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22 September, 2019

Taxation of Italian Companies.

The taxation of the income of an Italian company is based on its aggregate income earned both in Italy and abroad. This articles provides an introduction to corporate tax in Italy, outlining the types (IRES and IRAP) and rates of income tax and explaining how such tax is calculated.

Corporate Tax

The taxation of the income of an Italian company is based on its aggregate income earned both in Italy and abroad. The corporation tax to be paid by a foreign company is levied upon its income earned in the Italian territory where it has a permanent establishment.

The income of a company is subject to national corporate income tax (IRES) and regional income tax (IRAP). IRES is a proportional tax levied at the rate of 24% on the amount of the taxable income. IRAP is calculated at a rate of 3.9%.

The taxable income of a company is represented by the results shown in its profit and loss account. Losses of a company may be carried forward and deducted from the corporate income tax (IRES) taxable income of the subsequent fiscal years up to 80% of the taxable income. Losses incurred in the first three fiscal years may be carried forward and deducted from 100% of the corporate income tax (IRES) taxable income of the subsequent fiscal years.. 

Italian corporate tax law provides for two types of withholding tax: (i) final withholding tax levied at source; and (ii) withholding tax in advance payment of income tax levied upon a single item of income and which may later be added to the aggregate income. Withholding tax rates refer to dividends, interest and royalties. This document explains the types and rates of withholding tax in Italy, including double taxation relief, and a table of Italian withholding taxes applicable to European countries is provided.

Withholding Tax

Types of withholding tax

Italian tax law provides, inter alia, for two types of withholding tax:

(1)     final withholding tax levied at source; and

(2)     withholding tax in advance payment of income tax levied upon a single item of income and which may later be added to the aggregate income. The amount of withholding tax levied in advance is deducted from the tax levied on the aggregate income. The withholding tax is levied intermediaries, i.e. by those who pay the income subject to withholding tax. These are commercial organisations, business concerns, commercial agencies and entities which are not subject to IRES. The withholding tax is levied by companies in the following instances: 

(a)     on income from employment;

(b)     on fees for independent services;

(c)     on commissions to agents and brokers;

(d)     on royalties for the use of intellectual property rights, patents, trademarks and other rights on industrial property; and

(e)     on capital income (interest on loans, from bonds, bank and post office deposits and current accounts, and dividends).

Rates of withholding tax

Italian Tax Law provides for the application of the withholding tax with referenceto dividends, interest and royalties. 

Dividends distributed to entities other than individuals, which are not resident in Italy, are levied with a withholding tax rate of 26%; however if the entity is a company, which is subject to corporate income tax in a State belonging to the European Union and to the Economic European Area the applicable withholding tax rate is reduced to 1.2%. According to the parent/subsidiary Directive (90/434), if certain conditions are met, dividends distributed to the parent company by the subsidiary are exempted from any withholding tax. 

In order to avoid cases of double taxation (both legal and economic) inbound dividends received by a company (non-resident in “low tax countries”) are exempt from taxation in the amount of 95%. For the interest due, a withholding tax rate of 26% is charged; for all other interest Italian Tax Law provides for the application of general full taxation. 

Royalties paid to entities not resident in Italy are levied with a withholding tax rate of 30%; for other royalties Italian Tax Law provides for the application of general full taxation.

According to the interest/royalties Directive (2003/49), if certain conditions are met, interest and royalties paid to “group companies” (25% of participation) are exempted from any withholding tax. 

Double taxation relief

Some international Doub, entered into by Italy to mitigate double taxation, set forth particular provisions for exemption from withholding tax for certain types of income or fix reduced rates in relation thereto. A table of the withholding taxes on payments from an Italian company to a resident of various countries included in this Publication is set out at para [508].

However, as mentioned above:

  • according to the parent/subsidiary Directive (90/434), if certain conditions are met, dividends distributed to the parent company by the subsidiary are exempted from any withholding tax;
  • according to the interest/royalties Directive (2003/49), if certain conditions are met, interest and royalties paid (and received) to (from) “group companies” (25% of participation) are exempted from any withholding tax;
  • a specific Agreement provides a measure for the avoidance of double taxation on dividends, interest and royalties paid between EU and Swiss companies whose rationale strictly aligns to that of the EU Parent-Subsidiary Directive for dividend and to that of the Interest/royalties Directive for interest and royalties, payments between EU companies: it implies that, if certain conditions are met, dividend, interest and royalties paid to Swiss companies are exempted from any withholding tax.

In particular, Italy has signed 97 tax treaties to avoid double taxation. 

For information for each countries, please visit: convenzioni-e-accordi/convenzioni-per-evitare-le-doppie-imposizioni/ 

Table of Italian Withholding Taxes Applicable to European Countries

RecipientWHT (%)
Resident corporations00/26 (1)0
Resident individuals26 (2)2620 (3)
EU resident corporations0/1.2 (4, 5)0 (4)/DTT rates0 (4)/DTT rates
Swiss resident corporations0 (6)/DTT rates0 (6)/DTT rates0 (6)/DTT rates
Non-resident corporations and individuals:   
Non-treaty countries26 (7)2630 (3)
Treaty countries (8):   
Czech Republic1500/5
San Marino0/5/150/130/10
Slovak Republic1500/5
United Kingdom5/150/108


  1. The actual applicable rate depends on the nature of the recipient. Applicable rates are as follows: 0% applies on loan agreements and ordinary notes when the recipient is a corporation; 26% rate in all other cases.
  2. For resident individuals, generally a 26% WHT applies, but there is a grandfathering regime for dividends received by ‘qualified’ shareholders (i.e. holding more than 20% of voting rights or 25% of the share capital, 2% or 5% in case of listed companies). The rate applicable to ‘non-qualified shareholders’ is always 26%. Non-residents are always subject to a 26% WHT, irrespective of whether or not they are ‘qualified’.
  3. The domestic rate applies on 75% of the gross amount of the royalty paid; however, treaty ceilings apply on the gross amount of the royalty paid.
  4. Pursuant to the EU Directives and provided that the requirements set forth therein are met, payments of dividends, interest, and royalties made by an Italian company to an EU resident group company can be WHT exempt. Specifically for the dividends, the minimum shareholding requirement (to benefit from this exemption) is currently equal to 10%; for interest and royalties, it is 25% of voting rights; a one-year minimum holding period applies for both.
  5. Should the full WHT exemption not apply, 1.2% applies on dividends paid to EU and EEA tax resident corporations.
  6. Pursuant to the Swiss – EU tax agreement and provided that the requirements contained therein are met, payments of dividends, interest, and royalties made by an Italian company to a Swiss tax resident group company can be WHT exempt.
  7. Non-resident persons have the right to obtain reimbursement for up to 11/26 of the withholding effected, upon proof of the actual taxation of the dividends in the foreign country where the recipient is a resident.
  8. Provided that all conditions are met, domestic tax legislation is applicable if more favourable for the taxpayer. In a number of circumstances, tax treaties may provide for particular tax rates mainly dependent on the nature of the instruments and on the profile of the recipients/payers. In such cases, the applicable WHT rate must be verified from an analysis of the relevant tax treaty.

This document summarises the rules on the application of registration and transfer taxes in Italy, and provides the tax rates.

Registration and transfer taxes

Capital transactions resulting in an increase in capital in cash or in the transfer of movable goods, if they are subject to VAT, are subject to registration tax at a fixed amount of €200. Sales of real property are subject to a registration tax of between 1% and 15% depending on the type of property involved plus mortgage and cadastral taxes (about 3% as whole). Such tax is levied on deeds entered into within Italy and relates to the market value of such deeds, regardless of the values declared in the deeds themselves. 

