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TRANSCRIPT
57th
UIA CONGRESS
Macau / China
October 31 – November 4, 2013
FOREIGN INVESTMENT
COMMISSION Saturday, November 2, 2013
CHINESE INVESTMENTS ABROAD AND
FOREIGN INVESTMENTS IN CHINA
THE ITALIAN PERSPECTIVE.
SUPPORTING FOREIGN INVESTMENTS AND
NEW MODELS FOR
SUPPORTING THE “INTERNATIONALISATION”
OF SMALL AND MEDIUM-SIZED
ITALIAN ENTERPRISES
Carlo Mastellone
2
Studio Legale Mastellone, “LegAll® Firenze”
Via Gustavo Modena, 23
50121 Firenze (Italy)
Tel. +39 055.4620040
Fax +39 055.475854
e-mail [email protected]
www.studiomastellone.it
www.leg-all.it
in collaboration with
Pietro Mastellone (tax law specialist)
[email protected] © UIA 2013
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SUMMARY OF CONTENTS: Section I. – Investing in Italy. 1. Foreign direct investments in Italy – An economic overview. – 1.1. Reasons for the relatively low attractiveness of
Italy for FDI. – 1.2. Good reasons for investing in Italy. – 2. Choice of corporate structure for a foreign subsidiary in Italy. – 2.1. S.p.A. vs. S.r.l. – 2.2. Società per Azioni (S.p.A.). – 2.3. Società a responsabilità limitata (S.r.l.). – 2.4. Conditions and steps to be taken to establish a subsidiary company in Italy. – 2.5. Registrations. – 3. Italian legislation on corporate groups. – 3.1. The concept of “management” and “co-ordination of companies”. – 3.2. How is a group structure reflected in the corporate documents (i.e. in the corporate purpose of the subsidiary, in other articles of association, in the organisational regulations/articles of association)? Impact on the corporate liability. – 3.3. Conflicts of interests between the parent/subsidiary and foreign shareholder/local management. – 3.4. Protections given to minority shareholders that should be considered if the parent company is the controlling but not the sole
shareholder. – 3.4.1. Minority shareholder rights in a Public limited company (Società per Azioni). – 3.4.2. Minority shareholder rights in a Private limited company (S.r.l.). – 4. Civil liability. – 4.1. Civil liability of i. individuals such directors/managers, and ii. legal entities such the parent company (e.g. corporate responsibility including directors and/or parent company accounting principles; concept of “trust” and “reliance on parent company”). – 4.2. “Piercing the corporate veil”. – 4.3. No liability threshold. – 4.4. The Group is not an actionable entity. – 4.5. The use of “Comfort letters”. – 5. Criminal / administrative liability. – 5.1. Statutory criminal offences of legal entities of which a parent company has to be aware when doing business in Italy. – 5.2. Italian implementation of the OECD Convention of February 15, 1999 on Combating Bribery of Foreign Public Officials International Business Transactions. – 5.3. Directors, management, auditors and/or other advisors (e.g. lawyers) can be held liable for
criminal offences. – 6. Branch Office (Sede Secondaria) of foreign company. – 6.1. Description and Pros & Cons. – 6.2. Steps to be taken to register a branch office. – 7. Representative Office (Ufficio Di Rappresentanza) of foreign company. – 7.1. Description and Pros & Cons. – 7.2. Steps to be taken to register a representative office. – 8. International tax issues and tax incentives for investments. – 8.1. Transfer pricing. – 8.2. Controlled foreign companies (CFC). – 8.3. Tax incentives for investments in Italy. Section II. - Investing in and from China. 9. The relationship between Italy and China. – 9.1. Similarities between the two countries. – 9.2. Italy-China commercial relationship. – 9.3. The legal framework. – 9.3.1. ICSID Convention. – 9.3.2 Bilateral treaties: 1985
Agreement concerning the encouragement and reciprocal protection of investments.– 9.3.3. Italy-China mediation. - 9.3.4. Other Italy-China bilateral agreements.
Section III. - Supporting the “internationalisation” of small and medium-sized Italian enterprises 10. Networks between enterprises for export trade: the Italian experience. - 10.1. Nature of the Network. - 10.2. Requirements and constitution. - 10.3. Effects. - 10.4. New members joining the network; termination . - 10.5. Case-Study . - 10.5.1. RIBES: a network among ESAOTE and smaller enterprises in the biomedical industry – toward innovation and competition. - 10.5.2. GUCCI‟s perspective of the network – autonomy and independence of the chain of supply . - 10.5.3. “Rating Project” . - 10.5.4. Two other cases in the automotive industry. - 10.6. Conclusions
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Section I
Investing in Italy
1. Foreign direct investments in Italy – An economic overview
1.1. Reasons for the relatively low attractiveness of Italy for FDI
Historically, the attractiveness of the Italian economy for foreign direct investment
(FDI) has been limited, compared to that of most other European countries and to its
own potential. Italy‟s inward FDI (IFDI) performance was particularly poor in 1990-
2000, when cumulative IFDI flows in the country were only 13% of those in the United
Kingdom, 17% of those in Germany, 21% of those in France, and 35% of those in
Spain.1 Since 2000, Italy‟s IFDI stock has almost tripled –a growth rate similar to that
1 UNCTAD, World Investment Report 2011: Non Equity Modes of International Production and
Development (New York and Geneva: United Nations, 2010), available at: http://www.unctad.org)., as discussed by Marco Mutinelli and Lucia Piscitello , Inward FDI in Italy and its policy context, Columbia FDI Profiles , Country
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of FDI stock in the European Union (EU) as a whole – reaching US$ 364 billion in
2009, before falling to US$ 337 billion in 2010.
Notwithstanding the relatively low level of IFDI stock, foreign majority-owned
affiliates play an important role in the Italian economy. 2 As in other European countries
(e.g. Germany), the growth of IFDI in the last decade was driven by privatisation and
liberalisation in telecommunications and particularly in the electricity, gas and water
supply industries. Between 2000 and 2009, the share of energy products – a category
that includes petroleum extraction and related industries as well as electricity, gas and
water supply services – in total IFDI stock rose from 2% to 13% mainly due to an
increase in the IFDI stock in those services, where IFDI had been negligible in 2000.
The relatively low attractiveness of Italy for FDI can be attributed to a number of
factors:
1) the lack of adequate infrastructure
2) the burdensome red tape and inefficient bureaucracy
3) the limited competition in many service industries
4) the high costs of energy
5) the high level of corruption and organized crime 3
6) the extent of the black economy
7) the number of overlapping regulatory public authorities each acting independently
from one another
8) the uncertainty (volatility) of the legal framework, and
9) the inadequate assurance of the efficient enforcement of property rights.4
Additional obstacles to IFDI stem from some of the characteristics of the Italian
industrial system, such as:
1) the limited number of publicly traded companies and
2) the relative lack of information that limit substantially the scope for cross-border
merger and acquisition (M&A) activity.
The weaknesses of the national innovation system, the paucity and the uncertainty of
public research grants (that could constitute an important incentive for MNEs to locate
their research and innovation centers), and the modest international competitiveness of a
large part of high-tech industries have led to a contraction of the activity of foreign
affiliates in those industries. The financial market is underdeveloped, compared to other
industrialized economies, with very few truly public companies listed on the Italian
stock market.
profiles of inward and outward foreign direct investment issued by the Vale Columbia Center on Sustainable International Investment , December 2, 2011 (Editor-in-Chief: Karl P. Sauvant)
2 At the end of 2008, almost 1,266,000 workers (7% of the total workforce) were employed in 14,375 foreign-controlled enterprises established in Italy; the turnover of these companies amounted to € 489.3 billion (16% of total
turnover) and their value added to € 89 billion (12% of total value added). Between 2003 and 2008, the number of workers in foreign majority-owned affiliates increased by about 200,000. The contribution of foreign-controlled enterprises is even more crucial for research and development (R&D) expenditures (25% of the total) and for foreign trade of goods and services (22% of total exports and 37% of total imports). Source: ISTAT, “Struttura e competitività delle imprese a controllo estero, Anno 2008”, Statistiche in breve, Roma, 20 December 2010
3 See Vittorio Daniele and Ugo Marani, “Organized crime and foreign direct investment: the Italian case”, CESifo Working Paper Series No. 2416, 2008, available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1281380#
4 For a recent empirical analysis showing that the relatively limited attraction of Italian regions vs. Other
European regions is due to a so called “country effect”, see Roberto Basile, Luigi Benfratello, and Davide Castellani, “Attracting foreign direct investments in Europe: are Italian regions doomed?”, Rivista di Politica Economica, XCV (1-2), pp.319-354 (2010).
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According to a study carried out by IlSole24Ore, the following are the weaknesses of
Italy:
1) High national debt, tax evasion
2) Loss of export market share
3) Low productivity
4) Inadequacy of research and higher education
5) Government inefficiency, large number of civil servants
6) Banking sector weakened by exposure to Italy‟s sovereign debt
7) Backwardness of the South
1.2. Good reasons for investing in Italy
Despite these factors, there are still many good reasons to invest in Italy5:
1) The first is Italy‟s GDP, ranking fourth in Europe and tenth worldwide (more than
US$ 1.9 trillion in 2010).
2) The second is the importance of the domestic market, which is the main reason for
IFDI to Italy, related to its size (almost 60 million consumers) and potential growth
rates. The country is acknowledged to be a “trend setter” for major consumer
products (e.g., food, fashion and design, mobile phones).
3) Moreover, Italy is centrally located in the heart of the Mediterranean and is (or
should be) a crucial crossroads for trade through land, sea and air routes linking the
North and the South of Europe.
4) In addition, the country has a diversified industrial economy. Italian manufacturing
industry ranks second in terms of value-added and exports in Europe, behind
Germany.
5) “Made in Italy” represents excellence and creativity all over the world.
6) Italy also offers a skilled workforce at relatively low cost compared to other
advanced economies
7) The Italian economy is characterized by a unique system of high-quality small and
medium-sized enterprises (SMEs), often located in clusters of excellence that
provide major external economies for specialist producers and thus offer significant
opportunities for MNEs. Italian SMEs can be either very demanding customers that
cooperate with their suppliers of machinery and intermediate goods for the
development of advanced products (e.g., chemistry for the textile and leather
industries, tiles, furniture, textiles and clothing, electronics and industrial machine
tools) or efficient suppliers of specialized machinery and original technological
solutions, thanks to their well-known design and engineering capabilities, or even
flexible and efficient partners for the outsourcing of production processes.6
5 Cf. Marco Mutinelli and Lucia Piscitello, Inward FDI in Italy and its policy context, cit.; Renzo Piano,
interview to La Repubblica on the future of Italy in the global market, Sept. 14, 2013: “There is no country better equipped than Italy to handle a future of sustainable economy. Italy is the most beautiful country of the world, and beauty is today a researched good. We have enormous cultural “fields” , a unique mix of natural beauties built over the centuries, a central position in the Mediterranean, a climatic situation ideal for producing clean energy, with sun,
water, wind.” 6 See Paniccia I., Industrial Districts: Evolution and Competitiveness in Italians Firms (Cheltenham: Edward
Elgar, 2002).
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8) The presence of strong local SMEs provides MNEs with an opportunity to take over
specialized firms endowed with complementary resources and know-how. Last,
9) Italy offers a high quality of life.7
According to Il Sole 24 Ore, the following are the strengths of Italy:
1) Strong tourism potential
2) Still important role of industry
3) Improved product range and highly profitable niches (luxury clothing, household
appliances, foodstuffs, machinery)
4) Low household debt and strong saving capacity
5) Government debt predominantly held by residents
From a legal standpoint, Italy has signed 93 bilateral investment treaties (BITs), 71 of
which have been ratified.8 The first BIT was signed with Chad in 1969, but most of
Italy‟s BITs were concluded in the 1990s (50) and in the 2000s (28). Italy has also
signed double taxation treaties (DTTs) with 93 countries, within and outside the EU, to
avoid double taxation on income and property.9 Draft agreements with additional
countries are at the discussion stages. Furthermore, there are forms drawn up
unilaterally by the tax authorities that can also be used to facilitate FDI.
FDI performance of the economy lags behind that of most other economies in Europe.
A relatively low attractiveness of IFDI in Italy for IFDI is reflected in the UNCTAD
survey of several prominent international companies and institutions.10
Moreover,
invariably, the most important international rankings that measure the health and
competitiveness of nations, including the World Competitiveness Scoreboard and the
Competitiveness Index, assign lower positions on the list to Italy, which is not only the
last in the club of small and large advanced economies, but sometimes even behind
many emerging markets. Italy ranks only 40th in the ranking on the World
Competitiveness Scoreboard 2010 of the IMD 11
and 48th in the ranking by the
Competitiveness Index 2010- 2011 of the World Economic Forum. 12
However, the potential of Italy as a host for IFDI is much higher than that indicated by
the country‟s IFDI performance thus far. The current difficulties of the country, the
Eurozone crisis and the recent OECD downward revision of growth forecasts certainly
do not encourage a recovery in the short term of IFDI in Italy; but if the reforms that the
Monti government was able to introduce and that the Letta government has prepared
7 For the latest report on the 2011 Quality of Life Index, available at www1.internationalliving.com/qofl2011/. 8 The traditional favorable Italian attitude toward IFDI appears not to be under discussion. Foreign firms may
freely repatriate profits, dividends and capital, subject only to reporting requirements. Italian law guarantees the convertibility, at prevailing exchange rates, of profits and capital from duly registered investments. Government grants are equally awarded to both Italian and foreign affiliates (with some exceptions in the film industry and the shipping industry).
9 25 More information, available at www.finanze.it/export/finanze/Per_conoscere_il_fisco/fiscalita_Comunitaria_Internazionale/convenzioni_e_accordi/convenzioni_stipulate.htm
10 UNCTAD, World Investment Prospects Survey 2010-2012, op. cit. 11 Available at www.imd.org/research/publications/wcy/upload/scoreboard.pdf. 12 Available at www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2010-11.pdf.
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and is at present preparing, achieve the objective of fiscal consolidation and at least
partially mitigate the well-known inefficiencies of the country (energy cost,
infrastructure, legislation, and bureaucracy), favouring the recovery of Italy‟s
international credibility and competitiveness, foreign enterprises as well as Italian ones
could increase their presence in the country by fully developing the growth potential
stemming from the strengths of the Italian industrial system.
The World Bank - IFC publication “Doing Business 2013” 13
sheds light on how easy
or difficult it is for a local entrepreneur to open and run a small to medium-size business
when complying with relevant regulations: it measures and tracks changes in
regulations affecting 11 areas in the life cycle of a business:
1) Starting a Business
2) Dealing with Construction Permits
3) Getting Electricity
4) Registering Property
5) Getting Credit
6) Protecting Investors
7) Paying Taxes
8) Trading Across Borders
9) Enforcing Contracts
10) Resolving Insolvency and
11) Employing Workers
The “indicators” used refer to a specific type of business, generally a local limited
liability company operating in the largest business city. Other areas important to
business - such as an economy„s proximity to large markets, the quality of its
infrastructure services (other than those related to trading across borders and getting
electricity), the security of property from theft and looting, the transparency of
government procurement, macroeconomic conditions or the underlying strength of
institutions - are not directly studied by Doing Business.
Looking at how Italy and comparator countries rank on the various indicators as will as
how Italy and Turkey compare14
, the following information emerges:
Figure 1. How Italy and comparator economies rank on the ease of doing business
Figure 2. How Italy and comparator economies rank on the ease of starting a
business 15
13 World Bank. 2013. Doing Business 2013: Smarter Regulations for Small and Medium-Size Enterprises,
Economic Profile: Italy, Washington 14 World Bank. 2013. Doing Business 2013: Smarter Regulations for Small and Medium-Size Enterprises,
Economic Profile: Turkey, Washington 15 What the starting a business indicators measure:
- Procedures to legally start and operate a company (number); - Preregistration (for example, name verification or reservation, notarization); - Registration in the economy„s largest business city; - Postregistration (for example, social security registration, company seal); - Time required to complete each procedure (calendar days); - Does not include time spent gathering information; - Each procedure starts on a separate day;
- Procedure completed once final document is received; - No prior contact with officials; - Cost required to complete each procedure (% of income per capita);
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Figure 3. How Italy and comparator economies rank on the ease of dealing with
construction permits16
Figure 4. How Italy and comparator economies rank on the ease of getting
electricity17
Figure 5. How Italy and comparator economies rank on the ease of registering
property18
Figure 6. How Italy and comparator economies rank on the ease of getting credit19
- Official costs only, no bribes;
- No professional fees unless services required by law; - Paid-in minimum capital (% of income per capita); - Deposited in a bank or with a notary before registration (or within 3 months).
