;
• Policy guidance, approved on 16 November 2017.
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Investor Visa for Italy: legal references
€2M in Gvt. bonds
€1M in an Italian
limited company
€500,000 in an innovative
startup
€1M donation in
selected fields
culture, education, immigration management, scientific research, cultural and natural heritage
1. Italy’s new investor visa: a smart visa for investors and philanthropists
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A user-friendly procedure with the following characteristics:
• It is fully digitised:
application submission and all
further communications take place
through a custom-made web portal;
• It is fast-track: the clearance to issue the
visa («nulla osta») is released within 30 days
of the application date;
• It is bilingual: website, application forms, written guidance and
«customer care» services are available both in Italian and English;
• It is centralised: the Secretariat (formed at the DG for Industrial Policy of
the Ministry of Economic Development) acts as the single contact point for
visa applicants. It also co-ordinates the inter-institutional Committee that
issues the nulla osta to the investor visa.
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Investor Visa for Italy: how it works
Until August 2019, we received
10 investor visa applications.
8 obtained a positive evaluation.
Countries of origin: x2 Russia
x2 Israel
x2 China
x1 South Korea
x1 Brazil 6
Investor Visa for Italy results up to now
Type of investment: listed companies (x4),
Innovative startups (x2) and Government bonds (x2)
Launched on 24 June 2014, Italia Startup Visa is
aimed at non EU entrepreneurs who want to
establish an innovative startup in Italy,
introducing a new procedure to issue
self-employment visas.
The procedure is:
• fast: it never takes more than 30 days
• centralised: it is based on a Committee of
representatives of the Italian innovation ecosystem, coordinated by the
Ministry of Economic Development
• free-of-charge
• completely online 7
More information:
italiastartupvisa.mise.gov.it
2. Italia Startup Visa: a visa for talented entrepreneurs
102 applications received in 2018 only
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16 pending evaluations 232 accepted 206 rejected
454 applications
Italia Startup Visa: an ever-expanding programme
data at June 30, 2019
1
23
4 5 8
9
22 24
35
14 26
61
30 29 36
24 23
34
21
15
20
2014Q2
2014Q3
2014Q4
2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
2018Q1
2018Q2
2018Q3
2018Q4
2019Q1
2019Q2
• Average age of successful applicants: 36,8 years.
• >90% of successful applicants are graduates (engineering, management, design…).
• A large share of applicants have already had entrepreneurial initiatives – some are serial startup founders. Many other were managers, engineers or IT specialists in large firms, or students.
Italia Startup Visa: an ever-expanding programme
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data at June 30, 2019
x4 x2
49 countries of origin
x2
x1
x1
x2
x1
x1
x2
x1
x1
x1
x92
x6
x25
x22
x36
x85
x39
x29
x1 x2
x1
x4
x4
x3
x9
x5
x3
x3
x3
x1
x1
x2
x1
x4
x1
x2
x3
x3
x1
x1
x1
x1
x1
x1
x1
x1
x1
Patent Box: 50% tax break on IP-related income
(eligible IPR: patents, copyrighted software, know-how, industrial models)
R&D Tax Credit: tax credit on incremental R&D expenditure:
50% for in-house and R&D outsourced to universities, research centers, innovative startups & SMEs)
25% for other expenditure (e.g. consulting, materials…)
Hyper-depreciation: depreciation deduction for I4.0 enabling technologies is increased by 170% for investments under €2.5m, by 100%
for investments under €10m, and by 50% for investments up to €20m. The result is a large, multiannual tax relief for
SMEs and large corporations alike.
Tax credit for Industry 4.0 on the job training Any Italy-based firm can deduct from income tax 40% of costs sustained to train personnel in I4.0 fields.
Corporate income tax lowered to 24% flat rate (from 27.5%) in 2017
New ruling procedure for qualified investors individuals and corporations investing >€20m in Italy may get binding advance assurance on their tax treatment upon a ruling procedure with the Italian Revenue Agency
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3. Tools to boost and attract investments: National Plan on Industry 4.0
Country Effective tax rate
2017 Ranking
Italy -33.18% 1
Ireland -3.39% 2
Hungary -0.52% 3
… … …
Portugal 5.48% 8
Spain 5.50% 9
France 6.73% 10
UK 7.45% 12
Netherlands 8.69% 15
… … …
USA (California) 21.97% 32 (2nd to last)
Germany 22.19% 33 (last)
The most favourable fiscal regime for innovation worldwide! (Digital Tax Index 2018)
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The Italian Startup Act: a legal definition of «innovative startup»
Introduced in late 2012 (d.l. 179/2012), the Italian Startup Act is a comprehensive legislative framework
aimed at facilitating the creation and the growth of new hi-tech companies.
