ANNOUNCEMENT 25 Jan 2015In January 2015, the government of Italy announced changed incentives for foreign investors entering the country and a change in its trade finance instruments.
NUMBER OF INTERVENTIONS
Legislative Decree No. 3 (in Italian):
Executive Summary on innovative SMEs by the Italian Ministry of Economic Development (in English):
On 25 January 2015, the Italian government passed Legislative Decree no. 3 (hereinafter: Decree) on the banking system and investments.
Export subsidies through Agency for Foreign Commerce
The provisions authorize the Italian Agency for Foreign Commerce to issue direct loans to its customers (mainly small and medium-sized entreprises - hereinafter: SMEs). Based on the legislation's wording (art. 3(1) of the Decree) this was introduced "to support exports and the internationalisation of the Italian economy and its competitiveness". The loan issuance shall be "conducted in compliance with international, European and national norms".
Revised definition of innovative SMEs
Furthermore, the Decree introduces requirements for SMEs to be classified as "innovative" in the Italian financial intermediation system - such as the obligation to possess a manufacturing plant or subsidiary within Italy or a number of residence requirements. Innovative SMEs may benefit from a number of exemptions. These include:
Foreign entities eligible for tax breaks from investments
In addition, non-resident foreign institutional investors will no longer be required to register as taxpayers in Italy in order to be eligible for tax exemptions from their investment income on immovable assets and purchased new capital goods.
Creation of a new Corporate Funding Mechanism
Lastly, the Decree creates a Service Fund for the Capitalization of Entreprises in order to support entities based in Italy and with growth potential despite suffering from financial difficulties. Whereas the fund will financed by institutional and professional investors, the state will be the one providing government guarantees. As stated in article 7(7) of the Decree, the exact conditions for these guaranteees shall be established by the executive branch and will need to be examined by the European Union.
The decree came into force on the day of its announcement.
The GTA includes state guarantees and other financial incentives thatare likely to affect the restructuring and performance of firms facinginternational competition, whether from imports, in export markets, andfrom foreign subsidiaries.