16 What the dealing with construction permits indicators measure: - Procedures to legally build a warehouse (number); - Submitting all relevant documents and obtaining all necessary clearances, licenses, permits and
certificates; - Completing all required notifications and receiving all necessary inspections; - Obtaining utility connections for water, sewerage and a fixed telephone line;
- Registering the warehouse after its completion (if required for use as collateral or for transfer of the warehouse);
- Time required to complete each procedure (calendar days); - Does not include time spent gathering information; - Each procedure starts on a separate day; - Procedure completed once final document is received; - No prior contact with officials; - Cost required to complete each procedure (% of income per capita);
- Official costs only, no bribes. 17 What the getting electricity indicators measure
- Procedures to obtain an electricity connection (number); - Submitting all relevant documents and obtaining all necessary clearances and permits; - Completing all required notifications and receiving all necessary inspections; - Obtaining external installation works and possibly purchasing material for these works; - Concluding any necessary supply contract and obtaining final supply; - Time required to complete each procedure (calendar days): is at least 1 calendar day;
- Each procedure starts on a separate day; - Does not include time spent gathering information; - Reflects the time spent in practice, with little follow-up and no prior contact with officials; - Cost required to complete each procedure (% of income per capita); - Official costs only, no bribes; - Excludes value added tax.
18 What the registering property indicators measure: - Procedures to legally transfer title on immovable property (number);
- Preregistration (for example, checking for liens, notarizing sales agreement, paying property transfer taxes);
- Registration in the economy„s largest business city; - Post-registration (for example, filing title with the municipality); - Time required to complete each procedure (calendar days); - Does not include time spent gathering information; - Each procedure starts on a separate day; - Procedure completed once final document is received;
- No prior contact with officials; - Cost required to complete each procedure (% of property value); - Official costs only, no bribes; - No value added or capital gains taxes included.
19 What the getting credit indicators measure: - Strength of legal rights index (0–10); - Protection of rights of borrowers and lenders through collateral laws; - Protection of secured creditors„ rights through bankruptcy laws; - Depth of credit information index (0–6);
- Scope and accessibility of credit information distributed by public credit registries and private credit bureaus;
- Public credit registry coverage (% of adults);
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Figure 7. How Italy and comparator economies rank on the strength of investor
protection index20
Figure 8. How Italy and comparator economies rank on the ease of paying taxes21
Figure 9. How Italy and comparator economies rank on the ease of trading across
borders22
- Number of individuals and firms listed in public credit registry as percentage of adult population; - Private credit bureau coverage (% of adults); - Number of individuals and firms listed in largest private credit bureau as percentage of adult
population. 20 What the protecting investors indicators measure:
- Extent of disclosure index (0–10); - Who can approve related-party transactions; - Disclosure requirements in case of related-party transactions; - Extent of director liability index (0–10);
- Ability of shareholders to hold interested parties and members of the approving body liable in case of related-party transactions;
- Available legal remedies (damages, repayment of profits, fines, imprisonment and rescission of the transaction);
- Ability of shareholders to sue directly or derivatively; - Ease of shareholder suits index (0–10); - Access to internal corporate documents (directly or through a government inspector); - Documents and information available during trial;
- Strength of investor protection index (0–10); - Simple average of the extent of disclosure, extent of director liability and ease of shareholder suits
indices. 21 What the paying taxes indicators measure:
- Tax payments for a manufacturing company in 2011 (number per year adjusted for electronic or joint filing and payment);
- Total number of taxes and contributions paid, including consumption taxes (value added tax, sales tax or goods and service tax);
- Method and frequency of filing and payment; - Time required to comply with 3 major taxes (hours per year); - Collecting information and computing the tax payable; - Completing tax return forms, filing with proper agencies; - Arranging payment or withholding; - Preparing separate tax accounting books, if required; - Total tax rate (% of profit before all taxes); - Profit or corporate income tax;
- Social contributions and labor taxes paid by the employer; - Property and property transfer taxes; - Dividend, capital gains and financial transactions taxes; - Waste collection, vehicle, road and other taxes.
22 What the enforcing contracts indicators measure: - Procedures to enforce a contract through the courts (number); - Any interaction between the parties in a commercial dispute, or between them and the judge or court
officer;
- Steps to file and serve the case; - Steps for trial and judgment; - Steps to enforce the judgment; - Time required to complete procedures (calendar days); - Time to file and serve the case; - Time for trial and obtaining judgment; - Time to enforce the judgment; - Cost required to complete procedures (% of claim); - No bribes;
- Average attorney fees; - Court costs; - Enforcement costs.
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Figure 10. How Italy and comparator economies rank on the ease of enforcing
contracts23
Figure 11. How Italy and comparator economies rank on the ease of resolving
insolvency24
These figures can be interestingly compared with the figures relating to China.
2. Choice of corporate structure for a foreign subsidiary in Italy
2.1. S.p.A. vs. S.r.l.
Foreign investors who decide to set up a subsidiary company in Italy generally
prefer a Società a responsabilità limitata (S.r.l.), i.e. a private limited liability company,
which is suitable for companies with a sole “quotaholder” (or few “quotaholders”) and
for larger operations a Società per Azioni (S.p.A.), i.e. a limited liability public
company/stock company.
In both types of company the liability of the shareholders (in an S.r.l.:
“quotaholders”) is limited to the par value of their shares (in an S.r.l.: “quotas”).
The S.r.l. is by far the more popular type of limited company in Italy. An S.r.l.
cannot be listed on the stock exchange. With the Italian Act on Company Law
23 What the enforcing contracts indicators measure: - Procedures to enforce a contract through the courts (number); - Any interaction between the parties in a commercial dispute, or between them and the judge or court
officer; - Steps to file and serve the case;
- Steps for trial and judgment; - Steps to enforce the judgment; - Time required to complete procedures (calendar days); - Time to file and serve the case; - Time for trial and obtaining judgment; - Time to enforce the judgment; - Cost required to complete procedures (% of claim); - No bribes;
- Average attorney fees; - Court costs; - Enforcement costs.
24 What the resolving insolvency indicators measure: - Time required to recover debt (years); - Measured in calendar years; - Appeals and requests for extension are included; - Cost required to recover debt (% of debtor‟s estate);
- Measured as percentage of estate value; - Court fees; - Fees of insolvency administrators; - Lawyers‟ fees; - Assessors‟ and auctioneers‟ fees; - Other related fees; - Recovery rate for creditors (cents on the dollar); - Measures the cents on the dollar recovered by creditors; - Present value of debt recovered;
- Official costs of the insolvency proceedings are deducted; - Depreciation of furniture is taken into account; - Outcome for the business (survival or not) affects the maximum value that can be recovered.
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(Legislative Decree 17 January 2003, No. 6), in force from January 1, 2004, the
personal character of the S.r.l. has been reinforced, together with the large degree of
freedom given to its members to agree the terms and conditions to govern the company.
The SRL places itself midway between a limited liability partnership (società di
persone) and a public company.
An S.r.l. has simpler rules for passing shareholders resolutions (without
holding a formal meeting); the transfer of quotas may be subject to the approval
(gradimento) of all members (Art. 2469, para. 2, Italian Civil Code, hereinafter CC); it
is possible to exclude a member for just cause (Art. 2473-bis CC)
An S.r.l. may issue bonds (so-called “titles of debit” – titoli di debito) that
however may be subscribed only by professional investors (Art. 2483 CC).
Certain activities may only be conducted by an S.p.A.
An S.p.A. may issue bonds and other “financial instruments” carrying
patrimonial rights but with no voting rights at the shareholders meeting (Art. 2346, last
para., CC) in return for contributions (by shareholders or third persons) of cash,
receivables or other assets, including contributions in kind such as work or services or
other assets (e.g. know-how).
An S.p.A. can issue special categories of shares, such as: azioni di godimento
(issued to owners of reimbursed shares), connected shares (azioni correlate) that grant
rights connected to the results of the corporate activities in a given sector (Art. 2350,
para. 2, CC), savings shares (azioni di risparmio, if the company is listed; this is the
only category where bearer shares are permitted), redeemable shares (azioni riscattabili,
Art. 2437-sexies CC), shares in favour of employees (azioni a favore dei prestatori di
lavoro, Art. 2349, para. 1, CC).
Bonds (obbligazioni, Art. 2411 CC) and other participating financial
instruments (strumenti finanziari partecipativi, Art. 2346, no. 6), CC) carrying
patrimonial rights or also administrative rights (for example: duty of the Board to report
periodically on status of the investment, right to appoint a member of the Board), but
only limited voting rights (Art. 2351, no. 5), CC) in return for the contribution (so-
called apporto) by shareholders or third persons, of works, services or other assets (e.g.
cash, goods, receivables, know-how, etc.), such contributions are not recorded as capital
contributions.
Furthermore an S.p.A. can set up separate funds reserved for a specific
transaction (Art. 2447-bis CC) having a value not exceeding 10% of the net assets of the
company.
Special care must be taken when choosing the type of company, especially
where there will be minority shareholders in the company.
In such cases it is advisable to choose the Società per Azioni (public limited
company/stock company) rather than the Società a responsabilità limitata (private
limited liability company), for the reasons given hereafter on the protection afforded to
minority shareholders (“quotaholders”) in the Società a responsabilità limitata.
The form of the parent company is irrelevant to the choice of company type.
As regards the regulatory restrictions, to proceed with the setting up of a
company it is necessary, inter alia, for the company to have authorisation from the
competent authority where it intends to carry out determined types of business.
In the case of banking activity, for example, authorisation is required from the
Banca d‟Italia. Also in the case of insurance businesses, authorisation is required from
the Minister of Trade and Industry. Professional sports clubs must also be registered on
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the Companies‟ Register and to do so must demonstrate that they have obtained
affiliation approval from the CONI Federation.
2.2. Società per Azioni (S.p.A.).
The minimum capital for an S.p.A. is of € 120.000, with a higher minimum for
banking, insurance and mutual funds. An S.p.A. may have a single shareholder, but the
capital must be fully paid up.
The contributions of each participant are represented by shares.
In the event of contributions in kind (property in kind or credits), a sworn
expert‟s valuation (by a court-appointed expert) of such contributions is required.
Members of an S.p.A. are not permitted to contribute undertakings to supply
personal activities or services in favour of the company.
The company may be managed by a sole director (Amministratore unico) or by
a Board of directors (Consiglio di amministrazione) appointed by the shareholders
meeting (“ordinary” governance structure), which also appoints statutory Board of
auditors (collegio Sindacale), consisting of three (or five) effective and two substitute
members (sindaci).
Alternatively the management may be entrusted to a management board
(Consiglio di gestione) of at least two members, appointed by a supervisory board
(Consiglio di sorveglianza) of at least three members, which is responsible for the
functions of the Board of statutory auditors and with those functions reserved in the
traditional model to the shareholders meeting: the members of the supervisory board are
appointed by the shareholders meeting (“dualistic” governance structure, two-tier
model).
A further governance alternative is the so-called “monistic” model (once-tier
model) with a Board of directors responsible for management and control, appointed by
the shareholders meeting, and a Supervisory control committee elected internally from
amongst the members of the Board of directors itself.
Neither the monistic nor the dualistic models include a statutory board of auditors,
and the accounting controls are carried out by an audit firm.
If the company has recourse to the market of risk capital and is required to draw
up consolidated accounts, the control of the accounts is reserved to an auditing firm
enrolled in the registry held by the Ministry for Justice.
2.3. Società a responsabilità limitata (S.r.l.).
The minimum capital of an S.r.l. is € 10.000 and the minimum paid in capital
requirement is 25%. Therefore, at incorporation 25% of the company‟s capital must be
paid and deposited in a bank account, but the payment shall also be replaced by an
insurance policy or by a bank guarantee.
The contributions of each participant are represented by “quotas” and not by
shares (hence the term “quotaholder” in lieu of “shareholder”).
In lieu of the contributions in cash, members are permitted to submit an
insurance policy or a bank guarantee.
11
In the event of contributions in kind (property in kind or credits), a sworn
expert‟s valuation of such contributions is required.
Members of an S.r.l. are also permitted to contribute undertakings to supply
personal activities or services in favour of the company, that must be secured, at the
time of setting up, by an insurance policy or a bank guarantee for their entire value; the
articles of association may allow security by means of a deposit of the corresponding
value in cash.
The company may be managed by a sole director (amministratore unico) or by
a Board of directors (Consiglio di amministrazione).
The company is required to appoint a statutory board of auditors if the capital
is of € 120.000 or more or if, although having a lower capital, in two consecutive
financial years, two of the following limits are exceeded:
a) the value of the assets in the balance sheet is of € 3.125.000;
b) the revenue from sales and services is of € 6.250.000;
c) the average number of employees is 50 persons during the financial year.
2.4. Conditions and steps to be taken to establish a subsidiary company in Italy
The following are the conditions required to establish an Italian company:
- before a company can be formed, the corporate capital must be fully
subscribed (although not fully paid up);
- both individuals and corporate entities may become shareholders of an
S.r.l. or an S.p.A.;
- in case of a company with a single founding member, 100% of the
contributions in cash must be fully paid up at the time of setting up the
company; when the founding members are two ore more, at least 25% of the
contributions in cash must be paid up;
- in case of contributions in kind or contributions of receivables a sworn
appraisal report must be submitted;
- the directors need not be shareholders nor Italian nationals, and not even
residents of Italy; only individuals (and not companies) may be appointed as
directors of a company in Italy.
The steps to be taken to establish a company are as follows:
- the founding member or members are required to appear before a notary
public to sign a memorandum and articles of association (atto costitutivo e
statuto) in the form of a public deed (atto pubblico)
- the memorandum of association and the articles of association (statuto) are
filed with the Registrar of enterprises (Registro delle imprese). Upon
enrolment in the Registrar of enterprises the company becomes a separate
legal entity.
2.5. Registrations
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Since 1st of April 2010, it is mandatory that the applicant electronically file a single
notice (Comunicazione Unica) with the Register of Enterprises. This includes issuance
of the tax identification number (codice fiscale), VAT number, and registration with
Social Security Administration (INPS) and Accident Insurance Office (INAIL). The
applicant must attach the forms requested by (i) the Register of Enterprises for the
registration (ii) the Italian Tax Authorities for immediate starting of business, and (iii)
by INPS and INAIL for the registration with these Administrations.
Under Decree Law no. 185/2008, converted into Law no. 2/2009 dated January 28th
2009, companies are now required to provide a certified email address on the registry of
companies registration form. After the single notice is filed, the enterprise receives all
the documents within 7 days. All notices, communications and receipts of filing are sent
to the Company„s certified email address. In detail:
• the Company receives immediately a reference number for the registration
procedure as well as the receipt of the filing of the Single Notice with the
Register of Enterprises;
• immediately the tax identification number and the VAT number;
• within 5 business days, the Registration with the Register of Enterprises;
• within 7 days INAIL documentation;
• within 7 days INPS documentation.
Furthermore Law No. 296/2006 provides that the newly established company,
before employing personnel, must notify the Provincial Labour Office (Direzione
Provinciale del Lavoro) one day before from the start of the employment relationship.
Further registrations are required as follows:
- if the company is engaged in the sale and distribution of merchandise, whether
as wholesaler or retailer, the company, its director having legal representation
and the sales director must be enrolled in the special registry for trade operators
(Registro Esercenti Commercio – the so-called R.E.C.) held at the Chamber of
Commerce;
- if the company performs business as a commercial agent the company and the
director having legal representation must be enrolled in the special register of
trade agents (Ruolo degli Agenti e Rappresentanti di Commercio) held at the
Chamber of Commerce.
3. Italian legislation on corporate groups.
3.1. The concept of “management” and “co-ordination of companies”.
Italian law does not provide a definition of “group of companies”, preferring
to emphasize the notion of “management and co-ordination of companies” by others.