Contracts for the transfer of rights are subject (depending on the type of deed) to proportional rates ranging from 0.5% to 3%. In some cases contracts of transfer are subject to VAT provided that, in accordance with the principle of alternative applicability between VAT and the registration tax, such contracts are only subject to registration tax at a fixed amount of €200. 

On the sale of property and on the performance of services by companies in Italy, VAT is applied at the rate of 21 percent on the amount of the sale or on the declared value of the services. This rate is reduced to 4 percent or 10 percent, as the case may be, if the company is involved in sales of particular categories of goods. This document explains the application of VAT on companies under Italian law. 

Value Added Tax (VAT)

On the sale of property and on the performance of services by companies in Italy, VAT is applied at the rate of 22% on the amount of the sale or on the declared value of the services. This rate is reduced to 4% or 10%, as the case may be, if the company is involved in sales of particular categories of goods (such as agricultural products, agronomic goods, fish, milk and dairy products, etc). 

VAT is also paid on imports from non EEC countries and on transactions abroad, but it is excluded, on the basis of the territorial principle, on particular export transactions (within the limits and the conditions provided by law). Transactions carried out in Italy by non-resident entities which have a permanent establishment in Italy are also subject to VAT.

EC Directive no 91/680, amending Council Directive 2006/112/EC, set forth a transitional regime for cross-border sales between business operations in the European Community. In the case of sales of goods, the VAT must be paid in the place where the goods are located. On the performance of services, there is a distinction: if the purchaser is a VAT subject, VAT must be paid in the State where the purchaser is resident or domiciled for tax purposes; if the purchaser is a consumer, VAT must be paid in the State where the performer is resident or domiciled for tax purposes. VAT is paid on the basis of the returns made either on a monthly or on a quarterly basis. 

Any sales of national or nationalised real estate or moveable property located in Italy are considered to be performed in Italy.

The act governing the application of VAT provides that certain transactions are exempt from tax (for example, credit and financing transactions; insurance transactions; foreign currency transactions; transactions concerning shares and bonds). VAT is based on the principle of ‘compulsory recourse’. Therefore, each commercial agent is bound to pay to the Italian Government, on a monthly or quarterly basis (depending upon the realised turnover) any VAT collected after deducting any VAT paid on the transactions in relation to which it was a beneficiary.

There are a series of steps involved in the application of VAT including the obligation of the performer of the service or seller of the goods to issue an invoice; the obligation to keep and maintain a book with a list of all invoices issued and purchases performed. Each year, companies must file a VAT return, at the same time as their income tax return, stating the turnover transactions performed, as well as the amount of VAT collected and the amount of VAT paid. By 16 March of each year any amount due in addition to the amount paid on a monthly or quarterly basis must be paid.

‘Capital gains’ (redditi diversi di natura finanziaria) are income deriving from the disposal of previously invested capital, including shares (or quotas in a society with restricted liability (srl)), foreign currency and bonds. As part of this commentary on company law in Italy, this document explains the tax treatment of capital gains, setting out the options as to how they may be taxed as well as the conditions for the application of the participation exemption regime. 

Capital Gains Taxes

‘Capital gains’ (`redditi diversi di natura finanziaria’) are income deriving from the disposal of previously invested capital, including shares (or quotas in an Srl), foreign currency and bonds.

Capital gains of an individual may be taxed, each having different advantages which are not dealt with in detail herefollows:

(1)     Regime della dichiarazione(‘tax return option’), which taxes the gains effectively realised at a rate of 26%, on an annual basis.

(2)     Regime Amministrato(‘Administration option’), which taxes the gains effectively made at the completion of each transaction at a rate of 26%. It is not applicable to qualified shareholdings, and allows anonymity for the taxpayer.

(3)     Regime Gestito(‘asset management option’), where the taxation is based on a ‘yearly accrual basis’ regardless of the income realised. It is not applicable to qualified shareholdings and the tax rate is 26%.

A particular regime is applied to capital gains from participations performed by companies: if certain conditions are met (see below)the capital gain is levied only on 5% of the taxable amount (the percentage of exemption is 95%). In order to enjoy this participation exemption regime four conditions must be satisfied: 

(a)     uninterrupted possession of the participation from the first day of the twelfth month preceding its sale (the `holding period’);

(b)     the participation must be classified as a financial fixed asset (`Immobilizzazioni finanziarie‘) in the first financial statement closed during the first holding period; 

(c)      the residence of the company in which the stake is held must not be in a State which is not a non-resident in “low tax countries”;; 

(d)     the subsidiary must carry on business activity.


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26 August, 2021


1 – The Benefit Corporations and their main characteristics

The Italian Law n.208 of December 28th, 2015 (2016 Stability Law) has introduced in the Italian legal system the figure of “Benefit Corporations”, defining them in the Article 1 paragraph 376, as those companies which, in the exercise of an economic activity, in addition to the purpose of dividing its profits, pursue one or more purposes of common benefit and operate in a responsible, sustainable and transparent way towards people, communities, territories and environment, cultural and social goods and activities, cultural entities and associations and other stakeholders.

The illustrative Report on the bill stated that the proposal to introduce such companies in Italy aiming to “allow the spread in our legal system of companies which, in the exercise of their economic activity, also have the objective of improving the natural and social environment in which they operate, reducing or eliminating negative externalities or, better still, using practices, production processes and goods capable of producing positive externalities”.

The aim of the legislator was thus to expand the concept of “Corporate Social Responsibility (CSR)” – already enriched, for example, by the introduction of innovative start-ups with a social vocation[1] and social enterprises[2] – given that with the Benefit Corporation the shareholders, at the time of incorporation or, in the case of companies already established, following a specific amendment of the memorandum of association and articles of association, decide to bind and bind the company to a mission of common benefit to be identified with a real legal obligation of a statutory nature.

However, the Benefit Corporations remains a “for-profit” company that can carry out any economic activity and distribute profits – just like all for-profit companies currently provided for by our legislation – but at the same time achieve one or more beneficial purposes in favour of the community. In addition to the activity aimed at obtaining a profit, these companies have the duty – expressly stated in their memorandum and articles of association – to pursue aims of ‘common benefit’ by adopting a sustainable, responsible and transparent management towards third parties such as the environment, territories, communities, people, social and cultural assets and activities, bodies and associations as well as any other stakeholders.

It is therefore a “hybrid” form of business activity, halfway between those whose sole purpose is to make a profit and those whose sole purpose is to achieve a social benefit (such as the so-called third sector companies). As we shall see, in the case of Benefit Corporations, the administrative body is entrusted with the task of balancing, on the one hand, the interests of the shareholders and, on the other hand, the pursuit of common benefit purposes and the interests of the stakeholders.

However, it should be pointed out that the legislator did not intend to create a new type of company[3] with the introduction of the Benefit Corporation, since it can be established in any of the legal forms provided for by the Civil Code, including partnerships, corporations and cooperatives. From a legal point of view, the Benefit Corporation does not therefore constitute a new type of company, but rather a business model specifically designed by the legislator to pursue social objectives while fully maintaining its profit-making purpose.

With the introduction of this type of reality, we are witnessing a conception of business that is also capable of including social aims in the context of its strategic objectives, thus mitigating the excesses of a capitalism inspired only by the pursuit of profit, which has become increasingly intolerable in the current crisis, in which social inequalities are worsening and collective trust in businesses is being undermined[4].

