21 March, 2024

Legal scenarios related to the omitted appointment of the Controlling Body or the Auditor

An increasing number of Italian companies are receiving reminder letters over the past few weeks from the Italian Companies Register for not appointing the company’s controlling body or auditor, appointment due for overcoming the relevant legal requirements.

In this regard, it is appropriate to recall that article 2477 of the Italian Civil Code establishes the mandatory appointment of an auditor or a controlling body for companies that:
a) are required to draft a consolidated balance sheet;
b) control a company which has appointed a company’s auditor;
c) have not overcome for two financial years in a row one of the following limits at least:
1. assets: (equal to) 4 million euros;
2. revenue from sales and services: 4 million euros;
3. average of employees employed during the financial year: 20 units.

In particular, paragraph 5 of the same article states that “the shareholders’ meeting approving the balance sheet in which the limits indicated in the second paragraph are exceeded must appoint the controlling body or the auditor within thirty days. If the shareholders’ meeting fails to do so, the appointment shall be made by the court at the request of any interested party or upon indication by the Companies Register”.
In light of this, the Companies Register, by means of the transmission of letters of reminder, call on the companies that have overcome the limits listed in article 2477, third paragraph, of the Italian Civil Code, with the approval of the financial statements as at 31st December 2022, to appoint the Controlling Body within 60 days from the reception of the notice, stressing that, in absence, the company will be reported to the Court for appointment ex officio.

The concerns raised in recent weeks are mainly about the list from which the sole auditor will be appointed as well as the criteria for determining remuneration.
In relation to this, the most recent interpretations of the letter received by the companies, consistent with the parameters mentioned above, seem to reinforce the assumption that the designated Controlling Body will also be entrusted with activities related to the legal audit of the accounts. This decision seems to be driven by the consideration of its cost-effectiveness and ease of implementation.
Lastly, it should be recalled that the Controlling Body is only required to supervise the adequacy and reliability of the administrative and accounting system, unless the By-laws explicitly provide that he shall also perform the legal audit of the company’s accounts.

 


20 February, 2024

Taxation of the shareholders’ loan enacted in the minutes of the shareholders’ meeting (Article 22 paragraph 2 of Presidential Decree No. 131/1986)

The Supreme Court of Cassation, with judgment No. 1960, section V, of 18 January 2024, following the intervention of the United Sections with judgment No. 14432 of 24 May 2023, excludes the taxability of a shareholders’ loan set forth in a shareholders’ meeting minutes relating to the increase of the share capital of a limited liability company.

In particular, the Supreme Court stated that:

  1. in the matter of registration tax, the resolution of the shareholders’ meeting for an increase of the share capital, achieved by means of the allocation of a shareholder loan concluded orally with the company, is not subject to the tax, even where the statement of the previous non-registered loan can be found, since the allocation determines the termination of the effects of the loan, by reason of the aforesaid use, thus giving rise to the cause of non-taxability pursuant to Article 22(2) of Presidential Decree No. 131 of 1986;

 

  1. the loan ceased to have effect following the final capitalisation of the amount already paid by the shareholder to the company which resulted in the extinction (by waiver, but before that by consideration: cf. Italian Supreme Court of Cassation, Section 1, 19 March 2009, No. 67011) of the company’s obligation to repay the shareholder, if not before, then at the same time or in execution of the deed of appointment;

 

  1. with reference to the admissibility of set-off between the receivables claimed by shareholders for loans and the contribution debts that the shareholder has towards the transferee company, it has already clarified that the loan is extinguished at the very moment in which the receivables arising therefrom are set off.

 


23 December, 2022

4 good reasons to invest In the Italian real estate

Many are the qualities for which Italy is known around the world. Good food, art, fashion and, most of all, the so-called “dolce vita,” an expression that has already entered the world’s vocabulary and refers to a carefree lifestyle devoted to the small but essential pleasures of life.

Another reason Italy should be known around the world is the great presence (and especially convenience) of real estate investment opportunities.

If you are a foreign national, whether you are thinking about buying a house in Italy or not, then this article is for you, because you will find 4 good reasons why you will ask yourself, “Why haven’t I invested in Italy yet?“.

1. Houses for sale at 1 €

Strange as it may seem, it is possible in Italy to buy a house for the symbolic price of €1. You may be wondering why. Very simple. A number of small Italian municipalities have started a project named “Case a 1 €” (“Houses for 1 €“) with the intention of combating phenomena such as the abandonment and decommissioning of properties and the depopulation of those areas that are becoming progressively uncrowded due to the lack of generational change.