According to Arts. 2497-septies and 2497-sexies CC, management and co-
ordination is presumed when it is exercised by a company that controls another, which
happens (Art. 2359 CC) when:
1) a company has a majority of the equity in another company;
2) a company has enough votes to be able to exercise a dominant influence
over the ordinary general meeting of another company;
13
3) a company exercises a dominant influence over another company by virtue
of binding contractual conditions.
The management and co-ordination in question may also derive from a contract
between two companies or by articles in their company by-laws.
What is important therefore is the fact that a company manages and co-
ordinates another company or companies. From an economic point of view these
companies are considered a group, but the “group” is not a legal person as such with
significant and specific autonomous rights from a judicial standpoint. Legal theory, on
the other hand, traditionally makes a distinction between two types of group, a
“horizontal” group with a joint or unitary policy that derives from contractual
agreements between several companies that are not subordinate one to the other, and a
“vertical” group in which the unitary direction is achieved by means of one company
exerting its control over others. Only the so-called vertical group is a true group for
these purposes and only where there is a unitary management (presumed when there is
control, unless the contrary is demonstrated) does law in question apply.
As regards the consequences for a company that exercises its powers of
management and co-ordination over the other, and specific liability, the matter is dealt
with by Art. 2497 CC: «Companies which, when exercising management and co-
ordination over a company or companies, act in their own or another's business interest
in violation of the principle of correct company and business management of the
companies concerned, are directly responsible to the shareholders of these for any
prejudice to the profitability of the companies and to the value of the shareholdings, as
well as towards the companies' creditors for any damage to the integrity of their assets.
There is no liability where there is no such damage in the light of the overall result of
the management and co-ordination work, or where it is wholly remedied by corrective
measures taken.
Anyone who has taken part in the damaging fact or event is jointly liable, up to
the limit of the advantage obtained, where a wilful advantage has in fact been gained.
The shareholder and the company creditor may act against the company or
other corporation that exercises such management and co-ordination, only if they have
not been satisfied by the company subject to said management and co-ordination
activity. In the cases of bankruptcy, involuntary winding up or extraordinary
administration of the company being managed or co-ordinated by others, its creditors'
action is exercised by the receiver or liquidator».
In short, it is possible to bring legal actions against the company that exercises
such management and co-ordination activity if the following circumstances apply:
a) there has been management and co-ordination activity, or it can be
presumed there has been such activity;
b) the company has acted in its own business interest or that of others;
c) there has been an infringement of the principles of correct company and
business management;
d) the infringement of the aforementioned principles has been prejudicial to
the company shareholders and/or creditors of the company subject to the
management and co-ordination activity.
14
3.2. How is a group structure reflected in the corporate documents (i.e. in the
corporate purpose of the subsidiary, in other articles of association, in the
organisational regulations/articles of association)? Impact on the
corporate liability.
The law deals with the question of the disclosure and the existence of the group
through the use of specific of provisions (in particular Art. 2497-bis CC), which
requires directors to indicate in their records and correspondence, and file in a specific
section of the Companies‟ Registry, the name of the company that exerts management
and coordination control.
It is in practice enough to enter in the records and indicate in the
correspondence such expressions as «member of the […] group […]», or «subject to the
management and control of […]» or similar.
Any failure to fulfil these requirements will result in the liability of the
directors for any damage such failure to communicate the information may have caused
to shareholders or to third parties.
As regards the annual financial statement, the company must set forth, in a
supplementary note, a summary of the essential details of the last balance of the
company that exercises the management and co-ordination control. The directors must
furthermore indicate in the report the handling of dealings with the company that
exercises management and co-ordination control and with other companies in the group,
as well as the effect such controls have had on the running of the company business and
its results.
In practice the shareholders and third parties must be allowed to evaluate the
relationships within the group so as to be able to ascertain whether the company that
exercises management and control has acted in its own business interests, infringing the
principles of correct company management.
The decisions of the companies subject to management and co-ordination
control must also be similarly transparent, so it can be seen if they have been influenced
in a particular way.
So the «reasons for decisions must be explained in detail and specific
indications must be provided of the interests that were evaluated when the decision was
being made» (Art. 2497-ter CC).
Such reasons must be adequately considered in the operating report
accompanying the financial statement. As we shall see, these provisions must also be
considered in the context of the general law on conflicts interest between parent
company and subsidiary, as examined hereafter.
3.3. Conflicts of interests between the parent/subsidiary and foreign
shareholder/local management.
According to the Italian legal theory and court decisions, there is conflict of
interest where the shareholder (or director) has two interests, as shareholder on the one
hand and a different and conflicting interest on the other hand. The interest external to
the company may be an interest of the shareholder himself or that of a third party.
In a group of companies, each company maintains its own individual identity,
hence the holding company that votes at a general meeting of shareholders of a
15
subsidiary, or the director who votes on the board of directors of the subsidiary are in a
situation of conflict of interest, if they are voting in pursuance of interests that are
different from those of the subsidiary, even if said interests were those of another
company in the group, because this would nevertheless be a third party in this case.
The consequences of exercising voting rights in the presence of a conflict of
interest are as follows:
as regards company general meetings, a resolution approved with the
determinant votes of shareholders with a conflict of interest can be legally
challenged (i.e. it can be annulled if the resolution could cause damage to
the company);
moreover, Art. 2373 CC provides that directors may not vote on resolutions
that regard their own responsibility;
as regards the director‟s conflict of interest, Art. 2391 CC provides that
managing directors must abstain from any activity where they have any
conflict of interest on their own account or that of third parties and must put
the matter to the board of directors, which must be informed of the existence
of and the nature of the conflict of interest;
the resolution of the board of directors, in these cases, must give suitable
explanations of the reasons of the transaction contemplated;
where there is any failure to comply with the provisions of this law, the
board resolutions can be annulled by the Court at the initiative of the
directors or of the statutory auditors (where appointed), but not at the
initiative of the shareholders, if such resolutions have caused damage to the
company. The director in a conflict of interest is liable for any damages to
the company resulting from his actions or failure to act.
The general law on conflict of interest applies also to companies that belong to
the same group and thus also as between parent company and subsidiary. The crucial
point is to ascertain which yardstick should be used when deciding whether a particular
matter or transaction, that involves the parent company and the subsidiary or other
companies in the group, is or is not in conflict of interest and whether it causes damages
to one or other company in the group.
The matter is resolved as follows by two court decisions:
«Given that the group of companies does not amount to a legal person or an
autonomous centre of interest over and above the linked companies, the notion of
company interest must be evaluated taking account of the legal autonomy of each
individual company in the group (as regards the issue of the liability of directors it has
been held unlawful to make loans for no consideration and without guarantees, and to
detach staff in favour of a company other than that upon which the financial burdens
lie)».25
«In relation to the linkage between companies, when considering conflict of
interest, regard must always be given to the complexity of the relationship between the
various entities making up the group as a whole. The censurability of the work of
directors who favour dealings within the group should therefore be excluded, provided
25 Italian Supreme Court, Civil Chamber, 8 May 1991, No. 5123. [authors‟ translation]
16
the privileged relationships do not result in choices whose only justification is to
procure an advantage for the holding company to the detriment of the subsidiary, i.e.
the compatibility of the company‟s interest with that of the group's interest has to be
assessed rationally and coherently as it is expressed in a single choice. Even if this
choice may be prejudicial to the company it may in the medium to long economic term
turn out also to be reasonable and advantageous also the individual company as
member of the group».26
This approach is consistent with the provisions of Art. 2497 CC whereby there
is no liability for the company exercising management and co-ordination control when
there is no resultant damage, when the result of this management and co-ordination
control is viewed in global terms.
3.4. Protections given to minority shareholders that should be considered if the
parent company is the controlling but not the sole shareholder.
3.4.1 Minority shareholder rights in a Public limited company (Società per
Azioni).
a) Minority of 5% (or lesser percentage if the articles of association – provide
otherwise).
In accordance with Art. 2377 CC, the shareholders representing at least the 5% of
the company‟s share capital may challenge the general meeting‟s resolutions, if
these fail to comply with the law or with the company‟s articles of association, if
the shareholders concerned were absent or voted against the resolution or abstained.
The proportion requested is 1/1000 in companies that have had recourse to the risk
capital market.
Every shareholder may also report the facts it considers censurable to the statutory
board of auditors, but if the report is submitted by shareholders representing at least
5% of the company‟s share capital (or 2% if the company has had recourse to risk
capital), the statutory board of auditors must investigate the allegations reported
without delay and present its conclusions to the general meeting.
b) Minority 10% (or lesser percentage if the company's articles of association
provide otherwise).
Shareholders with at least 10% of the company share capital may request a
general meeting of shareholders to be called to resolve on the questions to be
discussed, which matters must be specified in the request (Art. 2367 CC).
Moreover, if there are reasonable grounds for suspecting that the directors have
committed serious irregularities in their management, and if these could cause
damage to the company or to one or more of its subsidiaries, they may report the
matter to the court.
26 Court of Milan 22.1.2001, Bankruptcy proceedings of Zimo Explor-Giacomini and others. [authors‟
translation]
17
The Court has wide powers: it may order an inspection of the company or make
suitable preliminary provisions to call a general meeting of shareholders to
deliberate on the consequent issues.
In the most serious cases it can revoke directors‟ appointments and put a judicial
administrator in their place.
c) Minority of 20% (Art. 2393 and 2393-bis CC).
Shareholders holding at least one fifth of company share capital (or such other
proportion that may be provided for in the articles of association – though not in
any case exceeding one third) may bring a stockholders suit against the directors or
statutory auditors‟.
d) Minority of one third party of the company‟s share capital
The shareholders participating in the general meeting of shareholders and
representing at least one third of the company share capital may request a
postponement of the general meeting of shareholders for not more than five days if
they declare that they have not been sufficiently informed about the matters to be
decided upon.
In the case of companies that have recourse to risk capital, the percentage required
falls to 5% (or such lesser figure provided for in the articles of association).
With 20% of the company‟s share capital it is possible to bring a stockholder action
or block any waiver or settlement by the company: the beneficiary of the action is
the company and not the shareholders who take the action, and if the latter abandon
the action, any payment for its abandonment or any settlement must go to the
company. Furthermore, any abandonment by the company of an action against the
directors or any settlement made will not be valid if a minority of shareholders
representing at least 20% of the company share capital (5% in the case of a
company with recourse to risk capital) has voted expressing its disapproval.
3.4.2. Minority shareholder rights in a Private limited company (S.r.l.).
The rights of minority “quotaholders” in an SRL are as follows:
a) the right of each quotaholder, not taking part in the management of
the company to be kept directly informed by the directors of the business of the
company and how it is going and to consult, including through professionals of his
or her own choice, the company journals, ledgers and documents regarding its
management.
b) The right of each quotaholder, irrespective of the percentage of his
share, to bring a stockholders action against the directors and to request, in any case
of serious irregularities, the preventive removal of the directors from office.
c) Any waiver or settlement of the stockholder action is valid only if
approved by quotaholders representing two thirds of the company capital and as
long as quotaholders with at least ten percent of company share capital do not
object.
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4. Civil liability.
4.1. Civil liability of individuals such as directors/managers, and of legal entities
such as the parent company (e.g. corporate responsibility including directors
and/or parent company accounting principles; concept of “trust” and
“reliance on parent company”).
A distinction is made by Italian Civil Code, between the civil liability of
directors to the company, to creditors of the company and to individual shareholders or
third parties; the rules set forth apply both to members of the Board of directors and
general directors.
As regards liability to the company, Art. 2392 CC states that directors:
a) must carry out the duties imposed on them by the law and by the articles of
association with the diligence that would be expected of someone in that
position with those specific competences;
b) are jointly liable to the company for damage arising as a result of any
failure to fulfil these duties, unless there are powers specific to the
executive committee itself or functions directly attributed to one or more
of the directors.
The directors are jointly liable if being aware of the prejudicial facts, they have
failed to take measures to prevent the event's occurrence or to prevent or limit the
resulting damage; however liability does not extend to the directors who, without
negligence, have recorded their dissent without delay in the Board meeting minutes
book, immediately notifying the chairman of Board of statutory auditors in writing.
The civil liability action can be brought within five years of the director
leaving office and is decided on by a resolution of the company, with the usual
majorities applying.
In an SpA, minority shareholders representing at least one fifth of the
company‟s share capital have the right to bring a civil liability action (see herabove).
Art. 2394 CC provides that creditors of the company can also bring a civil
liability action where:
a) there has been a failure on the part of the directors to maintain the integrity
of the company‟s assets;
b) the company‟s net assets are insufficient to pay the creditors.
The above-mentioned civil liability suits (by the company and by the
company‟s creditors) are a matter for the court appointed bankruptcy commissioner in
the event of bankruptcy of the company: statistically, the great majority of civil liability
actions that have been decided by the courts have been brought by bankruptcy
commissioners.
19
Finally, an “individual” action can be brought by each shareholder or by a third
party, pursuant to Art. 2395 CC, where they have been damaged by negligent or
fraudulent actions of the directors. Such action which is independent of any damage
that may have been suffered by the company and deals with direct damage caused by
the actions of directors to the detriment of shareholders or third parties .
In the event of actions of the directors that have caused damage to third parties,
the third party would be entitled to institute an action for damages also against the
parent company for which the directors have acted (reference should be made to the
liability of the company exercising management and co-ordination control over another
company as per art. 2497 CC, as discussed above), subject to proof that directions
emanating from the parent company were issued in the interest of the latter with
damages resulting in the company subject to the management and co-ordination control.
4.2. “Piercing the corporate veil”.
For this issue reference should be made again to Art. 2497 CC, as discussed
above, on the issue of liability of the company exercising co-ordination and
management control over another company.
Any loans to a company made by another company exercising coordination
and management control are treated as shareholder loans (cf art. 2497-quinquies CC),
hence under art. 2467 CC the reimbursement of such loans is not permitted unless all
the other creditors have been satisfied (and if the reimbursement has taken place within
the year preceding a bankruptcy order of the company, it will have to be returned) - the
restriction laid down by art. 2497- quinquies CC overrides any different agreements
made between the parties.
4.3. No liability threshold.
No liability threshold exists under Italian law.
Any third party that considers itself damaged by the company, may claim
compensation for damages without limitation. Of course, limitations of liability may be
inserted into contracts between the company and third parties, nevertheless under the
Civil Code any limitations of liability for intentional wrongdoing or gross negligence
are void.
A peculiarity of Italian law is that in the case of a standard contract of one of
the parties, the limitation of liability in favour of the party that has presented the
standard contract is only effective against the other if the clause in question has been
specifically approved and signed. The subject is covered by Art. 1341 CC.
4.4. The Group is not an actionable entity.
According to Italian law the group is not an actionable entity; each company
that belongs to the group may therefore be deemed a separate legal person from each of
the others.
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4.5. The use of “Comfort letters”.
Banking practice includes the use of what are commonly referred to as lettres
de patronage or comfort letters, consisting of a document signed by a “patron”,
generally made out to a bank, to secure the bank‟s consent in maintaining or extending
the opening of a line of credit in favour of the sponsored party (patrocinato), that is
connected with the former, generally the patron is a majority shareholder of the
sponsored party.
The patron thus remains outside of the contractual relationship established
between the bank and the sponsored party that benefits of the credit line.
Legal theory and court rulings have made a distinction between two different
types of letter:
weak letters, with which the patron informs the bank of the control and
influence that it exercises over the sponsored party, generally accompanied
by an obligation to inform the financial institution of any changes that
might occur in the relationship between the controlling and controlled
parties;
strong letters, in which the patron undertakes to reimburse the loan should
the controlled company become insolvent;
As regards the nature of the obligations that arise under the provisions of these
letters, it has been held that letters that are merely informative in their content come
within the area of what is referred in Italian law as “pre-contractual liability”, with the
resulting obligation to observe the general principles of good faith and correct conduct.
The patron enters into the negotiations between the bank or other financial institution
and the controlled company for the purpose of facilitating the positive outcome of the
negotiations, hence creating reasonable expectations that this will in fact occur.
The so-called strong letters fall within the category of unilateral contracts
governed by Art. 1333 CC (Contract with obligations binding only on the offeror) and
thus lead to potential exposure to strict contractual liability.