2 – The Italian legislation applicable to Benefit Corporations

The Benefit Corporations were introduced into our legal system by paragraphs 376-384 of Law no. 208 of 28 December 2015, “Provisions for the formation of the annual and multi-year budget of the State” (2016 Stability Law, published in the Official Gazette no. 302 of 30 December 2015), in force since 1 January 2016. This legislation follows, moreover, the draft law presented in the Senate during 2015[5] in which the objective to be pursued with such discipline clearly stands out, legitimising the pursuit of an additional purpose to that of profit[6] by way of derogation from the general principles of company law and in order to “allow the diffusion in our system of companies that in the exercise of their economic activity also have the objective of improving the natural and social environment in which they operate”.

This legislation thus regulates the possibility of a profit-making company also pursuing one or more public benefit purposes, taking care to articulate it in the company’s object and statute. Hence the need to regulate the obligations of the directors to act in compliance with both the profit-making purpose and the corporate purpose, the obligations of publicity and transparency regarding the pursuit of the objectives of common benefit, the definition of external evaluation standards to which reference should be made for the assessment of the impact generated by the Benefit Corporation in terms of common benefit as well as the related sanctions (both for the directors and for the company) arising from the failure to pursue the aforementioned purposes as declared in the articles of association and the memorandum of association.

The introduction of this legislation has thus enabled Italy to become the first country in the European Union, along with a number of federal states in the United States of America[7], to assign real legal dignity to this innovative business model.

3 – Why become or set up a Benefit Corporation

The incorporation of a Benefit Corporation or the transformation of an existing company into a Benefit Corporation has numerous benefits for both the shareholders – i.e. the members – and the stakeholders (as defined above), which could be summarised as follows:

(i) the guarantee of legal protection of the directors who pursue not only the profit motive of the company but also the purpose of common benefit as set out in the articles of association thus balancing financial and non-financial interests;

(ii) the certainty for both shareholders and stakeholders that the company will continue to pursue over time the purposes of common benefit set out in the articles of association, while providing a constant update, in a transparent manner, of the methods adopted to pursue those purposes;

(iii) to make the company more attractive in terms of social impact investments, thus giving it access to private investment capital from consumers who are aware and knowledgeable about the activity actually pursued by the company;

(iv) advantages from the point of view of external reputation, as those who interface with the company can be sure that it operates in a responsible manner with the aim of pursuing its social objective;

(v) the ability to attract young talent;

(vi) The possibility of developing a network of other benefit enterprises with which to share the values they pursue;

(vii) the possibility of being one of the few subjects that have so far decided to project themselves into this new entrepreneurial reality that also aims to give back value to society and the environment.

In this context, however, it is worth noting that the legislator, in introducing this new business ‘model’, did not originally provide for any tax benefits for Benefit Corporations, let alone reductions in social security contributions or financial benefits, and did not provide for any exceptions to the company regulations that impose particular reporting requirements, and indeed, as better specified below, perhaps made them more stringent.

It was thus legitimate to imagine that without tax advantages or incentives the spread of Benefit Corporations could be severely limited, especially in terms of attracting both Italian and foreign socially responsible investors.

The “Decreto Rilancio”, however, set aside a specific fund for Benefit Corporations which granted a 50% tax credit for the establishment or transformation of Benefit Corporations. Article 38-ter of the law converting the “Decreto Rilancio[8]” (Law No. 77 of 17 July 2020, Official Gazette No. 180 of 18 July 2020), entitled “Promotion of the system of Benefit Corporations”, recognised a contribution in the form of a 50% tax credit to reduce the costs incurred in setting up or transforming into a Benefit Corporation.

Lastly, mention must be made of the further intervention in favour of Benefit Corporations provided for by the Fiscal Decree Law – an amendment to art. 49 of DDL 2220 containing ‘Urgent dispositions on fiscal matters and for urgent needs’ – which provides that Benefit Corporations and in general all companies that operate in a transparent and responsible manner may be granted a bonus in public tenders. With the approval of this amendment, all companies will have access to a bonus in public tenders if they choose to assess their social and environmental impacts, even if they do not have the legal status of a Benefit Corporation.

4 – The establishment of a Benefit Corporation and the transformation of an existing company into a Benefit Corporation

As mentioned above, Benefit Corporations must be incorporated in compliance with the formalities prescribed by the legislator for the types of companies provided for in Book V, Titles V and VI of the Civil Code, since they must be governed by the rules applicable to the type chosen, except, of course, for the specific provisions introduced by the rules on Benefit Corporations. A company can therefore be set up as a Benefit Corporation at the time of its incorporation or, if it has already been set up as an ordinary company, it can become a Benefit Corporation by amending the corporate contract and, therefore, the articles of association and memorandum of association adopted at the time of incorporation.

The specific regulation of Benefit Corporations thus affects some key aspects of the corporate paradigm, such as the object, the purpose and the interest of the company, thus differing significantly from those of companies that are exclusively profit-oriented.

In the case of a Benefit Corporation to be set up from scratch, the contractual clauses that come into play are in particular those concerning the name, the objects of the company, the duties and responsibilities of the directors and the annual report on the benefit activity, which will be discussed later in this article.

Once the type of company that best corresponds to the structure desired by its founders has been identified, the first thing to do is to define its corporate purpose. This element plays a key role in the case of Benefit Corporations, since it not only defines the company’s own purpose, but also acts as an element of attraction for third parties who, sharing the purpose pursued by the company, may decide to establish commercial relations with the company. In this regard, Article 1, paragraph 377 of the 2016 Stability Law provides that the common-benefit purposes of a Benefit Corporation must be specifically stated in the corporate purpose and are pursued through management aimed at balancing the interests of the shareholders and those on whom the corporate activity may have an impact[9].

The common benefit constantly referred to by the law and the ultimate aim of the business activity carried out by the Benefit Corporation must therefore be correctly declined within the corporate purpose, since it must concern one or more positive effects or the reduction of negative effects on one or more categories included among people, territories, communities, environment, cultural and social assets and activities, bodies and associations and other stakeholders that can be generally referred to as workers, suppliers, lenders, creditors, public administration and civil society[10].

The Benefit Corporation will thus have to add the words “Benefit Corporation” or “SB”[11] to its name or business name. in order to allow it to avail itself of the qualification in analysis especially towards third parties. As we shall see, a specific clause in the memorandum of association will have to identify the person or persons responsible for entrusting the tasks aimed at the pursuit of the common benefit as well as regulating, again with a specific clause, the obligations of the directors for drafting and publishing the annual report on the pursuit of the common benefit.

If an existing company intends to transform itself into a Benefit Corporation, the corporate structure must instead proceed with the amendment of the memorandum and articles of association by means of a shareholders’ resolution to be held in the manner prescribed by law. In this regard, it will not be sufficient to amend the company’s object in order to introduce the common benefit purposes that the company intends to pursue, but it will also be necessary to make changes to the name as well as to set out in detail, as mentioned above, the duties and responsibilities of the directors in the context of the activity aimed at pursuing the common benefit. All the aforementioned changes will therefore have to be filed, registered and published in accordance with the provisions of the law for each type of company pursuant to Articles 2252, 2300 and 2436 of the Civil Code.