Joining the project requires complying with certain conditions. Specifically:

  • a willingness to redevelop the property through a short-term (max. 1 year) project to renovate it;
  • bear the notary fees for registration, title deeds and stacking;
  • initiate work within the timeline decided by the municipality, once all necessary permits have been obtained.

So the interested buyer will have to get in touch with the municipality, fill out the necessary forms to express their willingness to purchase and redevelop the property; the municipality will evaluate the proposal and, if approved, a property can be purchased for €1, which, once redeveloped, can be used for residential use or can be sold with a huge profit margin.

Buying a house at the cost of €1 is not the only way to make a good investment in Italy. If your dream has always been to own a historical property with aristocratic charm and you have a budget of more than 1 €, in Italy it is possible to purchase state-owned or privately owned properties of historical character. As a result of increases in maintenance costs and taxes, the state has in fact launched a program to sell such properties in order to redevelop them. Through the websites of the regions or judicial auction portals, it is possible to buy or even just rent, historic properties (such as villas or palaces, even castles) at prices significantly lower than the market value and their real value.

real estate in italy2. “Elective residence” and tax benefits

Buying houses in Italy if you are a foreigner is very simple. Most importantly, it is very convenient. Being the owner of a property does NOT imply the obtaining of a residence permit, nevertheless, it is possible for the foreign buyer to obtain a kind of “retirement permit” through the so-called “elective residence“, which will allow him to move permanently to Italy with the sole condition of proving a passive income of at least about € 31 k/ year.

This means that the foreigner will not be allowed to work and thus generate active income in Italy, but will be able to invest and move to our country, enjoying all the tax benefits our system has to offer to new residents.

For example, high net worth individuals who transfer their tax residence to Italy can apply a substitute tax of 100,000 euros per tax year to their foreign income in substitution of Italian income tax. This taxation represents an alternative to the application of ordinary taxation, therefore, and the option is valid for a period of 15 years. This regime can also be extended to family members through the payment on their foreign income of a substitute tax of 25,000 euros for each family member.

In addition, individuals with pension income paid by foreign entities who transfer their tax residence to Italy, in one of the municipalities belonging to the territory of the regions of Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Apulia, with a population of no more than 20,000, can benefit from an optional tax regime, which provides for the application of a substitute Irpef tax at a rate of 7 percent to any category of income produced abroad. The “Sostegni Decree” Ter (Dl 4/2022) expanded the number of beneficiaries of the favorable regime: foreign pensioners who transfer their residence to municipalities affected by the L’Aquila earthquake of April 6, 2009, can also benefit.

Lastly, there are also tax benefits for foreigners who intend to move to and work in Italy; in fact The tax-advantaged “impatriate workers” scheme is designed for employees and freelancers who transfer their residence to Italy. Under the scheme, for 5 years, income from employment (or assimilated category) and self-employment exercised in Italy is taxed at 30 percent of the amount, or even at 10 percent if the worker becomes resident in some particular regions of Southern Italy.

3. Safety and Guarantees in Real Estate in Italy

One reason that makes Italy a favorable target for real estate investments is the security that characterizes this kind of transaction, guaranteed by the presence of a figure (not always existing in the European legal landscape) of the Notary.

In Italy, any deed of real estate purchase and sale must pass under the watchful, impartial and competent eye of the Notary, who acts as a public official on behalf of the government and not on behalf of the parties, from whom he remains neutral, and who carries out the work of checking the regularity of the procedure, which is of crucial importance for both buyer and seller.

First of all, the Notary, as an extremely competent and impartial person, has the task of interpreting the wills of the two parties, seller and buyer, and making sure that the content of the deed of sale actually reflects the two wills, and that it does so in accordance with Italian law.

Secondly, and this is probably his most important function, the Notary verifies that the property is free from any legal or economic constraint (lien, mortgage, foreclosure, seizure, etc.), and that the seller is the real owner of the property itself. Only in this way you can be sure that you are buying the property from the person who has the full right to sell the same. In addition, the Notary’s control also extends to the verification of the urban, building and cadastral regularity of the property: the law, in fact, prevents or (in less serious cases) limits the purchase of properties that present abuses or that, simply, are not correctly and/or completely recorded in the Land Registry.

The verification work of the Notary certainly does not stop there, as he or she has to carry out a series of formal verifications however of great importance, from the power of signature and capacity of the parties involved in the contract to the matrimonial property regime of the couple (if the parties are married) or the tax regime to be applied to the contract (there may, for example, be specific facilities related to the verification of compliance with energy regulations).