5. Criminal / administrative liability.
5.1. Statutory criminal offences of legal entities of which a parent company has
to be aware when doing business in Italy.
Before the approval of Legislative Decree of 8 June 2001, No. 231, an ancient
legal principle applied in Italy that was expressed in Latin as societas delinquere non
potest - criminal liability was, therefore, exclusively the realm of individuals and hence
individual directors, auditors, etc. Law 8 June 2001, No. 231 changed direction on this
and laid down provisions for holding legal entities liable criminally for unlawful
administrative acts, and established (Art. 5) that «the entity is liable for criminal actions
committed in its interest or to its advantage, by persons who represent, administer or
manage the entity or one of its organisational units with financial and functional
autonomy, as well as by persons exercise, officially or “de facto”, management or
21
control functions over the company or persons subject to management or supervision of
the above-referred-to persons».
Nevertheless the entity is not liable if the individual who commits the crime
acts exclusively in his or her own interest or of a third party. The legal entity shall
exclude liability if it can prove that (art. 6) :
a) the company's governance body has adopted and efficiently implemented
an “organisational and management model” suitable to prevent crimes of
the kind that have in fact occurred;
b) the task of monitoring the effectiveness and compliance with the model
and to update the model has been entrusted to the supervising body
(organismo di vigilanza) with independent powers of initiative and
control;
c) the individuals have committed the crime while fraudulently breaching the
organisational and management model;
d) there has been no omission of or insufficient supervision on the part of the
supervising body.
In practice if the entity establishes for itself a self-regulation code and if this
code is effectively applied and implemented in the company, the entity can argue that it
should not be liable for a crime committed by an individual who has acted in breach of
its self-regulation code.
5.2. Italian implementation of the OECD Convention of February 15, 1999 on
Combating Bribery of Foreign Public Officials International Business
Transactions.
Italy implemented the OECD Convention of February 13,1999 with the Law 29
September 2000, No. 300, which introduced into the Criminal Code its Art. 322-bis,
whose para. 2 extends the crime of “active” corruption – i.e. bribery - (article 321 code
of criminal procedure) and the instigation of active corruption (Art. 322, paras. 1 and 2,
Civil Procedural Code) even to the giving, offering, promising or the provision of other
“utility” «to persons who carry out official functions and public services in or for
foreign countries or international public organisations, where the act is committed with
the aim of procuring for an undue advantage to self or others in the field of
international transactions».
In addition, Art. 322-ter, para. 2, of the Criminal Code, provides for a new case
of compulsory confiscation of assets that represent the gains derived from corruption,
including for an equivalent value (that is to say assets «for a value corresponding to that
of the said profit and in any case not less than the money or other utility given or
promised to the public service or the other persons indicated in article 322-bis
paragraph two»).
As regards the practical application of this law, no cases have been reported in
the legal press. Many critical comments have however emerged from academic lawyers
with regard to the implementation of the convention in Italy, both because Art. 1 of the
Convention seems widely framed so to strike against conduct distorting free
competition and trading relationships due to corruption; as well as criticisms of the
legislative method employed in the formulation of the article, making it particularly
22
complex and “asymmetrical” with respect to other law on the subject, particularly those
provisions implementing EU instruments in relation to the corruption of community
officials or functionaries of other member countries.
5.3. Directors, management, auditors and/or other advisors (e.g. lawyers) can
be held liable for criminal offences.
Directors, management, auditors and other advisors can be deemed criminally
liable for actions that they have carried out on behalf of a determined company.
Their liability result from the breach of criminal laws that expressly provide for
crimes that can be committed by directors, auditors and general directors of the
company, or by “concurrence” where a person concurs, i.e., with the director or auditor
in the commission of the crime.
From this point of view consultants, including lawyers, may be considered
criminally liable to the extent that it can be shown that they have concurred in, i.e. “
provided assistance”, in committing the criminal offence.
Through the laws governing “concourse” the criminal liability may also be
declared of de facto directors, i.e. those who do not appear in the official list of directors
but do in practice manage the company.
What has been said up to this point generally applies to all companies, i.e. there
is no specific law applicable only to groups. The director of the parent company may
however be criminally liable if he has “concurred” in the commission of the crime.
One particular case of liability of company directors who are part of the same
group is envisaged by Legislative Decree 8 July 1999, No. 270 dealing with the subject
of «extraordinary administration of large companies in a state of insolvency».
This is a complex law that regulates the insolvency of large businesses.
To summarise the position, where there is a single management of a particular
group of companies, the directors of the companies that have misused that management
are jointly liable, with the company that has been declared insolvent, for any damage
caused to the company itself as a consequence of the instructions imparted.
6. Branch Office (Sede Secondaria) of foreign company
6.1. Description; Pros & Cons
A foreign company has the right to establish one or more branch offices in Italy (art.
2508 CC). The Italian branch office of the foreign corporation does not have separate legal personality, in that it is an extension of the foreign entity and depends
on its headquarters, it uses the same name and legal form of the foreign company,
does not have its own internal governing body, but is managed directly by the
governing body of the foreign company which appoints a local permanent legal
representative (preposto / legale rappresentante).
Pros & Cons
23
Pros:
No need to capitalise
Freedom as regards transactions with the foreign company
Free flow of revenues from branch office to parent corporation with no
withholding taxes at source
Cons
Need to file annual balance sheets of both the branch office (in order to prepare the Italian income tax return) and the foreign corporation
Liable to pay Italian corporate income taxes etc. on profits
Difficulty in obtaining local bank finance
Further, the foreign company is liable for the contractual and other obligations
incurred by the Italian branch office and becomes subject to the jurisdiction of
the Italian courts in case of insolvency of branch
6.2. Steps to be taken to register a branch office
The setting up procedure involves filing documents with a notary public in Italy and
enrolment in the Companies‟ Registry. The following are required:
- notarised and legalised copy of the appropriate governing body under the
foreign applicable law (Board resolution; Shareholders‟ resolution) of the
foreign company resolving to set up the Italian branch office
- notarised and legalised copy of memorandum and articles of association of the
foreign company
- certificate of existence of the foreign company attesting that it is duly enrolled
in the competent companies‟ registry and in good standing
7. Representative Office (Ufficio Di Rappresentanza) of foreign company
7.1. Description; Pros & Cons
The Italian representative of the foreign corporation does not have separate legal
personality. It is administered by a local director (preposto). A representative office
may be suitable, for example, for liaising with Italian suppliers of merchandise, supervising the performance of orders placed by the foreign company, carrying out
inspection and quality control prior to shipment of the merchandise, and performing
follow-up procedures to ensure prompt shipment of the ordered goods (Italian
"buying office" or representative office of the foreign company).
The representative office will be a suitable vehicle on condition that it does not
perform any operational trading activities (i.e. it shall not sell merchandise or
provide services to Italian customers), and that the Italian suppliers will invoice the
24
foreign company. Unlike an operational Italian resident company or a branch offic ,
the activities carried out by the representative office are be exempt from liability to
income tax based on the OECD model tax treaty (for the avoidance of double
taxation on income).
The Italian tax legislation follows the principle that the business income (reddito di
impresa) of a non-resident company is taxable in Italy only if it is earned through a
permanent establishment: Under the OECD model tax treaty art. 5 (d), “the
maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information for the enterprise” shall not be
considered as creating a permanent establishment.
Nevertheless a dispute with the Italian tax authorities might still arise on the
question as to whether the particular facts fall within the activities which do not
constitute a permanent establishment under the Treaty, since under the Italian tax
system it is not possible to obtain from the revenue authorities a preliminary ruling
to confirm the income tax liability exemption.
Direct taxation
There are no formal book-keeping and tax return filing requirements for the purpose
of income tax for a buying office which satisfies the requirements for being
considered, taxwise, as a fixed place of business which does not constitute a
permanent establishment.
Indirect taxation
The foreign company is not exempt from the payment of all indirect taxes (stamp
duties, registration tax, value added tax, etc.) levied in Italy in connection with the performance of the buying office's activity.
For the purpose of receiving and sending samples to manufacturers and/or suppliers,
the office will have to keep a register of shipping documents (bolle di
accompagnamento.
VAT
The company may file an application to obtain reimbursement of the VAT paid in
connection with the purchase of services (telephone, etc.) and moveables (office
equipment, furniture, etc.) in connection with the operation of the Italian office.
In order to take advantage of this procedure, the Company will have to appoint a
"VAT representative" (generally: the office director) and comply with certain book-
keeping requirements.
Pros & Cons
Pros.
No need to capitalise
No business income subject to Italian system
25
No balance sheet filings
Cons
Not an operational vehicle (no sales or services to third parties permitted)
Impossible to obtain local bank finance
7.2. Steps to be taken to register a representative office
The setting up procedure involves appearing before a notary public in Italy and
enrolment in the Companies‟ Registrar. The following documents are required:
- notarised and legalised copy of the appropriate governing body under the foreign applicable law (Board resolution; Shareholders‟ resolution) of the
foreign company resolving to set up the Italian branch office
- notarised and legalised copy of memorandum and articles of association of the
foreign company
- certificate of existence of the foreign company attesting that it is duly enrolled
in the competent companies‟ registry and in good standing
8. International tax issues and tax incentives for investments.
8.1. Transfer pricing.
Art. 110, para. 7 of Presidential Decree 22 December 1986, No. 917 (Income
Tax Consolidated Act, ITCA) provides that «the income components deriving from
transactions with companies not resident in the territory of the State, which directly or
indirectly control the taxpayer, are controlled by the taxpayer or are controlled by the
same company controlling the taxpayer, are measured at the normal value of the goods
sold, services supplied and goods and services received, determined according to
paragraph 2, if there is an income increase; the same provision applies also if there is
an income decrease, but only in executing agreements concluded with the competent
authorities of foreign states in force under special “mutual agreement procedures”
provided by international double taxation agreements. This provision also applies to the
goods sold and services supplied by companies not resident in the territory of the state
on behalf of which the taxpayer undertakes an activity of sale or supply of raw
materials or goods or an activity of manufacturing or processing».27
Such regulation provides for a set of possible solutions to be selected from,
based on:
- the market in the specific field;
- the relationship between the parties;
- other circumstances pertaining as between the parties.
According to this rule, the Italian Tax Authority shall argue that the price of
infra-group transactions is lower than the “normal value”. This power shall be exercised
if the following conditions are met:
27 Authors‟ translation.
26
- there must be a domestic and a foreign company, being excluded from the
application of the rule all other enterprises (imprese) not having the form
of a company;
- the domestic company must control or be controlled by the foreign
company (either directly or indirectly). In some cases it will be possible
for tax authorities to consider a relationship of control as existing
irrespective of the formal legal relationships (substance over form
principle).
The “control” is determined according to Art. 2359 CC, which provides that
“controlled companies” are:
1) companies in which another company has a majority of the votes
exercisable at a regular meeting;
2) companies in which another company has sufficient votes to exercise a
dominant influence at a regular meeting;
3) companies which are under the dominant influence of another company by
virtue of particular contractual bonds with it.
The “control” is presumed by the Tax Authority when:
- both the Italian and the foreign partner are controlled by the same third
company;
- the Italian company, on behalf of the foreign company, carries out an
activity of sale of raw materials or products or a manufacturing activity;
- the Italian company participates to cartels or consortia aimed at fixing the
prices;
- the Italian company cannot operate without capitals, products or
cooperation of the foreign company;
- the foreign company has the right to appoint the Board of Directors or the
management bodies of the Italian company;
- the member of the Board of Directors of the Italian company and of the
foreign one are the same.
In relation to the “normal value” (valore normale), the determination is made
with two categories of methods:28
1) Basic methods:
- Comparable Uncontrolled Price method (CUP);
- Resale Price method (RP);
- Cost Plus method (CP);
2) Alternative methods:
- Comparable profits;
- Distribution of profits;
- gross margins of the economic sector;
- profitability of the invested capital
- Resale Price method (RP);
28 See Ministry of Finance, Circular Letter 22 September 1980, No. 32/9/2267.
27
The rationale of this specific anti-avoidance regime is to minimize a reduction
to the tax burden through the manipulation of profits, by using group companies placed
in tax-privileged jurisdictions.
The onus to demonstrate the existence of such tax avoidance is on the tax
authorities to the extent that they intend on making adjustments. In this respect, the
Italian Supreme Court (ISC) held that, «the taxpayer is not required to prove the
correctness of the transfer prices applied, if the tax authority did not prove prima facie
the infringement of the normal value principle».29
In doing so it recalled its
longstanding case law in the field of specific anti-avoidance provisions.30
Since the
purpose of the transfer pricing provisions is to avoid a situation where, within a group of
companies, the profits are transferred for less than the normal price of the goods sold,
with the specific aim of avoiding Italian taxation thereon in favour of foreign more
advantageous tax regimes, the ISC believes that Art. 110, para. 7, ITCA represents «an
anti-avoidance clause rooted […] in the EU principles of abuse of law».31
The burden
to prove the existence of the requirements of the transfer pricing provision is on the tax
authorities and the taxpayer only has to prove the correctness of the prices applied after
the tax authorities have prima facie established a divergence from the arm‟s length
principle.
Art. 26 of the Law Decree 31 May 2010, No. 78 (converted into the Law 30
July 2010, No. 122) substantially amended the transfer pricing regime by introducing a
“safe harbour” provision in regard to tax administrative sanctions for taxpayers that
previously prepared pre-determined documents proving the transfer prices applied. This
legislative amendment aims at aligning the Italian rules with the relevant OECD
Directives and defines administrative penalty profiles in regard to infringement cases.
The regime provides that in circumstances where a transfer price adjustment is
made by the Tax Authorities that results in higher tax or a credit difference, the penalty
for tax return errors (from 100% to 200% of the higher tax or lower credit ascertained)
shall not apply if:
a) during the access, inspection or tax examination, the taxpayer supplies to
the tax officers the Transfer Pricing Documentation (TPD) that has been
identified in a Decision of the Chief Commissioner of the Italian tax
authorities, which is aimed at verifying compliance of transfer prices with
the normal value; and
b) the taxpayer had already informed the tax authorities that it held such
documentation.
The Decision of the Chief Commissioner of the Italian tax authorities was
enacted on 29 September 2010 (Protocol No. 137654/2010) and specifies the TPD that
is required to enable tax officers to confirm whether or not the transfer prices are
consistent with the normal value. Any discrepancies would, thus, justify administrative
sanctions. In compliance with the EU Code of Conduct and the OECD Transfer Pricing
Guidelines, the TPD must be:
– suitable and necessary to comply with the arm‟s length principle;
29 ISC, Tax Chamber, Decision No. 22023, 13 October 2006 [authors‟ translation]; ISC, Tax Chamber,
Decision No. 11226, 16 May 2007; Tax Court of Second Instance of Rome, Section I, Decision No. 643, 9 December 2010; Tax Court of First Instance of Milan, Section XXXI, Decision No. 87, 13 March 2009; Tax Court of Second
Instance of Milan, Section IV, Decision No. 88, 18 January 2007. 30 ISC, Tax Chamber, Decision No. 4317, 25 March 2003. 31 ISC, Tax Chamber, Decision No. 22023, 13 October 2006. [authors‟ translation]
28
– sufficient to prove “reasonable effort” and the absence of disproportionate
costs in regard to the specific transaction;
– complete in terms of all information that is reasonably available at the time
of the transaction; and
– in line with the prudent business management principle.
The amendment enables the tax authorities to verify whether or not the prices
used in intra-group transactions correspond with those used in a free market context by
relying on a pre-defined standard of documentary evidence. The new provision provides
that the taxpayer shall:
1) keep the Masterfile and the Country-specific documentation for intra-
group transactions; and
2) inform periodically the Tax Authorities of the existence of the TPD, in
order to allow the tax officers to rapidly obtain the available TPD in the
event of an examination.
The Masterfile, which is kept by the holding company, contains all the relevant
information of the company group and the economic characteristics of the intercompany
transactions to be monitored. According to the EU Code of Conduct, the Masterfile
«should follow the economic reality of the business and provide a „blueprint‟ of the
MNE group and its transfer pricing system that would be relevant and available to all
EU Member States concerned».