5 – The obligations of the directors of the Benefit Corporation and the appointment of the person responsible

One of the main aspects of a Benefit Corporation is certainly the management of the company, which must be carried out in accordance with the rules of the type of company adopted, appropriately adapted to the provisions of paragraph 380 of Law no. 208/2015. The traditional canons set forth in the Civil Code with reference to the management of the company and especially to the implementation of the corporate purpose must then be coordinated with the specific provisions of the Benefit Corporations. Paragraph 380 of Article 1 of the aforementioned law states that the management of the Benefit Corporation must pursue objectives in addition to those attributable to the proper pursuit of the statutory and legal obligations and coinciding with the balancing of the interest of the shareholders, the pursuit of the purposes of common benefit and the interests of the categories referred to in paragraph 376 (persons, communities, territories and environment, cultural and social assets and activities, bodies and associations and other stakeholders).

The text of the law gives the administrative body the greatest freedom in defining the balance between the different interests that animate the company’s activity. The directors of a Benefit Corporation must therefore act in accordance with the general principles, taking particular care to consider the impact of their actions.

Where it is not possible to pursue a profit and an external collective benefit at the same time, the governing body must decide which interest should prevail and which should be sacrificed. Clearly, the yardstick for such management choices must be professional diligence, since they must act informed and make well-considered choices.

In the pursuit of the company’s object, the directors may decide to depart from the criteria of maximising profit and increasing shareholding, in order to achieve the additional purpose represented by the common benefit, without prejudice, of course, to full autonomy and discretion in management choices. The correct management of the company must be carried out in a responsible, sustainable and transparent manner towards people, communities, territories and the environment, cultural and social assets and activities, bodies and associations and other stakeholders, as well as shareholders. It follows that the traditional canon of “qualified” diligence under Article 2392 of the Italian Civil Code (in joint stock companies) or of “qualified” diligence under Article 2392 of the Italian Civil Code (in public limited companies) must be respected. (in joint stock companies) or of the diligence used in the management under Article 2476 of the Civil Code (in limited liability companies) or of the diligence used in the management under Article 2476 of the Civil Code. (in limited liability companies) or the canon of the diligence of a good father must necessarily also be assessed in the light of the common benefit purposes indicated in the corporate purpose of the individual Benefit Corporation. In such companies, the scope of management powers and related responsibilities is thus broadened.

In this regard, it should be noted that the common benefit is qualified by law as the pursuit, in the exercise of the economic activity of the Benefit Corporation, of one or more positive effects or the reduction of negative effects on one or more of the above-mentioned categories. It follows that the directors must manage the Benefit Corporation by pursuing a positive effect or reducing negative effects on the categories of subjects with respect to which the company’s activity may have an impact and at the same time pursue the typical economic activity. All this determines for the directors a wide discretion as to the methods to be followed in balancing the opposing interests and in the evaluation of the interests to be sacrificed or to prevail. Thus, in cases where the corporate purpose contemplates several activities of common benefit, it is up to the directors to assess which are pursuable and which are expendable, or in any case to identify priorities in the actions to be undertaken.

In this context, as is clear from a reading of Article 1 paragraph 380 of the 2016 Stability Law, the Benefit Corporation has the burden of identifying the responsible party or parties to whom it entrusts functions and tasks that enable the pursuit of the interest of the shareholders, the purposes of common benefit as well as the interests of the categories indicated in paragraph 376 in accordance with the provisions of the articles of association.

The identification of the person or persons responsible for such tasks must be provided for and regulated in a specific clause of the memorandum or articles of association. If it is not already identified in the articles of association, it is up to the administrative body to appoint the person in charge on each occasion, it being understood that it is not clear from the wording of the provision whether it must necessarily be a person outside the board of directors or (also) an internal person.

The so-called “impact manager” is in any case the figure assigned responsibility for the process aimed at pursuing the specific objectives consistent with the aims of common benefit and who, by way of example: a) ensures the involvement of all corporate functions in the implementation of the plan for the achievement of such aims as well as its improvement; b) supports the directors by providing information and data on the internal and external context in which the company operates; c) promotes the transparency of the results of the impact by ensuring its publication on the website and through appropriate channels.

However, the appointment of such a figure cannot exempt the administrative body from the specific duties and responsibilities imposed by the law in terms of management aimed at balancing the interests of the shareholders and of those on whom the company’s activities may have an impact, the executive body therefore remaining responsible for supervision.

The provision (in Article 1, paragraph 380 of the 2016 Stability Law) therefore provides that in the event of failure to manage the Benefit Corporation in a manner that ensures the balancing of the interests of the shareholders, the pursuit of the purposes of common benefit and the interests of the categories referred to in paragraph 376 and set forth in the corporate contract, such circumstance may constitute a breach of the duties imposed on the directors by law and by the articles of association. In the event of a breach of such duties, the provisions of the Civil Code relating to each type of company concerning the liability of directors shall apply.

In this respect, company law provides, as is well known, in addition to the corporate liability action and the creditors’ action, for an individual liability action that may be brought by an individual shareholder or third party who has been “directly damaged by the negligent or intentional acts of the directors” (pursuant to Articles 2395 and 2476(6) of the Italian Civil Code).

With regard to the potential beneficiaries of the benefit purposes (so-called stakeholders), it could be considered that individual liability actions can be brought against the directors pursuant to Articles 2395 or 2476, paragraph 6 of the Civil Code, or even the general action pursuant to Article 2043 of the Civil Code.

The action pursuant to Article 2395 of the Italian Civil Code could be brought by the stakeholders in the event that the directors, by a negligent or wilful act, have created a legitimate expectation that the company will fulfil the common benefit promised (including by means of the annual report attached to the financial statements pursuant to paragraph 382 of the 2016 Stability Law, which will be discussed below), inducing the stakeholders to take decisions (e.g. in their contractual relations with the company) that they would not otherwise have taken[12].

In the above context, however, given the limited scope of the rules under analysis, it is certainly difficult to identify what can be considered an act of mismanagement or wrongdoing by the administrative body. Certainly, the directors must base their choices on the principle of acting responsibly, sustainably and transparently, principles that must generally guide the actions of a Benefit Corporation. One could therefore consider as exempt from blame a director who has diligently and in an informed manner balanced the various interests at stake, favouring the solution that appears best and in the absence of personal interests, acting in good faith and in the absence of a conflict of interest. It would therefore seem reasonable to assume that, even with the current structure of the rules under analysis, a director (or directors) who have not achieved the objectives of common benefit envisaged in the articles of association cannot be held liable if they have nevertheless acted diligently in balancing the various interests mentioned above.

It should also be noted that any breach by the directors of the obligations related to the realisation of the common benefit could also be considered as a breach by the company itself or as an unlawful act attributable to it, by way of unfair commercial practice or anti-competitive behaviour. In this sense, in fact, paragraph 384 of Article 1 of the 2016 Stability Law specifies that if the Benefit Corporation did not pursue the common benefit purposes imposed on it by the applicable legislation, it would be subject to the provisions of “legislative decree no. 145 of 2 August 2007 on misleading advertising and the provisions of the consumer code pursuant to legislative decree no. 206 of 6 September 2005”.

It is thus clear that any entity wishing to adopt a corporate form falling within the “benefit” category as described above must do so in the knowledge that the Antitrust Authority will constantly monitor the actual purpose of common benefit as indicated in the corporate purpose[13].

 6 – The annual report on the pursuit of the common benefit and the evaluation instruments of the Benefit Corporation

The Benefit Corporation is required by law to give an annual account to its stakeholders of its ability to create value for society, by publishing a special report – provided for in Article 1, paragraph 382 of the law in question – which clearly sets out the objectives, results and impacts of its actions.