4. High ROI: where to invest?

Last but not least, a final important evidence of the good health of the Italian real estate is the high average of ROI, calculated on the basis of every region in the country.

For those who do not know, ROI, or return on investment, is an index that measures the profitability and economic efficiency of a financial transaction, given by the simple ratio of the revenue obtained from the transaction to the cost incurred to put it in place (revenue/cost of investment).

To date, it has been calculated that the average ROI of the Italian real estate market is about 22 %, with areas that slightly exceed 10 % and areas that, even, go over 40 %. This simple data makes it clear how every area of the country can represent an important investment opportunity despite the fact that, obviously, there are areas that are potentially more profitable than others, such as big cities (Milan, Rome, Florence, etc.), or major tourist areas (Sardinia, Amalfi Coast, Capri Island, Puglia, etc.).

To recap: you can buy houses for €1; you can decide to live in a castle; you can enjoy many tax advantages; you can spend a golden retirement in the most beautiful country in the world; you can buy property everywhere, in any part of Italy, and you can be confident that your purchase is safe and secure. I bet you are wondering, “Why haven’t I invested in Italy yet?”.

 


17 November, 2022

FIFA World Cup 2022: a spotlight on the next big investment opportunity in Qatar

This year, the world of soccer will be marked by an event destined to become part of the history of the sport. For the first time FIFA World Cup, the most watched sporting event of the world, will be played in winter. It will start on November 20th, with the opening match between Qatar and Ecuador, and the final scheduled for December 18th.

But this is not the only important news related to this event.

For the first time, the host country of the FIFA World Cup will be the State of Qatar, a country whose standing by the rest of the world has grown in the last few years. Qatar is also a country that can offer great prospects and opportunities.

qatar investments 2022Overview of the Qatari Economy

Starting with a quick overview of the country’s socio-economic background, Qatar is the country with the highest GDP per capita in the world. The small country has recorded the highest average growth rate in the Gulf Cooperation Council (GCC). This is thanks to the presence of large oil fields in its territory, and immense gas reserves underground, making it the world’s third largest natural gas reserve. It is estimated to have almost 15 % of all the reserves in the world.

Although not very large, Qatar has the second-highest population growth rate in the world. This is due to the continuous influx of immigrants, including many Italians, who are attracted by the multitude of earning opportunities it has to offer.

Creating a 21st Century Economy

Despite the fact that Qatar’s economy is primarily sustained by the energy sector, the government has committed a substantial amount of resources to transform the nation and create a more diverse and sustainable economy. Their efforts include promoting the inflow of private and foreign investment in a multitude of sectors such as financial services, welfare, education, tourism, sports, and more.

The upcoming World Cup is estimated to bring more than $20 billion into Qatar’s coffers in the short term. The long-term benefits provided by the investments in infrastructure, will grant significant opportunities for development and expansion of the business and tourism sectors, generating more investment opportunities.

Investment Opportunities for Italians

In addition, Qatar’s has a cultural inclination to embrace the participation of foreign companies that are ready to enter into joint ventures with local companies and to become economic operators in its markets. Consider the incentives that the Doha government has provided in recent years to encourage the establishment of joint venture companies.  These include concessions on the price of gas, electricity, annual rent of industrial land, more elasticity in the provision of loans for the purchase of machinery or commodities, no tariffs on the import of machinery, plant and spare parts, and no quantitative restrictions on the latter.

In other words, the state has undertaken a series of economic measures and maneuvers that have created an attractive legislative, regulatory and institutional environment that can offer multiple investment opportunities.

Legal Support for Investors

If the aforementioned information has convinced you to think of Qatar as a possible target for your investments, after thanking the World Cup for turning the spotlight on this opportunity-filled country, it would be best to rely on LEXIA Avvocati’s Foreign Direct Investment & Corporate Services Team, whose expertise in the field and in-depth knowledge of the target market can provide you with all the basic information on the country’s economic scenario. We can  help you devise a proper strategy for operative action on the ground and assist you in every legal aspect of the procedures. Contact us!

 


11 November, 2022

Italian limited liability companies’ online incorporation: now possible with preset bylaws

company online italyFollowing the adoption of the EU Directive 2019/115 into national law by Legislative Decree No. 183/2021, concerning the use of digital tools and processes in Company Law, the Italian Ministry of Economic Development has finally adopted the relevant implementing Regulations (No. 155/2022 of July 26, 2022), which went into effect on November 5, 2022.