More precisely, the Masterfile shall contain:
a) a general description of the multinational group;
b) an outline of the structure of the group:
– organization, list, legal form of the members and their shares; and
– operative structure;
c) the general commercial strategy of the group;
d) the transactions carried out (described in a data flow diagram);
e) the intra-group transactions:
– sale of material or immaterial goods;
– supply of services;
– supply of financial services;
– services necessary to carry out the intra-group activity; and
– agreements regarding the distribution of costs;
f) the company‟s functions, assets and risks;
g) intangible goods, royalties, etc.;
h) the company‟s transfer pricing policy and reasons why it complies with the
arm‟s length principle; and
i) an outline of its relationships with the tax authorities of other Member
States regarding Advance Pricing Arrangements (APAs) and rulings on
transfer pricing.
The Country-specific documentation, which contains the information
specifically related to the resident company involved in intra-group transactions, has the
function of adapting the general description of the information provided in the
Masterfile to the economic reality of the resident company. This document shall
contain:
29
a) a general description of the company;
b) an outline of the areas of its business activity;
c) the operative structure of the company and of its business units;
d) general strategies of the company and changes from the previous business
year;
e) intra-group transactions, including:
– a description of the entities of the group with which the transactions
are conducted;
– a comparability analysis;
– an indication of the transfer pricing method adopted;
– application criteria in respect of that method; and
– the results of the method adopted; and
f) the intra-group agreement for the distribution of costs.
In the event of an assessment, the tax authorities (knowing that the taxpayer
has the TPD) shall ask the taxpayer to produce the TPD within 10 days. This term is
shorter than the general one (15 days) and it is justified on the basis that the documents
required are – in theory – available. However, the consequences of not meeting this
deadline appear to be disproportionate in terms of the administrative sanctions that
apply.
8.2. Controlled foreign companies (CFC)
Art. 167 ITCA provides a specific anti-avoidance regime, according to which
the income of a company, an enterprise (impresa) or another legal person resident or
anyway established in a State or territory with a “privileged tax system” and controlled,
directly or indirectly (also through a trust company), by an Italian resident taxpayer,
shall be imputed to the latter in proportion to the shares held (so-called transparency
taxation).
The “control” is determined according to Art. 2359 CC, as already explained
supra at paragraph 2.5.1. The tax regime implies that the whole income produced by the
CFC (impresa estera controllata) is imputed in Italy as if it was of the controller and
taxed as business income.
The resident controlling taxpayer shall declare in a specific section of its
annual tax return (quadro FC) the income produced in the tax year by CFC determined
from the profit and loss account according to the rules of the foreign State, to which the
Italian resident controlling taxpayer shall make all the relevant adjustments (variazioni
fiscali) as provided by Italian law.
Since the CFC discipline provides a relative presumption of tax avoidance, the
resident controlling taxpayer shall pre-emptively make a written question to the tax
authorities in order to demonstrate the existent of certain conditions that justify the
disapplication of the CFC discipline (so-called interpello disapplicativo). This written
question shall be delivered to the tax authorities at least 120 days before the term
provided for submitting the annual tax return.
The disapplication may be obtained only if the taxpayer demonstrates at least
one of the following circumstances:
30
1) Effective establishment of the CFC in the foreign country. From the
documentation provided by the taxpayer it clearly emerges that the CFC
carries out an effective industrial or commercial activity in the market of
the State where it is established. In order to proof this condition, the
taxpayer shall provide (for example): profit and loss account, rental
agreement for real estates, employees contracts, copy of the insurance
contracts, evidence of working bank accounts, copy of the invoices for
consumptions (e.g. electricity, water, telephone, etc.), etc.;
2) Adequate level of effective taxation. The taxpayer shall prove that the
ownership of shares in CFC established in certain countries does not imply
an unduly loss of revenue for the Italian Republic. Consequently, the
taxpayer shall provide all the accounting and fiscal documentation able to
demonstrate that the income received from the shares of the CFC are taxed
not below the 75% of the regular level of taxation in force in “ordinary tax
jurisdictions”.
In 2009 the CFC discipline and the consequent taxation for transparency has
been extended to the cases where the controlled is established in a State or territory
different from those having a “privileged tax regime”,32
if the following two
requirements are met:
a) the CFC receives more than 50% of its income from activities that
generate passive income;
b) the CFC is subject to an effective taxation lower than 50% to the one
applicable if it was resident in Italy.
Art. 168 ITCA extends the CFC discipline also to “foreign connected
companies” (imprese estere collegate), i.e. those legal persons established in States or
territories with a privileged tax regime whose at least 20% of the shares (or 10% if the
shares are listed in the stock market) is owned by an Italian resident taxpayer.
8.3. Tax incentives for investments in Italy.
According to the World Bank, Italy stands at 131 in the ranking of 185
economies on the ease of paying taxes: in fact, the effective tax pressure over Italian
enterprises is 68,3% and, on average, an enterprise spends 269 hours a year filing,
preparing and paying taxes (so-called compliance costs).33
Foreign companies benefit from a great variety of incentives, which shall
nevertheless comply with EU competition law. Incentives may consist in capital grants,
easy-term loans or tax credits: some of them are granted automatically provided that the
applicant meets the requirements and some other are granted after a specific evaluation
process.
The most used incentives are those granted for investments in new and existing
facilities, the revitalisation of production areas, local development, R&D, etc.
32 See Art. 167, para. 5-bis, ITCA, introduced by Art. 13, para. 1, letter b), Law Decree 1 July 2009, No. 78,
converted, with amendments, by Law 3 August 2009, No. 102, in force from 5 August 2009. 33 WORLD BANK – PWC, Paying taxes 2013. The Global Picture, available at
www.doingbusiness.org/~/media/GIAWB/Doing%20Business/Documents/Special-Reports/Paying-Taxes-2013.pdf.
31
Usually these tax incentives are granted through tax credits, regulated by a
specific decree published in the Official Gazette and subject to two requirements:
a) preliminary communication of the applicant;
b) yearly limit of use provided for all credits to be listed in the RU column of
the annual tax return.
In relation to point b), the tax credit granted from January 1, 2008 shall never
exceed € 250.000,00: consequently, what exceeds such amount may be compensated
from the following third tax year.34
A) Tax credit for investments in “disadvantaged areas”.35
Tax credits may
also be granted for investments in disadvantaged areas made by
investments in the South Regions of Abruzzo, Basilicata, Calabria,
Campania, Molise, Puglia, Sicily and Sardinia. According to the former
Art. 87, para. 3, letters a) and c) of the EC Treaty, these Regions are
“disadvantaged areas” (aids aimed at facilitating «the development of
certain economic activities or of certain economic areas, where such aid
does not adversely affect trading conditions to an extent contrary to the
common interest»).36
These tax credits cannot be granted to enterprises
operating in certain specific fields: iron and steel, synthetic fibres, carbon
industry, credit, finance and insurance.
B) Tax credit for R&D investments.37
All enterprises carrying out investments
for R&D are eligible for a tax credit equal to 90% of the amount of R&D
investments exceeding the average of the investments themselves in the
triennium 2008-2010.
C) Tax credit for innovative start-up companies.38
Newly established capital
companies that carry out “innovative activities” and that hold certain
requirements, benefit from tax exemptions and procedural simplifications.
In the original discipline (Art. 25, Law Decree No. 179/2012, as amended
by Law No. 221/2012) it was necessary that for the first 24 months the
control of the start-up company was in the hands of physical persons: with
a recent amendment of 2013 .39
These companies benefit of this
advantaged regime for the first four years from their incorporation and it is
applicable also to existent companies (incorporated not more than 48
months from 19.12.2012). In order to benefit from this tax regime, the
following requirements shall be met:
- Form the applicant must be an Italian or EU capital company with
residence or main seat of its business in Italy;
34 See Art. 1, para. 53, Law No. 244/2007; Ministry Resolution of April 3, 2008, No. 9/DF; Resolution of the
Tax Authorities No. 259/E of 23 June 2008. 35 See Art. 1, paras. 271-279, Law No. 296/2006. 36 See EUROPEAN COMMISSION, Carta degli aiuti di Stato a finalità regionale 2007-2013, C(2007)5618 def.
cor., Bruxelles 28.11.2007, available at http://ec.europa.eu/eu_law/state_aids/comp-2007/n324-07-cor.pdf. 37 See Art. 1, Law Decree No. 70/2011, converted in Law No. 106/2007; Resolution of the Tax Authority No.
2011/130237. 38 See Art. 25, Law Decree No. 179/2012, as amended by Law No. 221/2012. 39 See Art. 9, para. 16, Law Decree of June 28, 2013, No. 76.
32
- Object development, production and commercialisation of
innovative products and services with a high technological content;
- Distribution of profits prohibition of distribution.
Innovative start-up companies must apply to be enrolled in the Register of
Enterprises without paying the relevant costs nor the stamp duty tax
(imposta di bollo).
The company is not allowed to benefit anymore of this favorable tax
regime if:
- loses one of the requirements during the start-up period;
- from the second business year the value of the annual production
exceeds € 5.000.000,00 according to the last approved profit and loss
account;
- it does not deposit the annual self-certification.
Every year the S.r.l. shall pay a government grant tax (Tassa annuale di
concessione governativa) of € 309,87 (or € 516,46 if the company‟s capital
is equal or more than € 516.456,90).
Innovative start-up companies receive a tax credit of 35% of the cost of
hired highly-qualified personnel (Ph.D. or employees with a bachelor
degree in technical or scientific disciplines).
For 2013, 2014 and 2015, subjects (physical or legal persons) investing in
the capital of start-up companies benefit from a deductions from income
tax purposes as follows:
- taxpayers subject to income tax:
a) 19% reduction from the gross personal income tax for investments
in one or more innovative start-up companies;
b) 25% reduction from the gross personal income tax for investments
in one or more “socially useful” start-up companies or start-up
companies active in the energy sector;
The maximum reduction from the gross personal income tax is €
500.000,00.
- taxpayers subject to corporation tax:
a) 20% reduction from the gross business income tax base on
investments in one or more innovative start-up companies;
b) 27% reduction from the gross business income tax base on
investments in in one or more “socially useful” start-up companies
or start-up companies active in the energy sector;
The maximum reduction from the gross business income tax base is €
1.800.000,00.
D) Networks of enterprises (Reti d‟impresa). Enterprises entering in a network
agreement (see hereafter Part III) shall store in a specific tax-exempt
reserve (riserva in sospensione d‟imposta) part of the profits realised in the
tax period in course until 2012. If such reserve is used for a purpose
different from covering losses or if the enterprise exits from the business
network agreement, the reserve itself concur to the tax base.
33
---=∞=---
Section II
Investing in and from China. Section II. - Investing in and from China. 9. The relationship between Italy and China. – 9.1. Similarities between the two countries. – 9.2. Italy-China
commercial relationship. – 9.3. The legal framework. – 9.3.1. ICSID Convention. – 9.3.2 Bilateral treaties: Strategic partnership. – 9.3.3. 1985 Agreement concerning the encouragement and reciprocal protection of investments. – 9.3.4. Other Italy-China bilateral agreements
9. The relationship between Italy and China
9.1. Similarities between the two countries .
There are three similarities between China and Italy:
- The first similarity is the importance of tradition and the link with ancient
civilizations. Both Italy and China are ancient civilizations, responsible for structures
and inventions that still shape our modern societies. Gavin Menzies , a controversial
historian (and retired submarine commander) claims that the Chinese “sparked the
Italian Renaissance and that Leonardo da Vinci‟s inventions were directly influenced by
Chinese technical drawings.” 40
- The second is the importance of family and familiar connections. Speaking of
which, family and relationships are paramount. In both cultures, whom you know
means everything. In China, business is conducted on the strength of the relationships
(guanxi) you possess. Hierarchy and position in both societies are taken very seriously,
and it is expected in both cultures to use formal titles, unlike the “low-hierarchy” North
American culture where first names, regardless of status, are far more common. And
cultivating “face,” one‟s external presentation to the world is embraced in both cultures
– where a great deal of emphasis is placed on well-known status symbols – such as the
right watch, and the right car. Interestingly, the Chinese are now one of the top
consumers of luxury products in the world – many of which are Italian labels such as
Armani, Prada, Versace, Lamborghini, Ferrari…
- The third is the importance of food, in the meaning of spending time in eating
with the friends and of sharing food with them. These cultures take everything involving
their food so seriously. They know the way, after millennia, how their food must be
40 '1434: The Year a Magnificent Chinese Fleet Sailed to Italy and Ignited the Renaissance' by Gavin Menzies (HarperCollins),
2008
34
prepared. And food is the ultimate social tool – you take time to savour meals, and to
cherish them with the people who are closest to you.
The biggest difference is that in China "society is more important than
individuals," while in Italy, it is the opposite.
One other area where one can see a striking similarity is in the Italian and
Chinese approach to rules. In North America, England and Germany, there is a rather
rigid approach to rules. It‟s simple – people who follow rules and laws are respected.
People who break or circumvent them are criminals and worthy of contempt. In Italy,
the bureaucratic process to simply pay a bill is crushing (a TV cable company will only
cancel its service if one produces a death certificate). For centuries, Italians have found
creative ways to get around the laws on the books, and all agree that not to do so would
be impossible to live. In China, there is a saying, “the mountains are high and the
emperor is far away,” and again, it is widely acknowledged that to survive one must
understand how to circumvent rules.
9.2. Italy-China commercial relationship
China is the second largest world economy with expectations of rates of growth still
sustained. It is a market that becomes increasingly competitive , sophisticated and
demanding , where the pursuit of economic and commercial opportunities is faced with
two kinds of difficulties connected to the access to the market and the legal framework
in evolution . A special effort of the system by the institutions and the enterprises is
therefore crucial .
The economic interchange between Italy and China is characterised during the last five
years by the following: a sustained increase of Italian export (although the increase has
been less compared to the increase of the interchange), a good growth of Italian
productive investments with a wide diversification of goods albeit with a still strong
geographical concentration on the provinces along the coast; a commercial presence
both of the larger groups as well as of small medium enterprises.
Italy is amongst the main suppliers of China as regards the sectors of instrumental
goods, where interesting possibilities of development are present with regards to the
segments of higher technology , together with a quick re-orientation of the Chinese
manufacturing compartment towards productions with higher added value . Even within
the traditional industries there is a progressive growth of Chinese productions towards
the higher segments and simultaneously and increased attention towards the aspects of
quality , safety and environmental impact , which are all aspects in respect of which the
Italian industry presents competitive positions at the world level.
The challenge for the future is to exploit as much as possible the complementarity
existing between the Italian and Chinese productive sectors so as to fill in the
dimensional gap which puts Italian small medium enterprises in a position of
disadvantage compared to the Chinese counterparts and international competitors.
Italian exports towards China show a good performance in the sector of consumable
products (in particular with reference to textile - clothing , footwear, agri - foodstuff ),
a tendency that should be confirmed during the next years, also considering the increase
of the Chinese population within medium high revenue . Italy is perceived as a symbol
of quality of life and luxury by the Chinese public , but this perception could result on
35
the long term as counter-productive for the expansion of objectives of the Italian
industry. For the sake of protecting the good name and the quality of the “Made in
Italy” appropriate communication activities should be undertaken aimed at the image of
the Italian consumer goods to underline their specificities : tangible quality , design ,
protection of the consumer's health.
Good opportunities should be offered by the development of the Italian restaurant
activity in China and from tourism as a generator of “ return consumers.”
For the sake of improving the position of Italy on the Chinese market the approach to be
promoted should be directed towards the widening of the geographical area of
commercial penetration to the cities of the second and third belts and to the provinces of
Western China, hence initiatives should be taken that should be adapted to the
characteristics of the local production.
Based upon the information of the IMF, Italy is the 16th commercial partner of China,
the third amongst the European Union countries (behind Germany and the Netherlands),
the interchange with Italy represents 1.8% of the total foreign trade of China.
According to a report prepared by the Consulate General of Italy in Shanghai 41
, the
critical issues concerning the foreign investments from Italy into China are the
following: - the impact of credit shortage in respect of SMEs; the difficulties in setting
up a network oriented to a post sales technical service; difficulties to promote a direct
investment in China connected to a “system integration” offer than “trading” only.