The annual report is prepared by the administrative body of the company which, in drawing it up, has the task of providing a precise and timely update on the pursuit of the “common benefit” that the Benefit Corporation pursues according to its corporate purpose. The report must be attached to the financial statements approved annually by the company and must include the following elements:

(i) a description of the specific objectives, methods and actions implemented by the directors in pursuit of the common benefit purpose and any circumstances that prevented or slowed it down;

(ii) an evaluation of the impact generated using the external evaluation standard with the characteristics described in Annex 4 and including in turn the evaluation areas identified in Annex 5 (both described below) of the same standard;

(iii) a section dedicated to the description of the new objectives that the company intends to pursue in the following financial year.

The report concerning the pursuit of the common benefit, as prepared and approved by the administrative body, must be made available – like the other financial statements – to the board of auditors, if appointed. No provision is made for the report to be filed at the company’s registered office before the meeting to approve the financial statements, nor for it to be approved by the meeting. However, it seems desirable that the report be made available at the company’s registered office (before the date set for the shareholders’ meeting) like any other document (financial statements, directors’ report, etc.) in order to provide shareholders with the information necessary to protect their rights and to cast an informed vote at the meeting.

Finally, the rule specifies that this annual report must be published on the company’s website, if it exists.

The annual report is therefore the main reporting tool available to the Benefit Corporation and is linked to both the company’s expectation of achieving the reputational effects of fulfilling its “social mission” and the stakeholders’ assessment of the company’s actual realisation of the promised benefits.

In order to carry out a specific assessment of the impact generated by the Benefit Corporation during the financial year and in terms of common benefit, the regulation also requires it to adopt an external valuation standard, the characteristics of which are described in Annex 4 of the regulation under analysis.

This external evaluation standard (which must be developed by a third party with respect to the company) aims to provide performance reporting on the achievement of the benefits promised or declined within the corporate purpose and must have the following characteristics:

(i) must be comprehensive and articulate in assessing the impact of the company and its actions in pursuing the common benefit purpose on people, communities, territories and environment, cultural and social assets and activities, bodies and associations and other stakeholders;

(ii) it must be developed by an entity that is not controlled by or affiliated with the Benefit Corporation;

(iii) it must be credible because it is developed by an entity that:

  1. a) has access to the expertise needed to assess the social and environmental impact of a company’s activities as a whole;

(b) use a scientific and multidisciplinary approach to develop the standard, possibly including a period of public consultation;

(iv) it must be transparent because the information about it is made public and in particular

  1. the criteria used to measure the social and environmental impact of a company’s activities as a whole;
  2. the weightings used for the different criteria for measurement;
  3. the identity of the directors and governing body of the entity that developed and manages the measurement standard;
  4. the process by which changes and updates to the standard are made;
  5. an account of the institution’s income and sources of financial support to exclude possible conflicts of interest.

In Annex 5 (Evaluation Areas), the legislation in question identifies the sectoral areas that must necessarily be included in the evaluation of common benefit activity and its impact and that must be taken into account in the annual report. This assessment should thus include the following areas of analysis:

(i) corporate governance, to assess the degree of transparency and accountability of the company in pursuit of its aims of common benefit, with particular attention to the company’s purpose, the level of involvement of stakeholders and the degree of transparency of the policies and practices adopted by the company;

(ii) workers, to assess relations with employees and collaborators in terms of remuneration and benefits, training and opportunities for personal growth, quality of the work environment, internal communication, flexibility and job security

(iii) other stakeholders, to assess the company’s relations with its suppliers, with the territory and local communities in which it operates, voluntary actions, donations, cultural and social activities, and any action supporting local development and its supply chain;

(iv) environment, to assess the company’s impacts, with a life cycle perspective of products and services, in terms of resource use, energy, raw materials, production processes, logistics and distribution processes, use and consumption and end of life.

This is a detailed, and at first sight exhaustive, list of the most relevant areas in which the positive effects of the Benefit Corporation’s actions can be appreciated and measured, based on the standard used. However, it is not clear whether the Benefit Corporation can choose which of the above areas to be assessed, limiting the measurement of the impact (and the related reporting) to one or more of them, or whether it must use the standard (and report) for each of the different areas identified by the legislator[14].

7 – Limits to the legislation governing Benefit Corporations

In light of the brief analysis carried out with regard to Benefit Corporations, taking into account in particular the conciseness of the paragraphs of the 2016 Stability Law governing them, a series of critical issues and “grey areas” remain open, which have not yet been clarified by the legislator and which may be summarised as follows:

(i)           the legislation does not specify whether the common benefit purposes to be pursued must be linked to the characteristic activities of the company;

(ii)          it does not regulate or clarify the possible right of withdrawal of the shareholder in the event that, in an existing company, the corporate purpose is changed in order to adapt it to any benefit purposes. In this case it will be necessary to verify on a case-by-case basis whether the type of changes introduced in order to place the company under the new rules leaves the business activity carried out by the company unchanged or not[15];

(iii)         there is no requirement for a register of all annual reports concerning the pursuit of the common benefit where they can be filed and made available for those companies which are not obliged to publish their financial statements or which do not have a website. This problem does not exist for those companies that are obliged to publish their annual reports and make them immediately available to third parties;

(iv)         there is no obligation for Benefit Corporations to publish the name of the corporate entity appointed as responsible for the actions that the Benefit Corporation must carry out in order to pursue the purposes of common benefit

(v)          the particular onerousness for a small and medium-sized company to put in place the process of identifying a standard that meets all the requirements of Annex 4 of the standard under analysis;

(vi)         the difficulty in understanding whether the role of the person responsible for the pursuit of the common benefit should necessarily be attributed to a person outside the board of directors. As to the subjective requirements of the manager, the standard does not provide any details

[1] Pursuant to Article 25 paragraph 4, Italian Decree Law No. 179 of 18 October 2012 converted by the Italian Law No. 221 of 17 December 2012.

[2] Law Decree No. 155 of 24 March 2006.

[3] According to the law (paragraph 377 of Article 1 of the 2016 Stability Law), “each of the companies referred to in Book V, Titles V and VI, of the Civil Code”, i.e. partnerships (simple companies, general partnerships, limited partnerships) and corporations (joint stock companies, limited partnerships, simplified limited liability companies, cooperatives and mutual insurance companies) may pursue one or more common-benefit purposes.

[4] S. Course in Benefit Corporations in the Italian Law: a new “qualification” between profit and non-profit, Le Nuove Leggi Civili Commentate 5/2015, 999.

[5] The draft Law No. 1882 containing ” Disposizioni per la diffusione di società che perseguono il duplice scopo di lucro e di beneficio comune” ” consisted of six articles and two annexes (A and B) which were transfused without amendments within Law No. 208 of 28 December 2015.

[6] G. RIOLFO, in Le società “benefit” in Italia: prime riflessioni su una recente innovazione legislativa, Studium Iuris 6/2016, 722.

[7] In 2010, Maryland was the first American state to establish the legal form of the Benefit Corporation, which, in addition to its profit-making purpose, pursues the aim of generating a positive impact on society.

[8] Decree-Law N° 34 of 19 May 2020.