Based on the aforementioned regulation, the Ministry has provided standard and pre-set templates for the online incorporation of both limited liability companies (S.r.l.) and simplified limited liability companies (S.r.l.s.). The online incorporation procedure has already been in use since last year, and the novelty concerns the possibility of using the facsimiles of the online public deed, annexed to the Regulations no. 155/2022, to further speed up the incorporation online procedure. However, it is still possible to incorporate the company online by adopting a different memorandum of association.

Requirements for setting up a company online

To use these standard templates:

  • – it is necessary for the company to have a registered office in Italy;
  • – the company’s capital should be paid in the form of cash contributions (with the exclusion of contributions in kind) and transferred to a dedicated notary’s client account.

Online registration of an Italian branch and other operations

Another aspect concerns the registration and deregistration of an Italian branch of foreign companies subject to the law of an EU State, which can be done online thanks to the introduction of the new Article 2508-bis of the Italian Civil Code. Such registration/deregistration is reported via Business Registers Interconnection System (BRIS) to the companies register of the EU State where the company is registered.

On the other hand, the use of the online platform remains excluded in the event of the adoption of shareholder’s resolutions to amend the articles of association. Moreover, the incorporation of joint stock companies and partnerships still requires the signing of the memorandum of association in the presence at the notary’s office.

The online incorporation procedure

The online incorporation procedure takes place through a dedicated platform that will allow the notary to ensure that the legal requirements are met, thus ensuring the same safety and reliability as for the stipulation of any other public deed.

Before proceeding with the execution of the deed, the notary will check the identity of the shareholders through the use of applications that are able to read the data contained in the electronic identification documents, verify the effective intention of the participants given their presence in the video conference meeting and read the incorporation deed as well as all the annexes.

Finally, the deed will be concluded and signed through the digital signature devices of all participants: therefore, the shareholders should have obtained an electronic signature device. However, this is without prejudice to the notary’s power to interrupt the execution of the deed by video conference and to require the physical presence of the parties or some of them if he/she doubts the identity of the applicant or detects non-compliance with the rules on the applicants’ capacity to act and power to represent a company.

Despite the online and digital procedure, the territorial jurisdiction of the notary must be determined by reference to the residence of the parties:

  • – if the parties are resident abroad, any Italian notary is competent to execute the deed of incorporation;
  • – in the case of citizens residing in Italy, the competent notary is the notary of the place where at least one of the intervening parties has its residence or registered office.

Contact us to set up your company in Italy by filling out the form.

 


1 September, 2022

Doing business in Italy: challenges and opportunities

If you’re an entrepreneur thinking about setting up your business in Italy as a foreigner, probably you should start getting to know better the challenges and the opportunities you could face. In particular, after everything that happened in 2020: as for any other country in the world, the pandemic influenced the Italian economy in many ways.

Of course, we are taking for granted the fact that your business idea fits the Italian market and you identified interesting opportunities there.

At this point, let’s get into the peculiarities of the Italian business culture and environment.

Economical aspects

Italy is historically famous for its relevant role played in the manufacturing sector, as well as the food & beverage field, design, and R&D.

In the last decade, other sectors have been able to increase their productivity as well. Wholesale and retail trade grew by about 1.75 % per year – more or less in line with Germany, France, and Spain. Financial and insurance activities become more relevant thanks to the development of the Internet & Home Banking services.

Unfortunately, COVID hit particularly hard on Italian companies. The pandemic effects that started in Italy before any other country and the stricter containing measures adopted resulted in many months of productivity stops. The traditional organizational models of SMEs (small and medium enterprises), successful for many years, could not adapt to the consequences of the pandemic. The difficult coexistence between innovation and tradition has shown the unpreparedness of Italian management.

In the first quarter of 2021, the Italian economy showed a very slight cyclical recovery (+0.1 % GDP), which however showed a better performance compared to other major European economies.

Opportunities

A long manufacturing tradition

manufacturing italy

Italy is the 8th largest economy in the world. As mentioned before, its manufacturing sector has a long and strong tradition, that allows Italy to rank consistently among the largest manufacturers globally. According to the Italian trade agency, is the 2nd in Europe (after Germany), 3rd in the eurozone, and 5th in the world. Not only manufacturing but also design, food, and luxury are a long tradition in Italy: Italy is the 2nd largest world wine and footwear exporter, the 3rd largest world fashion exporter, and the 4th largest furniture exporter. For foreign entrepreneurs, Italy is often an attractive country from the perspective of being close to its main producers and suppliers.

Mechanical machinery is still the biggest market in Italy in with a value of 80bln euros, followed by chemistry (Italy is the 3rd largest chemistry producer, with a turnover of more than 50 bln euros) and pharmaceuticals (Italy is the 1st European producer of pharmaceutical goods).