Looking at the numbers of the economic and commercial interchange between Italy and
China (information relates to 2011 ):
- Italy China interchange : 51,2 billion USD in 2011, with an increase of 19.5%
compared to the same period of 2010
- Italy is the seventh country supplier of China with a share of 1% of the total
- Italy is the third country of the European union supplier of China after Germany and
France
- Italy's exports to China amount to 17.6 billion USD in 2011, with an increase of
27.8% compared to the same period in 2010
- 47,7% of exports is represented by machinery and electrical machinery 42
- According to the report the opportunities for Italian SMEs in the area of the Yangtze
Delta relate to the following areas
High-tech
Green Economy
Design & Innovation
Pharmaceutical and health
Increase of Chinese consumers towards the “Made in Italy”
9.3. The legal framework
9.3.1 ICSID Convention
41 L‟Italia a Shanghai - Presentazione del Sistema Italia: la Comunità Italiana, le Relazioni Economiche,
le Attività Culturali, i Visti; January 2013 42 China Customs – Elaborazione ICE Shanghai
36
Italy and China are both parties of the 1965 multilateral Convention on the Settlement
of Investment Disputes between States and Nationals of Other States (the ICSID
Convention).
9.3.2 Bilateral treaties
9.3.3. 1985 Agreement concerning the encouragement and reciprocal
protection of investments.
This important Agreement aims at promoting investments between the two countries,
being such concept referable to every kind of investment in accordance with the
respective rules and regulations of either country, though not exclusively:
a) movable and immovable property, and any other rights in rem including
mortgages , liens , pledges , usufructs and similar rights;
b) shares of companies and other kinds of interest;
c) claims to money utilised with the purpose of creating an economic value or
to any performance having an economic value;
d) copyrights, industrial property (including trademarks ), technical
processes , know-how and trade names;
e) concessions under law , including concessions to search for , extract or
exploit natural resources (Art. 2).
The treaty encourages the promotion of investments (art. 1 ) whereby both contracting
parties shall accord such investments equitable and reasonable treatment of the
investments of investors of the other contracting party.
The agreement provides that the treatment accorded to investments by nationals or
companies of either country in the territory of the other shall not be less favourable than
that accorded to investments by nationals or companies of any third parties -
furthermore the treatment accorded to the activities associated with such investments
shall not be less favourable (art. 3 n. 1 and 2), with the exception however of any
advantage according to nationals or companies of the third state based on membership
to a customs union, common market or free trade zone or based on a bilateral treaty
with a third-party for the avoidance of double taxation or for facilitating frontier trade
(art. 3 n. 3).
Investments in one country shall enjoy adequate protection in the territory of the other
country (art. 4 n. 1)
Expropriation , nationalisation or other similar measures concerning investments are not
excluded , but if they occur, compensation shall be granted in an amount equivalent to
the value of the investment at the time when the expropriation was declared (art. 4 n. 2)
Furthermore any losses suffered by investments by national companies of one country
owing to war, other armed conflict, a state of national emergency or other similar
events, shall be accorded the treatment not less favourable than that accorded to
nationals or companies of any third state (art. 4 n. 3) . Nationals or companies of either
37
country shall enjoy most-favoured-nation treatment in the territory of the other country
in respect of matters provided for by article 4. (art. 4 n. 4)
Foreign investors are entitled to the free transfer of the property made as an
investment , which is as follows : - returns , royalties deriving from incorporeal rights,
instalments in repayment of loans aimed at direct participation in the investments,
amounts spent for management of the investment, additional funds necessary for the
maintenance of the investment in the territory of the other country and the value of
partial or total assignment and/or liquidation of the investment, within the scope of the
country's laws and regulations (art. 6)
Any dispute arising from Italy-China investments shall be settled, as far as
possible, and who are friendly consultation by both parties through diplomatic channels,
failing which they shall be submitted to settlement to an ad hoc international arbitral
tribunal (art. 11)
9.3.3. Italy – China Mediation
The ICBMC (Italy-China Business Mediation Center) was set up following a
cooperation agreement signed on 7 December 2004 by the Italy-China Chamber of
Commerce, Milan Chamber of Arbitration and the Mediation Center of the China
Council for the Promotion of International Trade (CCPIT) in Beijing.43
43 Clauses
ICBMC Mediation clause
"Parties agree to submit all disputes arising in connection with this agreement to the mediation attempt managed by the Italy-China Business Mediation Center at the Chamber of Arbitration of Milan for the
Italian side and the Mediation Center of China Council for the promotion of International Trade in
Beijing for the Chinese side to solve the dispute with a mediation agreement in accordance with the Rules
adopted by the same ICBMC."
Multi-step clauses
(Mediation + arbitration)
Option n.1: ICBMC mediation clause + model clause under the Rules of the Chamber of Arbitration of
Milan “Parties agree to submit all disputes arising in connection with this agreement to the mediation
attempt managed by the Italy-China Business Mediation Center at the Chamber of Arbitration of Milan
for the Italian side and the Mediation Center of China Council for the promotion of International Trade in Beijing for the Chinese side to solve the dispute with a mediation agreement in accordance with the Rules
adopted by the same ICBMC. If the attempt fails, all the disputes arising out of or related to the present
contract shall be settled by arbitration under the Rules of the Chamber of Arbitration of Milan, by a sole
arbitrator / three arbitrators **, appointed in accordance with the Rules, and shall be administered by the
Chamber of Arbitration of Milan. The Arbitral Tribunal shall decide in accordance with the rules of law
of ... / ex
aequo et bono**.
The seat of arbitration shall be ... . The language of the arbitration shall be ...".
** alternative choice, to be done considering the real circumstances and the value
of the dispute.
Option n.2: ICBMC mediation clause + model clause under the Rule of the Arbitration Institute of the
Stockholm Chamber of Commerce (http://www.sccinstitute.com/uk/Model_Clauses/) oppure Hong Kong
International Arbitration Centre (http://www.hkiac.org/HKIAC/HKIAC_English/main.html)
“Parties agree to submit all disputes arising in connection with this agreement to the mediation attempt
managed by the Italy-China Business Mediation Center at the Chamber of Arbitration of Milan for the
Italian side and the Mediation Center of China Council for the promotion of International Trade in
38
9.3.4. Other Italy-China bilateral agreements
1973 Exchange of notes concerning trademarks
1990 Agreement for the avoidance of double taxation on income
1995 Treaty for the judicial assistance in civil matters
---=∞=---
Section III Supporting the “internationalisation” of small and medium-sized Italian
enterprises
10. Networks between enterprises for export trade: the Italian experience
The spine of the Italian economy is represented by so-called “small and medium
enterprises” - “SMEs”, most of which are family-owned: according to a report carried
Beijing for the Chinese side to solve the dispute with a mediation agreement in accordance with the Rules
adopted by the same ICBMC. If the attempt fails, all the disputes arising out of or related to the present
contract shall be settled by arbitration under the Rules of the Stockholm Chamber Commerce –
OR** – Hong Kong International Arbitration Centre, by a sole arbitrator / three arbitrators
**, appointed in accordance with the Rules, and shall be administered by Stockholm Chamber Commerce
– OR** – Hong Kong International Arbitration Centre**
The Arbitral Tribunal shall decide in accordance with the rules of law of ... / ex aequo et bono**.
The seat of arbitration shall be ... . The language of the arbitration shall be ...".
** alternative choice, to be done considering the real circumstances and the value
of the dispute.
Option n.3: ICBMC mediation clause + model clause for ad hoc arbitration under the Uncitral Rules
(www.uncitral.org) “Parties agree to submit all disputes arising in connection with this agreement to the
mediation attempt managed by the Italy- China Business Mediation Center at the Chamber of Arbitration
of Milan for the Italian side and the Mediation Center of China Council for the promotion of International
Trade in Beijing for the Chinese side to solve the dispute with a mediation agreement in accordance with
the Rules adopted by the same ICBMC. If the attempt fails, any dispute, controversy or claim arising out
of or relating to this contract, or the breach termination or invalidity thereof, shall be settled by arbitration in accordance with the UNCITRAL Arbitration Rules as at present in force and as may be amended by
the rest of this clause.
There shall be one sole arbitrator.
OR: The Arbitral Tribunal shall consist of three arbitrators; each party shall appoint an
arbitrator and the two arbitrators so appointed shall agree on a chairman. If no agreement can be reached,
the apponting authority shall appoint the chairman.
The appointing authority shall be …. …. …. (Chamber of National and International
Arbitration of Milan / Arbitration Institute of the Stockholm Chamber of Commerce/ Hong Kong
International Arbitration Centre).
The place of arbitration shall be in …. …. …. (Milan, at the Chamber of National
and International Arbitration of Milan / Stockholm, at the Arbitration Institute of the Stockholm Chamber of Commerce / Hong Kong at Hong Kong International Arbitration
Centre).”
The arbitration shall be conducted in ............., in accordance with .................law”.
The Chamber of Arbitration of Milan provides assistance in drafting the clauses.
Contacts Tel +39 02 80 555 88 Fax +39 02 8515 4577 [email protected] www.icbmc.it
39
out by the Italian Ministry for the economic development and circulated in August
2012, there are almost 4.500.000 registered enterprises in Italy,44
each of which employs
on average 3.9 employees, whilst the enterprises employing less than 10 persons
represent 95% of the total. This entrepreneurial tissue represents a structural limit of the
Italian economy, and has prompted the legislator to elaborate a new type of contract
called contratto di rete tra imprese (“contract of network between enterprises”):
introduced in the Italian legal system with a Decree Law of February 2009,45
the
legislation on the contratto di rete has been substantially amended and improved first in
2010 and then only very recently, in August and October-December 2012, as part of the
Monti Government measures aimed at promoting “development”, such that today we
are faced with a ”second generation” of contract of network. The contract is aimed at
facilitating the system that represents the true brand of origin of the “Made in Italy”
(“piccolo è bello”), whilst preserving the history and the traditions that have their value
also on the market. The new contract of network is therefore aimed at overcoming the
main difficulties encountered by SMEs in making investments in term of innovation,
research and development, as well as their inability individually to achieve significant
economies of scale or to engage in ambitious industrial projects.
This type of interaction among enterprises is gaining attention at the European level,
since on one side, several policies already make reference to “networks between
enterprises” and on the other, the EU Commission is also starting to distinguish between
“clusters” and “networks” of firms.46
10.1. Nature of the Network
The “network between enterprises”, by its nature a multilateral contract, is defined as
the contract through which two or more enterprises undertake to perform together one
or more economic activities which are not outside their respective business plans, in
order to mutually increase each other‟s innovative capacity and competitiveness on the
market. As a contract, it draws the usual requirements and discipline from the Civil
Code and particularly from the part on the “contract in general”. 44 Source: Report of the Ministry for the economic development of February 2012, available at
http://www.sviluppoeconomico.gov.it/images/stories/documenti/Rapportofebbraio2012.pdf. 45 Art. 3, para. 4-ter of Law Decree February 10, 2009, no. 5, converted with modifications by Law of
April 9, 2009, no.33, and amended by Law Decree of May 31, 2010 no. 78, converted into Law of Juy
30, 2010, no. 122; as subsequently amended by Decree Lay June 22, 2012 n. 83 (so-called "Decreto
Sviluppo" – “development decree”) converted with amendments by Law August 7, 2012 n. 134
(published on the Official Gazette n. 187 of August 11, 2012). Decreto Crescita - “growth decree”,
Decree Law October 18, 2012 n. 179 as converted with amendments by Law December 17, 2012 n. 221
(published in the official Gazette n. 294 of December 18, 2012)
For some bibliographical indications, see F. MARIOTTI, Detassazione degli utili destinati al fondo
patrimoniale comune per incentivare le reti di imprese, Corriere Tributario 12/2011, p. 951; M.
MALTONI-P. SPADA, Il “contratto di rete”, Studio n. 1-2011/I del Consiglio Nazionale Notariato,
available at http://www.notariato.it/en/highlights/news/archive/pdf-news/1-11-i.pdf; F. Cafaggi (a cura
di), Il contatto di rete, Commentario, Il Mulino, Bologna, 2009; F. Cafaggi, P. Iamiceli, Contratto di rete.
Inizia una nuova stagione di riforme?, Obbligazioni e Contratti 7, luglio 2009, pp. 595-ff.; P. Iamiceli (a
cura di), Le reti di imprese ed i contratti di rete, Giappichelli, Torino, 2009; F. Cafaggi, (a cura di ), Contractual networks, inter-firm cooperation and economic growth, Edward Elgar, 2011. For additional
information and updates visit the web page of RetImpresa - Agenzia Confederale per le reti d'imprese,
http://www.retimpresa.it/index.php/it. 46 Review of the Small business ACT for Europe, Brussels 23.2.2011, COM (2011) 78 final. See, F.
Cafaggi, Contractual networks and the small business act, European review of contract law, 2008, p. 493
ss
40
According to certain authors, commenting on the “first generation” of contracts, the
network should not be seen as a new type of contract, but rather as a set of requirements
and binding obligations that, where satisfied, would allow the participants to benefit
from certain tax reliefs and other incentives, such as those for the manufacturing
clusters (distretti produttivi).47
In this sense, any contract, in theory, could be qualified
as a „network between enterprises‟, if the relevant formal and substantive requirements
were satisfied. In such event, the contract would naturally have to satisfy also the
requirements of the underlying type of contract. These observations lose part of their
validity and justification following the recent amendments of August and October-
December 201248
(on which more infra) that introduce a “second generation” of
network contracts, allowing the network to be considered a “subject of law”, thus the
new network contract resembles more a joint venture than an ordinary contract.
Moreover, in practice, what has resulted to be more attractive for enterprises so far are
not so much the tax benefits, but rather the creation of an integrated and flexible
cooperation - collaboration structure among two or more enterprises. Two broad
categories of networks have been created so far:
- Networks characterized by a horizontal integration, among enterprises engaged in
the same businesses; and
- Vertically integrated networks, consolidating chains of supply and
import/export.49
Several purposes can be served by becoming a member of a network, from improving
each participant‟s competitiveness to realizing economies of scale and granting a better
access to loans and financing from the banking system, to promoting a common
trademark. The major innovation introduced by the August 2012 amendments is that
members of “second generation” registered networks are given the possibility of putting
into place a “separation” of the network‟s own fund from the assets owned by each of
the members individually. As a result, claims by network‟s creditors can be satisfied
only on the dedicated funds - a crucial feature, which is likely to increase the number of
network contracts in the next years.
In conclusion, “second generation”50
networks are a flexible instrument that can easily,
but not necessarily, become something close to a juridical person enjoying a certain
degree of separation of assets from its members: the network, upon enrolment in the
Registry of Enterprises, acquires what is referred to as “legal subjectivity”, that is, the
ability to assume rights and obligations of its own, and a certain degree of separation of
its assets from those of its members – the assets of the network alone are responsible for
47 Law of December 23, 2005, no. 266. See MALTONI, supra note 2, p. 2. 48 Decree Lay June 22, 2012 n. 83 (so-called "Decreto Sviluppo" – “development decree”) converted
with amendments by Law August 7, 2012 n. 134 (published on the Official Gazette n. 187 of August 11,
2012). Decreto Crescita - “growth decree”, Decree Law October 18, 2012 n. 179 as converted with
amendments by Law December 17, 2012 n. 221 (published in the official Gazette n. 294 of December 18,
2012) 49 While antitrust aspects are beyond the scope of the present paper, it should be noted that the network
will have to comply with all applicable European and Italian antitrust laws. 50 This is the definition given in the Report of May 2012 of the Ministry for the economic development, p.
2, available at
http://www.sviluppoeconomico.gov.it/images/stories/documenti/Analisi_Contratti_di_rete_28_maggio20
12.pdf.
41
the obligations incurred by the governing body - but not what as referred to as a “perfect
patrimonial autonomy”. Hence whilst the network qualifies as a “subject of law”, it
does not amount to a “legal entity” of its own (which implies a perfect autonomy). This
situation is similar to the status of a partnership or of a non-recognised association that
are subjects of law (soggetti di diritto) but not legal entities of their own (persone
giuridiche).
10.2. Requirements and constitution
The requirements of a contract of network are the following:
a) two or more enterprises;
b) the indication of the strategic targets relating to innovation or increase of
competitive power on the market;
c) agreed means of measuring the advancement toward the targets;
d) a definition of the network‟s project and program, containing rights and duties
of each participant and the means of reaching the common target;
e) term of the contract;
f) whether other enterprises are allowed to join, and how;
g) rules for the passing of resolutions on issues relating to the network.