[9] As for the possible corporate purpose of a Benefit Corporation, here is an example: ‘Pursuant to and for the purposes of the Law of 28 December 2015, Sole Article, paragraphs 376-384, the Company, in addition to the purpose of sharing its profits, pursues the following [or: the following] common benefit purpose and operates in a responsible, sustainable and transparent manner towards people, communities, territory and environment, cultural and social assets and activities, bodies and associations and other stakeholders. The company therefore has a multiple purpose consisting of the following activities:

profit-making activities: [to be detailed below].

activities for benefit: in carrying out its economic activity, the company shall pursue one or more positive effects, or the reduction of negative effects, on one or more of the following categories [one or more of the following must be indicated here: employees, customers, suppliers, communities, territories and environment, cultural and social assets and activities, bodies and associations and other stakeholders]. To this end, by way of example only, and in accordance with the procedures and within the limits set out in the [annual/biennial/triennial] plan for the implementation of activities of common benefit approved at the end of each financial year for the following year, as referred to in the following articles, the company shall be involved in [specify the activities]. In order to implement the company’s aims, the company may carry out the following operations: [specify instrumental, related, consequent, accessory activities]” (in Società Benefit Breve Guida alla Costituzione e alla Gestione prepared and published on the website of the Taranto Chamber of Commerce).

[10] In the case of already existing companies, should the shareholders wish to proceed with the transformation into a Benefit Corporation, this decision must be adopted by a resolution of the shareholders’ meeting in accordance with the legislation applicable to the specific company in question.

[11] As far as the name is concerned, the following is a possible example to be included in the articles of association of the company to be set up: “A limited liability company called: ALFA Società Benefit a responsabilità limitata” or in abbreviated form “ALFA S.B. S.r.l.” or “ALFA S.B.r.l.” (in Società Benefit Breve Guida alla Costituzione e Gestione prepared and published on the website of the Taranto Chamber of Commerce). (in Società Benefit Breve Guida alla Costituzione e alla Gestione prepared and published on the website of the Chamber of Commerce of Taranto).

[12] S. Corso in Le Società Benefit nell’Ordinamento Italiano: una nuova “qualifica” tra profit e non-profit, op. cit., 1025.

[13] It is worth recalling that under Legislative Decree no. 146/2007, advertising means any form of message disseminated in the exercise of a commercial, industrial, craft or professional activity for the promotion of goods or services. Advertising is ‘misleading’ when it is ‘likely to mislead the natural or legal persons to whom it is addressed or whom it reaches and which, by reason of its misleading character, is likely to prejudice their economic behaviour or which, for that reason, is likely to harm a competitor’. According to the Consumer Code, a misleading commercial practice is one that “contains untrue information or, although factually correct, in any way, including in its overall presentation, induces or is likely to induce the average consumer to make a mistake”.

[14] S. Corso, op. cit, 1030.

[15] The question will have to be resolved differently depending on the concrete case and the type of company used. In this regard, it is worth noting, limiting the scope of the investigation to Benefit Corporations that have been incorporated as joint stock companies, the difference between Article 2437 of the Italian Civil Code and Article 2473 of the Italian Civil Code. While in the case of S.p.A. the right of withdrawal is linked, inter alia, to the modification of the clause of the company’s object which entails a significant change in the company’s activity, in the case of S.r.l. the mere change of the company’s object is mentioned, even if the same discipline provides for the further hypothesis of withdrawal upon the performance of transactions entailing a substantial modification of the company’s object determined in the memorandum of association. This should imply the right of withdrawal by the shareholder upon the occurrence of the modification of the clause of the corporate purpose with the provision of a further purpose of common benefit extraneous to the original activity of the company, when the activity of the latter undergoes significant changes compared to the initial business project and relevant also from the point of view of the risk of the investment.


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].


3 December, 2020

“Resto al Sud”

“Resto al Sud” is the new measure managed by Invitalia, aimed at encouraging young people to start their business activities in the Southern regions of Italy. The program is aimed at financing new production activities, both in the form of sole proprietorships or corporations, in industry, manufacturing, processing of agricultural products, fishing and aquaculture, provision of services to businesses and individuals, tourism, freelance activities.

The measure covers 100% of the start-up costs of new business initiatives, partly in the form of bank financing assisted by the SME Guarantee Fund and partly through a non-repayable grant, which covers up to 50% of eligible expenditure. In its first year of operation, between 2018 and 2019, Resto al Sud collected 16,218 applications and financed 2,177 proposals, resulting in more than 20 thousand new jobs, investments for € 145 million euros and € 68 million of benefits granted.

In this particular period of economic difficulty, the President of the Sicily Region has recently approved a new decree that provides for additional incentives for a total of € 4.7 million additional resources over three years, accessible in the form of tax credit, thanks to an agreement between the Finance and Credit Department of the Department of Economy and the Revenue Agency.

The available funds amount to 1 million euros for the year 2020, 1.7 million euros for the year 2021 and 2 million euros for the year 2022. The tax credit is based on some fiscal amounts due to the Region – paid for each of the first three tax periods starting from the one in which the application is filed – such as:

  • the regional additional tax Irpef
  • the car tax for owned vehicles registered in Sicily and strictly necessary for the cycle or for the transport of products
  • the registration, mortgage and cadastral fee for the purchase of real estate falling within the regional territory and related to the performance of the activity.

The tax credit can be requested from 15 to 31 December 2020 for the current year and from 15 to 31 May in subsequent years and can be used as compensation with the F24 payment model to be presented exclusively through the telematic services provided by the Inland Revenue.


26 October, 2020

Last 6 October 2020, the EU Commission launched a new digital platform to support EU companies doing business with Iran.

The JCPOA (Joint Comprehensive Plan of Action) dated 14 July 2015intended to put an end to all economic and financial sanctions imposed by the European Union in connection with the Iranian nuclear program. However, some restrictions remained in place with reference to certain persons and in relation to particular categories of goods. Over the years, the scope of application of these restrictions has created significant uncertainty among EU companies that wanted to do business with Iran and the EU banking system, preventing the trade between the EU and Iran.

The new platform launched by the EU Commission include the following tools aimed at facilitating business with Iran:

  • a “Due Diligence Helpdesk”, and
  • a “Sanctions Tool”.

Both tools are aimed at helping EU companies that intend to engage in commercial relationships with Iran to  the identify their Iranian partners and permitted business.

The Due Diligence Helpdesk is an online platform that allows a free due diligence check on the compliance with European sanctions by the potential Iranian business partner. Using this tool, users can verify whether potential Iranian partners comply with European sanctions. The Due Diligence Helpdesk provides concrete and tailor-made support to European SMEs by performing due diligence and verifying whether specific business projects comply with European sanctions.

The Helpdesk will also publish guides, organize training courses, webinars and support business to business events.

The Sanctions Tool, on the other hand, is based on an interactive questionnaire, aimed in particular at small and medium-sized enterprises (SMEs) interested in engaging in activities involving Iran. This tool provides an easily accessible source of information on European restrictive measures. Its aim is to give a first general and non-binding orientation to assist SMEs in carrying out business projects, in full awareness and respect of the European restrictive measures against Iran.

EU companies that want to do business with Iran, can now visit the platform, enter a description of the type of goods they intend to export and of their Iranian counterparties, and quickly obtain a confirmation as to whether the transaction is legitimate and what measures  should be taken to carry out that specific transaction.


10 October, 2020

The real estate simple partnership (“società semplice immobiliare”) is a type of partnership that does not carry out commercial activity as its only purpose is to hold real estate assets. The shares of a real estate partnership can also be held by foreign companies.

There are many advantages for the incorporation of a real estate simple partnership: it acts as an aggregator of wealth of various subjects, overcoming some of the problems related to the co-ownership of real estate. This type of partnership does not have to keep company books or draft and file financial statements, therefore it allows to save a lot on operating costs. The great flexibility of this type of form allows the bylaws to be adapted to the needs of the shareholders. The rules regarding the company structure are also extremely simplified, with utmost freedom regarding the transfer of shares and the possibility for corporations and foreign subjects to hold shares.