Innovation

Italy can claim a strong network of research institutes, technological hubs, and innovative incubators, often linked to universities. An example is the next big project is being developed in the ex expo area, in Rho, that is called Human Technopole and will collect research groups, research centers, and core facilities focused on Genomics, Neurogenomics, Structural Biology, Computational Biology, and Health Data Science.

Despite a high-quality level of research, small and medium enterprises struggle to incorporate innovative practices into their organization. An example of this lack of connection between research and industries can be seen in the scarcity of innovative start-ups in Italy. The few successful ones (Depop, Yoox, and scalapay) have been sold to foreign multinational companies.

To face this obstacle, which proved particularly damaging during the health crisis, the MISE (Ministero dello Sviluppo Economico) introduced policies to help and support research and innovative investment, hoping to fill the gap Italian companies have compared to other European countries in terms of digital skills and development. Digitalization is also one of the core points of the PNRR (piano Nazionale ripresa e resilienza) that will focus on pushing investments in tech development. In particular, 30.57 billion euros are allocated to improve innovation in the private production system. In particular, much of the investment is earmarked for Transition 4.0 and the establishment of ultrafast networks (5G). The main beneficiaries will be SMEs, which will be incentivized to invest in information systems and digital tools to be used in process optimization.

Geographical position

Its great geographical position makes Italy’s role central in logistics and trade across Europe, northern Africa, and the Middle East. To support trade and commerce, a great effort is put into the construction and improvement of transportation infrastructures (highways, highspeed rail, ports, and airports), which leads to increased growth in export, especially of goods, that is 2017 exceeded 450bln euros. According to ice,” Italy is one of only five countries in the world whose manufactured products have an export trade surplus (over € 47 bln).”

Support to entrepreneurship

According to Movimprese, 2021 shows that there is still the desire for entrepreneurial activities and new businesses set up in Italy. 332,596 new registrations have been recorded (+14 % compared to 2020). Even if we cannot talk about a full recovery and the number are still lower than the pre-pandemic ones (maintaining a gap of about 20,000 fewer openings than in 2019) the new financial support and public investment provided in the next generation EU will support private sector investment.

Challenges

Post pandemic slowdown

As regards GDP growth, OECD predicts a + 2.5% this year, which will slow down to + 1.2% in 2023. Preliminary predictions were more favorable, however, they have been downsized by the impact of inflation, both covid and war-related.

Bureaucracy

One of the main difficulties for entrepreneurs that want to do business in Italy is the complex regulatory environment, which often lacks clarity and efficiency. Italy’s economic freedom has increased by 1,1% in 2021 compared with 2020, thanks to an improvement in judicial effectiveness. However, there is still a long way to reach the average level of other European Countries (it still ranks 36th out of 45 countries in Europe). For everyone that is going to open a company in Italy, is strongly suggested to rely on local legal support.

To set up a company in Italy, contact our corporate lawyers specializing in foreign investments: they will guide you through all the processes.

Cultural aspects

Italian workers in the past

As a result of the pandemic, the Italian labor market has changed dramatically. But before we get to the current situation, let’s do a little historical background that characterizes Italy from a working culture point of view.

Traditionally, Italy has been a country of workers, and savers, attached to the concept of the “stable job“-as permanent contracts in Italy, especially in the past, had considerable advantages for employees. Difficulty in layoffs and protections guaranteed workers the economic stability needed to meet needs considered primary: buying a house and supporting a family. Culturally, loyalty to the company, measured in years of continued employment within the same company, was privileged.

The labor market did not shine in terms of dynamism, given also its composition: the majority of companies in the area were (and still are) SMEs (Small Medium Enterprises) that lacked the strength and adequate structure to find benefit in a high turnover of their workforce. The corporate culture, goes without saying, was centered around the role of the “boss/entrepreneur” who, in exchange for stability, demanded dedication and respect for roles and hierarchies.

This is more or less the traditionalist picture of the labor market and the priorities of Italians, which have remained virtually unchanged for a very long period.

New post-pandemic evolutions

We can now speculate that the mindset is changing. The effects of the pandemic have left many entrepreneurs appalled, and unprepared for the impact not only economically but also culturally. The Great Resignation phenomenon, born in America, has spread throughout Europe arriving in Italy as well. The first 3 months of 2022 recorded almost 460k voluntary resignations from permanent contracts (we can suppose due to a desire for better pay, better work-life balance, and better business culture), compared with 414k in the same period in 2019 (thus pre-pandemic).