Two other elements, the creation of a common fund and the existence of a managing
committee, became optional after the 2009 amendment. However, the former is still a
condition to benefit from the tax reliefs51
and, even more importantly, to prevent
network creditors from satisfying their claims on the assets of individual members.52
The general rules applicable to the common fund established by the network are drawn
from arts. 2614 and 2615 of the Civil Code,53
which regulate the particular form of
“aggregation” known as consorzio (consortium). The basic concept laid down by these
provisions is the separation of the network‟s fund from the member‟s own assets: on
one side the members cannot demand the division of the fund during the term of
performance of the activity (or project); on the other side there is a “patrimonial
segregation” between the fund and the members of the consortium. As a result of the
above, creditors of the fund cannot, generally, claim their credits against the members of
the consortium who set up the fund and vice versa, the personal creditors of a member
cannot satisfy his claim over the fund. Initially the possibility to extend to the network
the discipline on assets separation was seriously put in question, however the August
2012 amendment has removed any doubt by expressly allowing some degree of
patrimonial autonomy of the network, stating that, if a network‟s fund is established,
network creditors can be satisfied only on the network‟s fund for all liabilities resulting
from the performance of the network‟s program.54
51 See Declaration of the IRS of June 13, 2011, p. 4. 52 This new possibility, which was questioned before, is specifically granted by the August 2012
amendment referred to in note 2 above. 53 A reference defined “difficult” by MALTONI, supra note 2, p. 2. 54 To be sure the law makes reference only to “obligations undertaken by the managing committee in the
implementation of the network‟s program”. Therefore it can be doubted that network‟s members will be
shielded in case of tort liability.
42
A member whose corporate structure is that of a Società per azioni (stock company), is
expressly granted the option of funding the network by way of creating a dedicated fund
for this specific affair, thus realizing a double step of assets‟ separation.55
Apart from this general remark, the contract establishing a network may have any
lawful purpose or justification. “Networking” can involve cooperating in any form or
area of industry, by way of exchanges of information or integration of the chain of
supply and production, by putting together facilities and infrastructures, by realizing
common R&D or sharing technologies and patents, by negotiating better conditions
with counterparts and banks, and so on.
An essential element of the contract of network is the network‟s program or project,
where all rights, prerogatives and duties of the members participating to the network
should be laid out. The practical experience has shown that the agreement between
members on what can or should be done and what is forbidden is the most delicate part
of the contract, and the crucial element of the network‟s creation. Often the elaboration
of the contract and of the network‟s program is assisted by the network‟s leader, while
other times it is the confederation of industries (Confindustria) that has supported and
promoted it.
The setting up of a management committee for representing and managing the network
is not an essential element, albeit it is certainly something that is and will be often part
of the contract. Alike, the participants might choose to open offices and branches to
better serve the network‟s purposes, as well as to use a logo or register a trademark.
As to formal requirements, the main one is that the agreement must be executed in a
notarised form.56
It is debatable whether this is to be interpreted as a requirement for the
existence of the contract itself or only for the purpose of registering the contract with
the Registry of Enterprises (for each of the companies involved). It appears that the
more correct interpretation is that the contract itself can well produce its effects if the
formal requirements of the particular type of contract are satisfied. On the contrary, the
effects of the network are conditional upon the contract being registered in the Registry
of Enterprises: hence, to the formal condition of the execution in a notarised form. Each
and every modification of the network, as to its content or participants, must be
performed in a notarised form and registered with the Registry of Enterprises for each of
the enterprises involved.
Following the mentioned recent amendment, if the network has a fund and a managing
committee the requirement can be satisfied by registering the network itself in the
Registry of Enterprises of the place where the registered office is located. By doing so
55 This possibility is granted by art. 2477 Civil Code and essentially entails an additional separation
between the corporation‟s own assets and the segregated fund, in the sense that the creditors of one or of
the other cannot avail themselves of the resources of the corporation (if they are special affair‟s creditors)
or of the segregated fund (if they are corporation‟s “ordinary” creditors). In this hypothesis the “specific affair” would be the creation of the network itself. 56 For sake of simplicity we use the expression “notary‟s deed”. As specified by the “DL Sviluppo”,
Decree Law of June 22, 2012, no. 83, converted into Law 134/2012, this expression should be meant to
encompass also a document executed by the parties whose identities are confirmed by a notary public
(scrittura privata autenticata) or a document signed by means of a digital signature, pursuant to art. 25
D.lgs. March 7, 2005, no. 82.
43
the network becomes a subject of law (close to a legal person), and thus can be the
centre of rights and duties.57
10.3. Effects
Before August 2012, the main legal consequence of the network‟s creation was the tax
relief and only if the network chose to create a specific fund. It was clear, thus, that the
justification for creating a network lied somewhere else, e.g. in the creation of the
network itself. This has changed with the amendments of August and October-
December of 2012, which have given the network the possibility of becoming a “subject
of law” and patrimonial autonomy: a tremendous legal consequence, the impact of
which on the practice rests entirely to be seen.
Let us begin from this last point: under the previous regime, the networks could not be
considered as a “subject of law”. It followed that rights and duties could not be “owned”
by the network itself, but had to be referred to each of the members. Moreover, despite
the creation of a fund, the members‟ liability for network‟s operations was considered
joint, several and unlimited. More specifically, the network‟s creditors (eg creditors of
operations implying implementation of the network‟s program) could satisfy their
credits both on the network‟s fund as well as n the members‟ assets.
The August and October-December 2012 amendments have radically changed the
situation: if the network has a fund and a managing committee, it becomes an
autonomous subject of law and duties as soon as it is enrolled in the Registry of
Enterprises. Legal subjectivity is acquired conditional upon the legal fall of the network
contract, i.e. if it is concluded by means of public deed all of a notarised private
agreement (“optional” subjectivity of the network). Moreover, the existence of a fund
produces the effect of separating, to a certain extent, each member‟s assets from the
network‟s assets. In this sense, the law explicitly provides that creditors of obligations
undertaken by the managing committee in the implementation of the network‟s
program, can satisfy their claims only on the network‟s fund and cannot direct their
attention toward the members‟ own assets. These networks, defined “second
generation” networks, are surely a more effective and attractive tool to achieve inter-
firm cooperation and coordination than the previous regime, which only provided for
tax reliefs.
The issue of the network being a “subject of law” (soggetto di diritto) has undergone the
following development: under Law 134/2012 , if the founders have established a
common fund, the network can be enrolled in the Registry of Enterprises and with such
enrolment the network acquires “legal subjectivity” (soggettività giuridica”); with
Decree Law n. 179/2012 as converted into Law 221/2012 subjectivity becomes
optional, in the sense that in principle the contract that provides for a common body and
57 The reluctance in acknowledging that the network actually becomes a “juridical person” comes from
the circumstance that in Italy a distinction is made between entities and juridical persons. All entities,
associations, foundations, consortia, companies and corporations, can be the centre of rights and duties: i.e. they all are equally capable of being a “subject of law” (soggetto di diritto). However, only those
entities that enjoy a perfect patrimonial autonomy can be considered legal entity (this is the case, for
example, of corporations and registered associations) and only after their constitution is sanctioned by
way of registration in suited registries (the Registry of Enterprises or the Registry of non-profit
corporations “ - persone giuridiche”). As the network‟s assets are not entirely separated from that of its
members, it cannot be said to be a legal entity (persona giuridica).
44
for a patrimonial fund does not acquire legal subjectivity; to acquire legal subjectivity
the network contract must be stipulated by means of the public deed or notarised private
agreement.
The fiscal benefits entail that the sums that each participant sets aside for being
transferred to the network‟s fund are not part of the taxable income,58
in other words
each member of the network contract can benefit from a so-called “suspension” of taxes
in respect of the sums that are destined to the investments listed by the common
program previously approved.59
The benefit can be equally claimed by the founding
members of the network, as well as by those who become members at a later stage. This
tax benefit applies only if the sums are later actually transferred to the network‟s fund
and only if they are used to implement the network‟s program, which should be the
object of a close scrutiny by the Tax Administration. It is worth noting that each
member can subtract up to 1 million euro of assets per tax year, but claimed benefits
cannot exceed 20 million euro (for tax year 2011) for the Tax Administration: if more
than 20 million euro are claimed, the benefits will be proportionally reduced for each
claimant.
With reference to these incentives, the Italian legislator, according to the procedure laid
down by art. 108(3) TFEU,60
addressed to the European Commission the question of
whether this could be considered a State-aid, prohibited as such by art. 107(1) TFEU.61
The Commission answered by granting a green light to the proposed measures, as it
found them to be not sector specific, nor territorially selective nor otherwise limited by
reference to the size of the enterprises or the scope of the project (not even de facto).62
While the August 2012 and later amendments have improved the legal significance of
the network, relevant effects pertain also to extra-legal (strictly speaking) areas, such as
efficiency, management, governance, and funding. Setting up a network allows the
various enterprises to achieve a number of objectives, from the optimization of a chain
of supply or chain of production, to the common use of certain resources (laboratories,
facilities) or of certain key personnel. An important feature of the network is that it
might allow easier access to loans and financial resources in general, in that the single
participant benefits from belonging to a greater entity, or from the umbrella of a bigger
network participant. A further example could be represented by a network designed to
have access to a specific public procurement or to certain incentives or public funds
(especially of European origin). On this latter note, several Italian Regions have started
58 See C. BUCCICO, Il contratto di rete e la sua disciplina fiscale, AIDPT 2012, pp. 11-17, available at
http://www.aipdt.it/wp-content/uploads/2012/05/Contributo-Clelia-Buccico.pdf. 59 Acknowledged by the Ministry for the economic development. The first list has been approved with
Decree of March 31, 2011. 60 Art. 108(3) TFEU: “The Commission shall be informed, in sufficient time to enable it to submit its
comments, of any plans to grant or alter aid. If it considers that any such plan is not compatible with the
internal market having regard to Article 107, it shall without delay initiate the procedure provided for in
paragraph 2. The Member State concerned shall not put its proposed measures into effect until this
procedure has resulted in a final decision”. 61 Art. 107(1) TFEU: “Save as otherwise provided in the Treaties, any aid granted by a Member State or
through State resources in any form whatsoever which distorts or threatens to distort competition by
favoring certain undertakings or the production of certain goods shall, in so far as it affects trade between
Member States, be incompatible with the internal market”. 62 Brussels, 26.01.2011 C(2010)8939 final, State aid N 343/2010 – Italy Support to set up companies'
networks (reti di impresa).
45
issuing public funds specifically dedicated to the creation of new networks or to
financing existing ones.
10.4. New members joining the network; termination
The network is thought as something naturally open to the participation of new
members. However, this should not be intended as a prohibition of closed networks.
Sometimes a network will be closed because of the particular purpose (e.g. when it is
the chain of supply of a larger firm: only those firms that are in the chain are meaningful
network participants). Other times it will be the choice of the participants to envisage
their new entity as something restricted. Whether the network is open or closed and
what are the rules for the adhesion of new members it is a matter that should be defined
in the network contract itself.
In principle the network itself is not seen by the law as something perpetual, and a fixed
and predetermined duration is an essential element. In practice, however, nothing
prevents the parties from indicating a long duration or from renewing the network at its
expiration. As for every long-term contract, it could be necessary or convenient for a
member to exit from the network. Once again, the place to look is the contract itself,
which could require an advance notice, prevent exiting or provide a penalty for exiting
the network, such as liquidated damages or non-competition (subject to the usual
requirements of proportionality and limitation in time and space, as well as to antitrust
laws). The contract might also provide for a mechanism for excluding a member under
certain circumstances, as well as special procedure to be followed. More importantly a
participant will be automatically excluded if it loses the needed requirements for being
part of the network. This could happen if a firm is liquidated or cancelled from the
Registry of Enterprises, or admitted to bankruptcy proceedings.
The network itself could cease to exist for many causes: at the expiration of its duration,
if no intention to renew it is shown by its members; by mutual consent, if all members
agree to terminate the network; because only one member remains in the network; if all
intended targets are reached; and for any other cause of termination indicated in the
contract.
10.5. Case-Study
Certain data reports show that by the end of 2012 there were 647 network contracts in
existence, involving some 3360 enterprises, in 19 Regions and 99 Provinces.63
As to the
corporate nature of the participants, the vast majority is made of commercial
corporations (3350 ) 6 foundations and 4 associations.
We hereby examine two case-studies on how the device of the network has been
employed in practice, and what are the reasons for it, the RIBES network, in the
biomedical sector, and the Gucci‟s chain of supply and production. The two
experiments differ substantially not only because the areas of industry, technology vs.
leather goods, are quite different, but also because they entail a different degree of
involvement of the leader: while ESAOTE chose to be part of the network, Gucci did
not.
63 Il Sole24 Ore March 15, 2013 reporting on information from Unioncamere. The most active Region is
Lombardy (198 contracts with 782 enterprises), followed by Emilia Romagna (145 and 482 ) and
Tuscany (81 and 496). The most active sector is B2B services (384).
46
10.4.1. RIBES: a network among ESAOTE and smaller enterprises in the
biomedical industry – toward innovation and competition
ESAOTE S.p.A. is one of the world‟s leading producers of medical diagnostic systems
(namely: diagnostic ultrasound imaging systems, Dedicated Magnetic Resonance (MRI)
imaging systems and electro-medical systems (ECG)). While R&D are internal to the
enterprise, ESAOTE outsources around 85% of its production to its suppliers. Because
ESAOTE could not afford losing any of these valuable elements, it chose to constitute
the RIBES network to be composed of ESAOTE itself and other 13 enterprises64
spread
between Tuscany, Liguria, Lombardy, Campania and Veneto. The revenues of the
group total some 550 million of euro, out of which around 330 are produced by the sole
ESAOTE. RIBES (Rete Imprese Biomedicali Esaote) is designed to achieve three main
objectives: to improve intra-network efficiency, quality and innovation, to increase its
competitive capacity in the market and to guarantee an easier access to funding to the
smaller participants of the network. ESAOTE‟s idea of creating the network received a
strong and early support by the Confindustria Firenze, which also assisted the
enterprises in the crucial passage of the network contract drafting process. RIBES could
also avail itself of the close cooperation of the Banca CRFirenze and of the whole Intesa
banking group, as a financial partner.
As to the first three keywords, this is pursued with the following strategy:
- Efficiency: because the network, acting as a unitary subject, can obtain better
tariffs, services as a stronger contractual actor
- Quality: by activating common certifications that allow an increase of
competitivity of the network
- Innovation: through common researches, development of new products and
common use of the various laboratory of the network
RIBES represents, thus, a unique use of the network contract. In this case, the network
is not only a way for SMEs to gain size, strength and competitiveness vis-a-vis
competitors, but is a working deal between the leader and its chain of supply to allow
the network to gain, together, new levels on the international market. ESAOTE is
protected, because its chain of supply is better placed and is more secure. The chain can
benefits from the umbrella of the leader, without losing its identity and without
requiring the leader from internalizing the production it previously outsourced.
The active participation of the Intesa Sanpaolo banking group represents something new
in the networks‟ panorama, but it is something highly relevant and important. It renders
possible to better achieve one of the purposes of net-building, which is to access to more
favourable lines of credit. Moreover, it allows to consider each business not as a single
entity, possibly supported by the leader, but as a part of the network and for this
participation to have more favourable loans and banking conditions. Intesa Sanpaolo
closely worked with the RIBES network in the phases of creation, and was able to
provide an organic and systemic financial offer to the network.
64 Esaote (GE-FI); Btp Tecno (SA); Omcf (FI); Provvedi Meccanica (FI); Df Elettronica (FI); Intercomp
(VE); Pastorino Giacomo (GE); Elemaster (LC); O.M.S. Ratto (RM); Seco (AR); Sy.O. (SP); Elesta (FI);
L&G Elettronica (GE); Softeco (GE).
47
10.5.2. GUCCI’s perspective of the network – autonomy and independence of the
chain of supply
Three networks have been set-up by the enterprises belonging to the Gucci supply
chain, operating in three different areas, whilst Gucci S.p.A. itself is not a member of
any: 1) P.re.Gi.65
– small leather goods; 2) Almax66
– suitcases and purses; 3) F.a.i.r.67
–
purses. In each of the three networks there are enterprises pertaining to the various
phases of the chain, from leather tanning, to cut, to finalization. The goals are various:
not only encouraging innovation, efficiency and communication of know-how, but also
realizing economies of scale, improving credit-access or credit-conditions and
guaranteeing transparency of the whole chain of supply and production.