The real estate simple partnership also has significant tax advantages: profits are taxed directly on the shareholders and the sale of real estate held by the partnership for more than five years does not create capital gains;  while the same property, held and sold by a s.r.l. always generates taxable income.

At the time of transfer, the real estate simple partnership pays a fixed amount of the registration tax (Euro 200).

In the case of transfer of real estate properties, instead, a taxation rate of 9% applies.

In conclusion, the simplified bureaucracy, the possibility of taking advantage of important tax benefits and the great corporate flexibility are the main features of a real estate simple partnership.


3 October, 2020

The Italian Investor Visa Program (Golden Visa), regulated by Article 26-bis of the Italian Consolidated Law on Immigration (Legislative Decree No. 286/98) has introduced a 30 days fast-track procedure to obtain an Italian residence permit for foreigners who intend to make one of the following eligible investments in Italy:

  • an investment of at least Euros 2 million in Italian Government bonds to be maintained for at least 2 years;
  • an investment of at least Euros 500,000 thousand into the share capital of an Italian company (including Italian listed companies) to be maintained for at least 2 years (the amount is reduced to at least Euros 250,000 if the investment is made into an Italian company that qualifies as “innovative start-up company”); it is worth noting that until recently these thresholds were, respectively, Euros 1 million and Euros 500,000;
  • a philanthropic donation of at least Euros one million to support a project of public interest.

It is worth noting that the purchase of real estate assets does not qualify for the Investor Visa.

Investors applying for the Golden Visa must provide evidence of available funds to make the eligible investment (e.g. a bank statement) and that they have sufficient financial resources to live in Italy.

The application can be submitted and approved before making the eligible investment, provided that the if the investment is not made within3 months from the entry in Italy, the residence permit will be revoked.

The Investor Visa is issued for a period of 2 years, renewable for further 3 years, subject to the condition that the relevant investment (or other eligible investment) is maintained,

Law No. 12 of 12 September 2020 – converting the so-called “Simplifications Decree” – has clarified that the eligible investment can be made also through corporate vehicles in which the investor is a legal representative. In case of donations, the eligible investment can be made through foundations.

Finally, the recent changes have provided that holders of an Investor Visa do not have an obligation to move their residence to Italy and are exempt from certain obligations that apply to other types of residence permit (e.g. Integration Agreement etc.).


18 April, 2020

Italy implemented a comprehensive reform of the Third Sector and other not-for-profit organizations.


Pursuant to Italian law, a Third Sector Organization or Ente del Terzo Settore (“ETS”) is a not-for-profit private organization or entity that pursues civic, solidarity and social benefits purposes carrying out, exclusively or principally, activities of general interest in an accountable and transparent way. The Code of the Third Sector (Legislative Decree No. 117 of 3 July 2017) introduced a common definition for not-for-profit organizations such as associations, foundations, social enterprises, philanthropic entities, and voluntary organisations, which are now all considered as “Entities of the Third Sector”. 

The Third Sector includes organizations and entities operating in different fields that promote Italian community solidarity and pluralism, in a context of autonomy and cooperation with governmental authorities. 

Main types of not-for-profit organizations (ETS)

Under Italian law, the main types of ETS are the following:

Volunteer Organizations (ODVs).

ODVs (in Italian) are a particular type of ETS regulated by the Code for the Third Sector. ODVs may use occasional volunteers for the furtherance of their activities, and the volunteers must register in a special registry. 

To be constituted, ODVs require a minimum of seven individuals or three other volunteering organizations. 

Volunteers may not serve simultaneously as employees of the respective ODV. Volunteers may only be reimbursed for their expenses, excluding non-refundable expenses in the case of, for example, blood and organ donors. 

Associations for Social Promotion (Aps). 

An Association for Social Promotion is a particular category of ODV that carries out activities of general interest for the benefit of its members or third parties using mainly the voluntary work of its members. 

An Association for Social Promotion must to adopt the legal form of an Association and be composed of at least seven individuals or three Associations for Social Promotion. Other third sector or not-for-profit entities may also be admitted as members, but these must not exceed 50% of the members. Exceptions are provided for sport organizations.

The number of employees cannot exceed 50% of the volunteers or 5% of the members.

Philanthropic Entities are those third sector entities whose purpose is to provide support to disadvantaged persons or to carry our “activities of general interest”.

Social Enterprises are private entities and companies that carry out mainly business activities of general interest, non-for-profit and for civic, solidarity or social utility purposes. Social Enterprises can, under certain circumstances, distribute limited profits and operating surplus. Social cooperatives and consortium of social cooperatives automatically acquire the status of Social Enterprise.

Associative Networks and Mutual Associations.

Under certain circumstances, religious entities are also subject to third sector regulations. Religious Entities recognized under civil law may adopt the status of Social Enterprise only if they carry out the activities of general interest as defined by Code for the Third Sector and identify such activities by means of a public deed or a notarized private contract.

Governmental agencies, political parties, unions, professional, entrepreneurial, commercial, or industrial associations cannot qualify as ETS.

Main features of ETS’s.

Each ETS must mention their non-profit nature in their founding documents. 

ETS may organize fundraising activities including solicitations to the public and acceptance of legacies. The distribution of funds, income or other assets to members of third sector organizations is prohibited with the exception of social enterprises. If the organization is dissolved or otherwise ceases to exist, the assets are transferred to Fondazione Italia Sociale, a private entity created by Law No. 106 of 2016 to support the activities of ETS. 

The law sets a minimum amount of initial capital for associations and foundations that intend to obtain legal personality (respectively €15,000 and €30,000). The assets of an ETS may also consist of contributions in kind, but in this case, the value of such contributions shall be audited. 

All Third Sector Entities must to register with the National Single Registry of the Third Sector (RUNT) held by the Ministry of Labour and Social Policies. The registration with the registry must be requested by the legal representative of the ETS.

The employees of a ET are entitled to the same benefits as other, equivalent private sector employees who are subject to collective bargaining agreements. 

Moreover, Government agencies at the national, regional, and provincial levels are mandated to provide ETS with access to their facilities, as feasible and appropriate.

Funding, tax Regime and exemptions.

ETS may have access to a dedicated government ETS fund. Financial institutions authorized to operate in Italy may issue “solidarity bonds” (titoli di solidarietà) to finance the activities of ETS. The issuing organization is exempted from the payment of placement fees.

General activities carried out by ETS pursuant to their mission through cooperative actions with government agencies are considered non-commercial activities. Hence, such activities are exempted from income tax liability. There is also a special tax credit equivalent to 65% of the cash donations made to ETS by individuals and 50% by legal entities. Additionally, 30% of the expenses incurred by taxpayers for in-kind contributions made to ETS for non-commercial activities are regarded as deductible for purposes of gross income tax. Managers of online portals that carry out social lending activities are subject to a different, more favourable tax regime for contributions received via their portals.

Measures to support Third Sector Entities during COVID-19 emergency.

The so-called “Decreto Cura Italia” (Decree-Law No. 18/2020) introduced a series of measures to protect workers, also applicable to the employees of Third Sector Entities.

In particular:

  1. the deadline to carry out the mandatory statutory changes required by the reform of the third sector is extended to 31 October 2020. Therefore, ODV, APS and Onlus registered in their respective registers will have until 31 October 2020 to modify their statute and update it to the Third Sector new legislation. Other associations that do not have one of the three qualifications mentioned and therefore are not registered in their respective registers have no time limit to adapt their statute to the third Sector reform and will be able to decide if and when to enter the “perimeter” of the Third Sector.
  2. The deadline for the approval of the financial statements of non-profit organizations and ETS is extended to 31 October 2020.