Although the number of permanent hires between 2020 and the first 3 months of 2022 does not balance the number of resignations (nearly 3.5 million resignations versus 2.5 million hires) according to inps, the spread is gradually narrowing, suggesting an increase in labor market dynamism. Even VAT openings, especially among young people, are approaching pre-pandemic levels again.

The phenomenon may be a mirror of greater flexibility and openness to change on the part of Italian workers: we will see in the coming years whether these assumptions are borne out, and especially whether companies operating in Italy will be able to embrace the challenge and adapt.

Do you need support in managing payroll activities for your Italian employees? Contact our lawyers specializing in the labor market.

business italy challenges opportunities

Italian working culture

In order not to address the topic of the Italian approach to work with a boring list of vaguely stereotyped examples (small talk during meetings, little organization, little attention to punctuality…) we try to give a simple classification, which may come in handy in the interpretation of many behaviors. Italian culture is identified as high context culture, which is opposed to the low context culture typical, for example, of Anglo-Saxon countries, Germany, or Scandinavian countries. Because in the business world the example often falls on American or Northern European models, the low context culture is the one that is presumably considered more common in the working environment. However, that is not always the case and it may not be easy for all countries to adopt it.

Low context culture refers to an approach based on the pure meaning of words, the direct expression of one’s thoughts through verbal communication, without contamination or external references. The approach is direct, specific, and analytical. The focus is placed on goals rather than on dynamics or relationships. There is a tendency to prefer a short written form of communication (messages, emails) that gets straight to the point.

In high context culture, references to context are much more frequent. Interpretation of the surrounding situation is essential to read correctly the meaning of a message. Attention needs to be paid to the “unspokennonverbal language, and situational and relational references. Relationships are usually more important than tasks. Oral communication is generally preferred over written communication, and in both cases, the approach is much broader.

This is a general classification. We certainly cannot say that the approach of an Italian is identical to the one of a Chinese, an African, or a Pakistani (although all are part of the same high context culture). As well, we cannot 100% liken the approach of an American to the one of a Dane. However, this identification may help us understand that there are different cultures, implying a different – and sometimes opposite – reasoning approach. What is needed is to become aware of this and learn to go along with one’s interlocutor.

We hope that this updated overview of the challenges and opportunities of doing business in Italy will be useful for your upcoming activities. If you need support in setting up your company in Italy, do not hesitate to contact us.

 


12 July, 2022

Climate change has entered political agendas in Italy since the advent of the Green Deal, which EU Countries joined in 2019. The goal is to achieve zero climate impact by 2050 and a net domestic reduction in greenhouse gas emissions of at least 55% by 2030.

It is not only the environmental situation that dominates the debate in Italy. The social and cultural aspects that characterize this century, such as gender equality, the fight against inequality and discrimination, etc., are also mixed in with the sustainability trend.

These issues populate discussions in the Italian media especially at the present time, due to the pandemic aftermath, climate change effects and war-related consequences.

sustainability business italyBusinesses and entrepreneurs are involved in all this as well. Italian companies are increasingly called upon when it comes to environmental and social impacts, so much so that their commitment is increasingly being sought.

In this article we look at how companies in Italy are involved in responding to these new needs from the market.

 

Benefit Corporations in Italy

Becoming a Benefit Corporation is a good way to endorse a new sustainable approach in business.

The number of Benefit Corporations in Italy is also a mirror reflecting the afore mentioned trend, as it doubles each year: in april 2021 its number reached 926, and in June 2022 Assobenefit surveyed just over two thousand (2146).

These companies are characterized for having, as a social object, the commitment to generate positive environmental and social impacts for employees, stakeholders and communities.

Italy has been a pioneer in this matter, being the first Country in Europe (and one of the few globally) in adopting the Law of December 28, 2015 that institutionalizes this kind of business model.

An explosion of interest followed the 2016 legislative intervention (stability law) that Italy accepted and strictly enforced, which adds provisions to promote benefit corporations.

The Decree Law 1882 of April 17, 2015 reports guidance on what is meant by “common benefit” and how to structure its processes. In particular:

  • give guidance on how to make the beneficial purposes explicit in the corporate mission, amend corporate name, articles of incorporation and bylaws;
  • give a definition of common benefit and how to balance the interest of the company’s members with the interest of those on whom the social activity may impact;
  • introduce external evaluation standards for assessing the impact generated;
  • identify areas of evaluation.

Benefit Corporations can make use of tax incentives as well. The Relaunch Decree (DL 34/2020) established a tax credit equal to half of the costs of incorporating a BC or transforming an existing company into a Benefit one (up to a maximum of 10000 euros).