Interestingly enough, Gucci is not part of any of these contracts, while actively
supporting and promoting the creation of ethically oriented networks. In the idea of
Gucci‟s management, the decision of not becoming a member of the contract supports
the independency and autonomy of the network, avoiding the risk of binding the chain
of supply to the Gucci brand. Gucci‟s promotion encompasses activities from
suggesting best practices and goals to counseling (organization, technology, education,
and finance).
This experience represents yet another example of the creation and use of networks to
handle and coordinate production processes, with multiple aims. On one side there is a
desire of increasing cooperation and efficiency among the components of the chain, on
the other side, the network, as a stronger counterpart in contracts and banking relations,
is able to obtain more favorable conditions and to spread the advantage among all
participants. It is noteworthy that also this experiment was carried out under the
supervision and aid of the Confindustria of Florence, as in the RIBES case.
10.5.3. “Rating Project”
As we have seen, one of the common purposes of the network is to enhance each
individual enterprise‟s ability to access to loans and funds in general. Being part of a
network could mean for the SME more favourable loans conditions or even whether or
not a line of credit will be granted by the bank (or by investors). As Confindustria itself
reported, one of the most worrying elements for SMEs in these times of crisis is access
to sources of credit. For this reason, and with the scientific assistance of the
65 Rete P.re.Gi., acronym of Rete Pelletterie Giancarlo, is a network of seven business of the small leather
goods sector, with 11 million of revenues. The leader is the Florentine Pelletterie Giancarlo and members
are BUD (Florence), Bernini Roberto (Florence), Pelletteria B.L.Z. di Barzagli Simonetta & C.
(Florence), Leather Style di Fanfani Milvia & C. (Florence), Pegaso Rifiniture di Tinti Manuela (Arezzo),
Pelletterie Le Iene di Coppola Francesco (Florence). 66 Rete ALMAX, named after the leader Pelletteria ALMAX of Florence, is a network of eight firms
(suitcases and purses) with 20 million of revenues and 300 employees. Member are Becattini Giovanni
(Arezzo), Samar di Montaleone Salvatore e C. (Florence), Pelletteria Demipelle di Grazia Maria Laura
(Florence); Miranda Bernardo (Florence), Pelletteria Vittoria (Naples), Pelletteria Anna di Pellecchia
Luisa (Naples), Nannì Pelletterie di Allocca Massimiliano (Naples). 67 Rete F.a.i.r., acronym of Firenze Accessori In Rete (purses) is a network of nine, including
manufacturers of leather machineries and a tanning company, for a total revenues of 45 million and 200
employees. The leaders are B&G and Del Vecchia (Florence) and members are Conceria Settebello
(Pisa), MIPA di Passarello Gaetano & C. (Florence), Fustellificio Toscano (Arezzo), Teknopell di
Roberto Fissi (Florence); Robot System Automation (Pisa), I.C. Service Logistica (Florence), Pelletteria
Rui Jin (Florence), Conti e Vannelli (Florence).
48
Associazione Premio Qualità Italia and of the Agenzia RetImpresa, the Progetto Rating
born from the agreement between Confindustria and Barclays Italia. The project aims at
developing an agreed methodology among enterprises and banks to improve existing
models of bank rating. These models are consolidated in the Basel 2 and Basel 3
systems. In particular the new elements to be taken into account are:
1. rating of individual enterprise‟s productive model in terms of sustainability;
2. rating of networks;
3. identification of enterprise‟s strengths and weaknesses in order to propose
strategies of improvements and development.
The model improves the dialogue between the enterprise and the bank, adding to pure
economical and financial criteria, an overall assessment of the governance, management
and ability to networking. The first experiments allowed to take into account all these
non-traditional elements in order to provide a more realistic and efficient rating of the
participants to an inter-firm network.
10.5.4. Two other cases in the automotive industry
RaceBo is the first Bologna based network of enterprises active in the field of
manufacturing, created on May 7, 2010, with 11 enterprises engaged in the automotive
industry: after three years from its establishment the balance of the experience is
extremely positive, considering that between 2008 and 2009 the automotive sector had
started to lose market shares, since with the globalisation the big players moved their
attention to the emerging markets to benefit of low-cost suppliers. The concrete risk of
the enterprises was to close down. The network of enterprises was set up based upon the
understanding that the enterprises in question needed to move their positioning on the
market on order to survive, fewer enterprises in the automotive sector have competences
at 360° and fewer are effectively integrated. Each member represents a segment, with
the network the members were capable of joining their experience, competence and
capacity, to create a group to present itself on the markets with a much more
competitive offer. In 2010 the 11 members (now 12) had a turnover of €80 million
which has increased to €150 million, increasing employed staff by 150 units and
carrying out a € 10 million investment programme on plants, research and development.
In the positioning project, the group has reinforced its international operations insisting
on the luxury end of the market with a portfolio of orders from Ducati, Ferrari and
McLaren. Overseas clients have welcomed the project and encourage the network
finding solutions to many industrial problems. The chairman of RaceBo, eng Florenzo
Vanzetto, in an interview to IlSole24Ore of March 15, 2013, was critical of the 2012
Decree law that has introduced the principle of the balance sheet of the network, giving
to the network the qualification of a “subject of law”, in his opinion the network balance
sheet runs the risk of contradicting the basic concept of the network which should
contribute to the maintenance of the autonomy of the individual enterprises.
Another example from a different region, Piedmont, is the network called Anfia whose
objective is to build a production cluster of the Italian automotive industry in Russia, to
enter into a market where in 2016 there will be 3.2 million vehicles produced with sales
of 3.7 million (2.9 million in 2012). The Italian enterprises have exported in Russia €
331 million worth of goods in 2011, there are 40 enterprises who have participated with
the objective of finding customers in the area and in particular to set up a production
49
plant of components in a country which is interesting for the market and the production
of motor vehicles.
The objective is to build in Russia a cluster of Italian manufacturers of components,
without FIAT, considering that in Russia, between Kaliningrad, St Petersburg, Kaluga,
Taganrog and Togliatti the main world car makers are present – Renault, Ford, GM,
Toyota, Hundai, Volkwagen (but not FIAT).
10.6. Conclusions
Aggregation of enterprises and business is a crucial element both in Italy as well as in
the rest of Europe. SMEs are not only a component of the Italian productive tissue, but
also a character of many other countries. Italy has tried to solve SMEs‟ problems and
weakness by first elaborating industrial clusters, but this solution only partially solved
the problems. Network contracts aim at providing a better, more flexible and efficient,
bottom-up approach of solving SMEs‟ frailties. Other European Member States are
focusing their incentives on the aggregation of enterprises. One example for all is the
case of Germany, which is encouraging the creation of clusters, something that Italy has
already experimented.
The attention toward SMEs can also be observed at the European level, too. Both the
CIP and the COSME, i.e. the pluriannual financial plans of the EU, have as their main
object SMEs. More interestingly from our point of view, the COSME plan for 2014-
2020 specifically mentions the need to improve development of network and clusters as
a necessary means to improve the framework conditions for the competitiveness and
sustainability of the Union Enterprises.68
In conclusion the network contract is a valuable tool that could help Italian SMEs to
work together and achieve what would otherwise be out of reach for individual
enterprises. While the network has already drawn the attention of enterprises in its
primitive form, it is likely that the features of “second generation” contracts
(subjectivity and assets separation) will make it one of the strategic elements for the
development and internationalization of Italian SMEs
68 COSME Article 6 - Actions to improve the framework conditions for the competitiveness and
sustainability of Union Enterprises: “(a) measures to improve the design, implementation and
evaluation of policies affecting the competitiveness and sustainability of enterprises, including disaster
resilience, and to secure the development of appropriate infrastructures, world class clusters and business
networks, framework conditions and development of sustainable products, services and processes”.
(emphasis added)
50
Appendix II
The Italian Government Destinazione Italia plan (September 19, 2013)
The Destinazione Italia plan illustrates why a foreign investor should invest in Italy, on the basis that Italy
is one of the first time exporting countries in the world, it is competitive and sometime a leader in sectors
with a high potential growth - such as fashion, household, automotive, instrumental assets, Robotics, agro
food, biopharmaceuticals, naval industry defence and security. Typically Italy is small and medium
enterprises are set up in production clusters capable of handling a production characterised by: -
sustainability, uniqueness of the product, capability of adapting production on a handicraft bases to every
request.
The government indicates in the plan that certain reforms have already been implemented relating to pensions, the labour market, civil justice and bankruptcy rules, the liberalisation of bonds, the electrical
and gas markets, the introduction of measures for access to credit or small and medium enterprises, a
policy for innovative startup companies, a legislation to combat corruption.
It is a fact that the share of foreign investment held by Italy today is dramatically low equal only to 1.6%
of world stock of foreign investment
The 50 measures listed in the Destinazione Italia plan are the following:
Measure No. 1 a close a collaboration between the tax office and foreign investments
tax agreements (for investments in excess of a given threshold for which the investing enterprise and the
tax authority agreed in advance on a non-modifiable manner the tax conditions for a given period (for
example the first five years) and dedicated Desk (dedicated to foreign investments)
Measure No. 2 the “conference of services” to be reformed - this entity was created as a means for
simplification to put around a table for local administrations and the central state administration
Measure No. 3 standard procedures and models for licences and authorisations to commence a
productive activity
Measure No. 4: to adapt the rules on employment contracts to the specificity of new investments
Measure No. 5: Consolidated text on employment law
Measure No. 6: Reducing the time element in employment court proceedings
Measure No. 7: concluding international and bilateral treaties and agreements on national security
issues, based on reciprocity
Measure No. 8: revising the concept of the “abuse of the law “
This concern is drawn from a certain jurisprudence of the European Court and has been developed by the
Italian Supreme Court, at present there is a degree of confusion and uncertainty as to the exact dividing
line between tax evasion and tax avoidance, an interpretation of the definition of abuse which is too
extensive frustrates the certainty of enterprises which is necessary for a suitable tax planning
Measure No. 9: redefining tax penalties at present the principle of proportionality is frustrated and certain penalties amount to a criminal offence rather than to an administrative penalty. In principle, the sanctions need to be reduced
Measure No. 10: revising litigation with the tax office
Measure No. 11: revisiting the rules on the “BLACK LIST” countries excessive limitations as regards cross-border activities amount to a frustration in the process of
internationalization of enterprises
Rules governing cross-border transactions , in particular the regime of withholding taxes and deductibility
of costs of commercial transactions sustained in respect of suppliers localised in Black list countries , the
51
regime of dividends coming from countries with low tax regimes and the rules to determine the revenue
of permanent establishments
Measure No. 12: implement a national energy strategy to reduce the price of electricity and gas
To fully integrate the Italian market with the European market (so-called market coupling); increase and
progressively rationalise the National electricity transmission grid; award concessions through
competitive tenders
Oil: complete liberalisation in the distribution
Gas: build strategic infrastructures (pipelines, terminals and warehouses )
Measure No. 13: to reinforce the Commercial tribunal (Tribunale delle Imprese )
The Italian civil justice system is a disaster is located at the 160th place worldwide on a total of 185 for
the resolution of commercial disputes with a average duration of debt collection proceedings of 1210 days
with a cost in terms of legal fees equal to 30% of the credit payable
Extending the competence of the Commercial tribunal to all controversies on commercial transactions ,
and concentrating on three tribunals (Milan, Rome and Naples) the disputes falling within the
competence of the commercial tribunals which involve a company with registered office abroad, even if
this company has a permanent establishments in Italy .
Measure No. 14: reduce the number and length of civil proceedings
Limiting the possibilities of filing appeals , increasing the competence by value of the justice of peace ,
reinforcing incentives for whoever uses mediation , reinforcing telematic civil proceedings
Measure No. 15: increasing the legal rate of interest on late payment
Measure No. 16: favouring a more efficient import - export cycle
The so-called “Single Window”, project commenced by the customs agency
Measure No. 17: give value to state-owned corporations and prepare a plan of privatisation and
sales
Measure No. 18: not only banks - enlarge the spectrum of sources of financing small and medium
enterprises
For example extending the possibility for small and medium enterprises to issue bonds
Measure No. 19: revitalise the stock market
tax incentives for investing in stock or shares of small medium companies listed on the stock exchange
council taxes on capital gains for investors who invest in Small Caps and keep such investments for at
least 3 to 5 years
Measure No. 20: investments to sustain the “ Made in Italy” micro, small and medium enterprises
Set up a fund “Invest in Made in Italy” for the investment in equity of micro enterprises
Measure No. 21: attract capital and competence to increase start-up companies To reinforce the market of investors in start-up (venture capitalist and business angel).
Measure No. 22: invest and take the global opportunities offered by tourism
Stimulate the growth of enterprises engaged in tourism and attract tourism developments
Measure No. 23: adding value to the cultural heritage of Italy
The artistic and cultural heritage represents a natural competitive advantage of Italy To favour the setting up of funds sourced from Private donations dedicated to large cultural institutions ,
To lay down forms of strong de-taxation of the so-called cultural patronage
Consider the possibility of entrusting to private entities and to nonprofit organisations the management of
cultural property
52
To use the property stocked in the museum warehouses to build initiatives of research, enhancing and
promoting Italian art and culture in the world
Measure No. 24: to enhance the state-owned property (BENI DEMANIALI) Open up to competition , provide for public tenders hence attracting international investors
Measure No. 25: to enhance unused real property
Measure No. 26: to liberalise the market of major leases other than residential use
Measure No. 27: encourage the change of destination of use of real property
Measure No. 28: facilitate real property investments by developing listed real property investment
companies
Measure No. 29: tax credits for research and development
Measure No. 30: encourage spin-offs of university and research
Measure No. 31: internationalise the education system
Measure No. 32: internationalise research
Measure No. 33: Digitilisation of the public administration and of citizens
Measure No. 34: create a mechanism of rapid reaction to deal with the financial crisis of enterprises
Measure No. 35: to facilitate environmental cleaning up
To favour the reindustrialisation who productive reconversion of many sites, and put the economy of the
territories in question in movement again, there are often critical environment all situations to be
overcome
The solution is to simplify the procedure is for the environmental cleaning up (bonifica ambientale) of
sites having a national interest
Measure No. 36: to involve private capital in the carrying out of major infrastructural projects
Measure No. 37: develop Public Private Partnerships (PPPs) in the field of small and medium
infrastructures
Measure No. 38: to reform harbours
Governance of ports
Reducing red tape
Incentives for investments in technological upgrading, logistics and access networks
Measure No. 39: a plan for airports
Making the Italian airport system competitive
Measure No. 40: Attracting investments that will benefit the territory , generating growth and
increasing the standard of living of the local citizens
Measure No. 41: National production of hydro-carbons and mining resources
Measure No. 42: investing in energy efficiency (green economy )
Measure No. 43: To attract investments in the green sectors (green economy ): renewable energies,
Measure No. 44: Visas as a means of attraction
Fast-track for specific categories , start-up visas
53
Visa for whoever makes a significant investment or a makes a substantial gift in the sectors of interest for
the Italian economy (culture , tourism , recovery of cultural heritage , science , etc)
visas for students and researchers of selected institutions
Attracting highly qualified non-EEC staff
Measure No. 45: to educate the investors of the future
Measure No. 46: campaign Destination Italy
Measure No. 47: Become capable of attracting : markets , persons and instruments
Measure No. 48: build a better reputation worldwide
Develop a national country branding strategy also with reference to the contents of the
EXPO 2015;
To establish at the ministry for foreign affairs a permanent Forum of the international reputation of Italy
Measure No. 49: to mobilise the global Italians
Italians who work, teach and study abroad are the first ambassadors of Italy in the world, and as such may
contribute to give a news story of Italy abroad and to efficiently implement a branding strategy of the
country
Measure No. 50: use the leverage of culture and sport for a diplomacy of attraction In enhance the artistic heritage not exhibited and the excellences of our museum industry, of restoration
and archaeology to corporations of cultural diplomacy
Promote the Italian language in the world
Enhance the potential attractiveness of Italian sport