17 April, 2020

The Italian Liquidity Decree: Covid-16 Government measures to support Italian enterprises.

Last 8 April 2020 the Italian government implemented new important measures to support and provide liquidity to Italian enterprises. Read our comprehensive guide.


10 April, 2020

Decree Law no. 23 of 8 April 2020

On 8 April 2020, the Italian Council of Minister approved Law Decree no. 23, published in the Official Gazette (General Series no. 94, Extraordinary Edition of April 8, 2020), containing “Urgent measures related to access to credit and tax obligations for businesses, special powers in strategic industry sectors, as well as healthcare and employment interventions, prorogation of administrative and procedural deadlines”.

Law Decree no. 23/2020 (the so-called ‘Decreto Liquidità’) (Decree) includes a number of provisions that significantly affect the application of Insolvency Law, for the period of Covid-19 emergency, which are summarised below.

Measures for access to credit for Small and Medium-sized Enterprises (SMEs)

Liquidity support for companies with registered offices in Italy (guaranteed amount up to €200 billion, with €30 billion reserved for SMEs), including:

  • SACE guarantee on bank loans issued by December 31, 2020 with a maximum duration of six years in favour of enterprises based in Italy
  • The maximum guaranteed amount depends on the number of employees and the turnover of the enterprise
  • The financing shall cover personnel costs, investments, or working capital related to activities to be carried out in the Italian territory

Liquidity support for SMEs (€1.7 billion), including:

  • Prohibitions to revoke, in whole or in part, overdraft facilities and loans granted against advances on credits existing as of 29 February 2020, until 30, September 2020
  • Extension of loans to be repaid bullet before 30 September 2020 together with the relevant ancillary items, without any formalities and under the same conditions, until 30 September 2020
  • Suspension of the payment of loan instalments and rental payments on financial leases due before 30 September 2020, until 30 September 2020 and extension of the relevant amortization or rental payments plans; at the request of SMEs, the suspension could be granted on the principal portion only

Increase in the Public Guarantee Fund for SMEs (EUR 1.5 billion).

  • The fund can release:
  • 100% guarantee for loans up €25,000, without any creditworthiness valuation;
  • 100% guarantee for loans up to €800,000;
  • 90% guarantee for loans up to € 5millions.

Extension of the deadlines for the fulfilment of arrangement with creditors and debt restructuring agreements proceedings.

The deadlines for completing the arrangement with creditors procedure (concordato preventivo) and debt restructuring agreements (accordi di ristrutturazione del debito) proceedings expiring between 23 February 2020 and 31 December 2021 are extended by 6 months.

Urgent labour measures 

State Aids to Companies and Workers

New Ordinary CIG:

General Rules: Ordinary CIG (“Cassa Integrazioni Guadagni Ordinaria”) is a State economic aid for companies active in certain sectors provided by Sec. 10 of Legislative Decree 148/2015, including manufacturing, industrial, building.

Italy Care Decree Exceptions: Italy Care Decree provides that Ordinary CIG may be exceptionally obtained without previous negotiation with Trade Unions (all steps, including such negotiation, shall be taken within 3 days after the request).

Both Ordinary CIG and Ordinary Check may be requested:

  • For all employees working in the company by February 23, 2020, notwithstanding their seniority;
  • For a limited term of up to 9 weeks starting from February 23, 2020 until August 2020.

Suspension of Solidarity Check and Temporary Change to Ordinary Check:

Solidarity Checks (“Assegno di solidarietà”) are economic aids granted at certain conditions to companies which may not enjoy Ordinary or Special CIG.

Companies currently enjoying Solidarity Checks (“Assegno di solidarietà”) – economic aids granted to companies which may not enjoy Ordinary or Speciali CIG – may suspend it and request its temporarily replacement with Ordinary Check for 9 weeks’ time.

Special Contributive Advantage:

With respect to any special aid granted under Italy Care Decree, the additional contribution to be paid by the employer is not due for the time such aid is given.

No Dismissals Policy:

For the period of 60 days after March 18, 2020, collective dismissal procedures pursuant to Sections 4, 5 and 23 of Law no. 223/1991 may not be activated;

Collective dismissal procedures activated after February 23, 2020 are suspended;

Dismissals based on objective justified reason pursuant to Section 3 of Law no. 604/1966 are forbidden and ineffective.

Tax and accounting measures

  • Suspension of tax contributions for taxpayers with tax domicile, operating, and/or registered office in Italy, until May 31, 2020
  • Suspension of tax contributions for companies with a turnover of less than €2 million with tax domicile, operating, and/or registered office in Italy, until 31 May 2020;
  • Suspension of tax contributions for individuals carrying on business activities with tax domicile, operating, and/or registered office in Italy, with turnover r earnings that o not exceed €50 million who recorded a decrease of more than 33% in their turnover, until 31 May 2020
  • Suspension of tax collection files and tax controls until 31 May 2020
  • Encourage the sale of impaired loans with the aim of supporting companies in terms of liquidity through the possibility of transforming into a tax credit a portion of deferred tax assets (DTA) relating to certain components, for an amount proportional to the value of the impaired receivables that are transferred to third parties.

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18 March, 2020

Covid-19 emergency measures: New rules for remote shareholders’ meetings and extension of the term to approve the yearly financial statements

The emergency measures against COVID-19 also apply to the corporate framework.

First, under the Italian law the shareholders’ meeting for the approval of annual financial statements must be convened within 120 days from the last day of the year to which the statements refer (which, for most companies, is December 31). For Italian companies with listed shares the shareholders’ meeting is also subject to a 30 day prior notice requirement (which is extended to 40 days if the appointment of a new board of directors or statutory auditors is in the agenda for the meeting).

Prior to the recent measures, the 120 day period could be extended to 180 days subject to the occurrence of at least one of the following circumstances: (i) the company is required to prepare consolidated financial statements or (ii) particular situations relating to the structure or purpose of the company occur. 

However, the Italian Government considers that the current Covid-19 could be treated as “force majeure” and therefore justifies an extension for all companies to approve their Financial Statement within 180 days.

Second, the Maxima No. 187, of March 11, 2020, of the Milan Notary’s Council allows that the shareholders’ meetings (and the boards of directors) of the companies take place even if all the attendees are connected by audio or video conference and, therefore, even if the chairman and the secretary of the meeting are not in the same place. The Maxima has been confirmed by Legislative Decree of March, 11, 2020, n. 18 (“Decreto Cura Italia”), where is specified that the shareholders’ meetings of the companies (as well as the boards of directors) may also be regularly held if the chairman, the secretary and, if required, the notary public, as well as all the attendees at the meeting, are connected by means of telecommunications that can guarantee their identification and participation (right to participate, expression of voting rights, etc.). The provision also applies where the company’s by-laws (i) do not regulate the conduct of the meeting by means of telecommunications, or (ii) condition the validity of meetings by audio or videoconference to the fact that the chairman and the secretary of the meeting are in the same place. The rule applies to shareholders’ meetings (or boards of directors) convened by July 31, 2020, or by the date, if later, until the state of emergency on the national territory related to the COVID-19 epidemic. The measures, while on the one hand promote and encourage participation in meetings at a distance and discourage travel that is not justified by necessity, on the other hand allow an easier management of meetings, which translates into a significant advantage for both resident and foreign shareholders and directors, who will under no circumstances be obliged to expose themselves to any risk at this particularly critical time.


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