To incorporate a Benefit Corporation there are subsidized expenses regarding notary fees, registration with the Companies Register, professional assistance and consulting services directly involved in the Benefit Company incorporation or transformation.

B Corps in Italy

Benefit Corporations and B Corps are two separate things. We use the term “ Benefit Corporation” to identify the type of legal form of a company (recognized in Italy but not very common internationally), while, “B Corps” are companies certified by the no profit organization B Lab.

B Corps meet the world’s highest standards of social, environmental and economic performances, with a legal involvement towards their stakeholders. As for Benefit Corporations, B Corps are a great indicator to identify a Country vision towards sustainability.

The first certified B Corp in Italy dates back to 2013 and since then the number has been steadily growing.

In 2021 the number of B Corps in Italy reached 140, +26% over the previous year, with a turnover of 8 billion and 15 thousand employees. In 2020 in Italy, B Corps saw their turnover grow in the 66% of cases and 52 % of them experienced an increase in workforce.

Regulation and ESG criteria

Companies that pay attention to environmental and social aspects while leading their activities and monitor their CSR performances have gained importance and popularity.

We summarize the tripartition of the environmental, social and economic role of companies today with the term ESG (which stands for environmental, social, governance). This term encapsulates a set of criteria on which many corporations are evaluated. The legislative activity has helped in regulating sustainable activities and in facilitating an unbiased monitoring of companies, preventing the so-called greenwashing.

How to monitor companies’ activities and achievements on these matters? The answer lies in the non-financial reporting that not only Benefit Corporations but also many listed companies draft. This is a qualitative report that informs stakeholders about the impact of social and environmental policies undertaken by the companies.

The GRI standard, developed by the international nonprofit Global Reporting Initiative and updated in 2021, is one of the most important benchmarks in giving a unique framework on sustainability reporting.

Publishing a public sustainability report is not the only way to identify companies’ activities and impacts from a sustainability perspective. ISO certifications, issued to companies by accredited bodies, are particularly important in supply chain and supplier assessment: ISO 9001 for Quality, ISO 14001 for Environment, ISO 50001 for Energy, and SA 8000 for Social Responsibility.

Understand and align with trends

To conclude, checking local trends on Benefit Corporations, B Corps, Sustainability reports and ESG criteria is a good way, even if not the only one, to evaluate a Country on its commitment towards environmental and social values. It is also important for entrepreneurs that intend to expand or set their business in Italy, in order to be aware of the approach and mindset towards sustainability.

Contact us for more information about Benefit Corporations and their incorporation, or to register an existing company as a Benefit corporation.


Sources:

  • ilsole24ore.com (Benefit Corporations)
  • societabenefit.net (Benefit Corporations legislation)
  • esg.360.it (facts and figures on benefit corporations and b corp in Italy)
  • ilsole24ore.com (BCorp)
  • wikipedia.org and globalreporting.org (GRI standards)

 


23 June, 2022

     


    12 June, 2022

    What are the dual-use items?

    The so-called dual-use items are defined as products and technologies that can be used for both civilian and military purposes and are listed in Annex I of Regulation (EU) 821/2021.

    The content of said Regulation on the export control of dual-use items was recently updated by the Council of the European Union since, until now, EU Regulation No. 428/2009 legislated the issuance of a specific, global or general authorisation for the export and transit of dual-use items.

    New export control Regulation: what changes?

    new regulation export control dual itemsThe new Regulation, effective as of July 1, 2022,  aims to integrate the existing discipline by extending controls to new products and technologies not included in the old lists, such as computer surveillance items, and to broaden the range of persons potentially affected by the requirements of the new discipline. It also covers individuals such as consultants, service providers, researchers, and persons transmitting software or dual-use technologies by electronic means. The main changes concern the concept of export and the concept of technical assistance, which also includes suppliers providing technical assistance of any kind on dual-use items.

    The new regulation also introduced general export authorisations for small and medium-sized enterprises (SMEs) to reduce administrative burdens while ensuring an appropriate level of control for certain destinations. SMEs using such authorisations will be required to keep records of all commercial documents relating to their exports, in accordance with national legislation or practice.

    In Italy, the export, transfer, intermediation, technical assistance and transit of dual-use items is subject to the control of the Ministry of Foreign Affairs and International Cooperation.

    Export control: compliance and risk assessment

    The new Regulation places greater significance on all company’s policies, internal procedures and standardized safeguards that an economic operator has ever implemented in order to ensure compliance with its dual-use obligations, the so-called Internal Compliance Programmes (ICP).