“Innovative startups” are defined as newly-founded
(less than 5 years old) unlisted limited companies, which have an
annual turnover lower than €5M, and a focus on
technological innovation.
The latter is identified by at least one of the following indicators:
1. significant R&D expenditure (>15% of total annual costs)
2. highly-qualified team
3. IP rights
Companies that fulfil the requirements can (self-selection)
register as innovative startups at their local Chamber of
Commerce and benefit from a vast array of policy measures.
The support measures are designed to help them throughout
their whole life-cycle (first steps, growth, maturity)
and to affect the national startup ecosystem as a whole
(investors, incubators, universities…)
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• More flexible corporate management fewer legal constraints on governance – works like an inc. with the costs of an ltd. (e.g. non-proportional voting rights for shareholders, longer times to replenish capital after losses)
• Some more flexibility on fixed-term contracts
• Internationalisation support by the Italian Trade Agency lower consulting fees, free-of-charge participation to events
• Stock options and work-for-equity schemes are not taxed as income
• Exemption from certain corporate registration duties and fees
• Conversion to innovative SME status «mature» startups (e.g. by age and size) can keep most of the benefits previously applied by shifting to this parallel special status
Online, free of charge incorporation innovative startups are the only companies in Italy that can be incorporated without a notarial deed. Over 2,000 have done so in the last 2.5 years, saving approx. €2.000 each
Special measures for innovative startups non-financial benefits
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30% tax relief for seed- and early-stage investors
One of the most generous schemes of its kind in Europe (see next slide)
Equity crowdfunding
for startups since 2013, for any company since 2017 – and booming since 2018
Favourable rules on «carried interest» (not just for startups!)
income deriving from holding shares with preferential rights in a company/institutional fund is subject to corporate tax (24% flat rate) rather than personal income tax (top marginal rate 43%).
Debt finance: fast-track access to a Public Guarantee Fund for SMEs
a highly popular initiative: approx. €1bn of facilitated loans issued in 5 years
Special measures for innovative startups: financial benefits
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Europe’s most favourable tax regime for VC tax breaks for seed- & early-stage investment
Since 2012, whoever invests in the equity of an
Italian innovative startup benefits from robust
tax breaks.
The 2017 Budget Law raised the rate of the incentive as follows:
• 30% (previously 19%) of the sum
invested in innovative startups by individuals
is deducted from personal income tax (IRPEF),
up to a ceiling of €1 million (previously €500,000)
• 30% (previously 20%) of the sum invested by companies
is deducted from taxable income (IRES), up to a ceiling of
€1.8 million.
In addition, as of 2017 incentives apply to investment targeting all innovative
SMEs, regardless of their maturity stage.
Holding period: 3 years.
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Access to risk finance: a 30% tax break for seed- & early-stage investments
The incentive can be claimed for:
Direct investment in registered innovative startups no particular limitations – provided that the company stays in business and “keeps innovating”
Indirect investments through CIUs and VCs the benefit is a function of the amount invested by the fund and of the percentage of shares held by the investor in the fund
Direct investment in registered innovative SMEs Claimable since 2019 for investments made after 2017. Additional conditions to comply with EU law, based on the date of the first market sale:
• < 7 years: no restriction
• 7 < x < 10 years: Independent assessment on funding needs
• < 10 years: firms must plan new investments for >50% of their past turnover
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€46M Former innovative startup
€13M Innovative SME, former innovative startup
€10M Innovative startup
€100M Innovative SME
€10M Innovative startup Osservatorio Startup Hi-Tech
Milan Polytechnic University
77 82 63 76 101 107
215 35 47 57 71
81 98
154
35
126
229
0
100
200
300
400
500
600
700
2012 2013 2014 2015 2016 2017 2018
VC investment mass (€M)
Formale Informale Estero
112 129 120
331
217
147
598
Italy’s VC market: still comparatively small, but some signs of growth are visible
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4. Lump sum tax regime for new residents: requirements
Concept The 2017 Budget Law introduced a lump sum tax on foreign-source income and gains for individuals (whether Italian or foreign nationals) that acquire Italian tax residence.
The option is valid for 15 years.
Requirements
1. The individual must have been non tax resident in Italy in at least 9 of the 10 years prior to the first year of effect of the option;
2. The option must be communicated in the annual tax return.
Notion of eligible income
Income is deemed to be foreign-sourced and is consequently covered by the substitute tax when: a. the asset from which the income is derived is located abroad, or b. the activity through which the income is produced is performed abroad, or c. the paying entity is resident abroad. 18
Lump sum tax regime for new residents: how it works
Effects
All foreign-source income and gains are subject to an annual lump sum tax of €100,000;
Such income and gains are not subject to any additional income taxation, even if remitted to Italy;
All Italian source incomes and gains are subject to ordinary taxation.
Extension to dependants
The substitute tax regime can be extended to one or more qualifying family members against the payment of an annual substitute tax of €25,000 per family member benefitting from such a regime.
Cherry picking
The individual can opt to not apply this special regime on income and gains realized in a certain foreign country (therefore ordinary tax regime with foreign tax credit will apply); the exclusion may allow the individual to benefit from reduced taxation/treaty relief in the State where the income and gains are sourced (and foreign tax credit in Italy). 19
The Italian Revenue Agency (Agenzia delle Entrate)
received ≈550-600 requests so far
2017: > 100 applications
2018: >250 applications
2019: > 400 applications
75% of applications come from residents of other EU countries:
1st 2nd 3rd Besides generating direct revenues the policy is intended
to produce spill-over effects on consumption, investments,
etc.
Lump sum tax regime for new residents: results so far
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Americas and Asia make up the rest (Latin America: 10%)
New ruling procedure for qualified investors: requirements
Since 2015, natural persons, companies, and funds that invest in Italy over
€20 million (before 2019: €30 million) may apply for a special ruling
procedure with the Italian Revenue Agency to get binding advance
assurance on:
• fiscal treatment of the investment
• eligibility for incentives and special regimes
• compliance with Italian legislation on tax elusion
• applicability of VAT and income tax
Key condition: the investment must have significant and lasting spill-overs
on employment (assessed case by case).
Investment by consortia and taking place over multiple years are also
eligible.
Applicants must file a detailed description of the investment, of the
occupational impact foreseen, and an outline of the fiscal treatment that
s/he considers appropriate.
The Revenue Agency has 120 days to respond: in case of silence, the
application is intended as accepted.
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Special treatment for pensioners that move South a 7% tax rate on all income
Who: Recipients of non-Italian pension income
that move their tax residence to a Southern
Italian region, in a municipality with less
than 20 000 residents, and that have not
been fiscally resident in Italy for the last 5
years.
What: A 7% income tax rate is applied on all
foreign income (not just pension income).
The option is valid for 5 years.
How: The tax is paid as a lump sum once a year, at
time of filing the yearly tax declaration.
Cherry picking is allowed (see res non dom
scheme).
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Abruzzo Apulia Basilicata Campania Calabria Molise Sardinia Sicily
^ Amalfi (Campania) 5 102 residents
Global ranking for FDI attractiveness: Italy enters the top 10
Country Ranking
2018
Var. 2017-2018
Var. 2016-2018
United States 1 - -
Canada 2 +3 +2
Germany 3 -1 +1
United Kingdom 4 - +1
China 5 -2 -3
…
Switzerland 9 +3 +2
Italy 10 +3 +6
India 11 -3 -2
Singapore 12 -2 -2
Italy ranks 10th in the A.T. Kearney
Foreign Direct Investment Confidence
Index for 2018 – a jump of 6 six spots
in 2 years, more than any other country
in the top-10.
The National Plan for Industry 4.0 is
explicitly mentioned in the report as a
likely strong driver for foreign
investment, in spite of increased
political risk and middling economic
growth.
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Thank you for your attention.
Contact us:
investorvisa@mise.gov.it info.italiastartupvisa@mise.gov.it
Visit our websites
mise.gov.it investorvisa.mise.gov.it italiastartupvisa.mise.gov.it
Stefano Firpo Director General for Industrial Policy, competitiveness and SMEs Italian Ministry of Economic Development
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