    The new Regulation has introduced specific guidelines for the development of these programmes to ensure equal conditions among EU exporters. In this regard, it would be appropriate for companies to verify the compliance with the provisions and objectives of the Regulation as well as to assess the risks associated with exporting products to end users.

    The new e-licensing system

    In addition, as of July 1st, 2022, the e-licensing system will replace the paper-based application procedure for authorisations. Companies will be able to send the application and necessary documents through the platform and monitor progress and respond quickly. However, this complex and constantly evolving subject requires an ongoing, careful analysis by companies and a proper export control procedure.


    Contact us if you need legal support on export control procedures and compliance. We can help you dealing with all legal requirements, allowing you to manage your exports in line with new regulations.

     


    21 December, 2021

    Read our guide on the Labour and Payroll Landscape

     


    15 October, 2021

     


    27 August, 2021

    Read our guide on the regulatory framework of Alternative Investment Funds in Italy.

     


    8 April, 2021

    An Introduction Brochure

     


    12 March, 2021

    The Ministerial Decree of December 28, 2020 has been published on no. 38 of February 15, 2021 of the Official Gazette. The decree adopted by the Ministry of Economic Development, which establishes the criteria and procedures for obtaining the tax benefits provided by Decree Law No. 34 of May 19, 2020 (so-called “Decreto Rilancio”) in favor of individuals who invest directly or indirectly in the share capital of innovative start-ups and SMEs registered in the special section of the Register of Companies at the time of the investment.

    The tax relief applies to cash contributions recorded under share capital and under the share premium reserve of shares or quotas of innovative start-ups and innovative SMEs and to investments in units of UCITS which, at the end of the tax period in which the subsidised investment is made, hold shares or quotas of innovative start-ups or innovative SMEs for at least 70% of the value of the assets.

    The benefit consists in a deduction from the gross IRPEF due by the investor, equal to 50% of the investment:

    • up to a maximum of 100,000 euros, for a deduction amount not exceeding 50,000 euros, with regard to innovative start-ups;
    • up to a maximum of 300,000 euros, for a deduction amount not exceeding 150,000 euros, with regard to innovative SMEs. In the event of an investment of more than 300,000 euros, on the part exceeding this limit the investor, in each tax period, may deduct from gross tax an amount equal to 30% of this excess.

    These facilities are granted under the so-called “de minimis aid” regime; therefore, the sum of the aid received by a single party must not exceed the threshold of 200,000 euros over three years; if this threshold were reached, the benefit would not be granted. A further condition is that the investment must be maintained for at least three years under penalty of forfeiture of the benefit.

    In order to benefit from the 50% deduction, it is necessary to submit the application electronically via a special digital platform of the Ministry of Economic Development. For investments made during the year 2020 and in the first months of 2021, until the platform becomes operational, the application must be submitted between March 1 and April 30, 2021. When fully operational, on the other hand, the company benefiting from the investments will have to submit the application before the investment is made by the investor.

     


    14 December, 2020

    The EORI number

    On December 31, 2020, the transition period for the United Kingdom’s exit from the European Union ends. From January 1, 2020, all companies moving goods and services to and from the UK will have to comply with a series of new administrative, customs and tax processes.

    The requirements that traders must follow are set out in a detailed government “Border Operating Model”, The Border with the European Union – Importing and Exporting Goods which can be found here.

    In particular, it will be essential to apply for an EORI (Economic Operator Registration and Identification) number, introduced by the European Community Regulation No. 312 of 16.04.2009. From 1 January 2021 traders and hauliers exporting and importing goods between the UK and the EU will need an EORI number in order to carry out border formalities.

    By 31.12.2020, every company should check if they already have an EORI number and, if not, apply for one. You will not usually need an EORI number if you only:

    • provide services
    • move goods between Northern Ireland and Ireland.

    The EORI number, instead, is issued by the Customs Agency of each EU member state and in order to obtain it, it is necessary to apply to the customs authority in the EU country where the first declaration is submitted.

    It is therefore necessary to prepare in time for the consequences of Brexit in order to avoid the blocking of your goods at customs and safeguard your business.

    Which documents are required to apply EORI number?

    If the applicant is an individual:

    • Passport or other valid ID document of the applicant, in original;
    • EORI number application.

    If the applicant is a company:

    • an extract from the Companies Register no older than 6 months;
    • Passport or other valid ID document, in original, of the legal representative of the company.

    If the person submitting the application is not a legal representative of the company, a power of attorney authenticated by a notary will be required.

    Should you need more information, do not hesitate to contact us at [email protected].

     


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