Bari, Italy

Private Capital: New Trends in Private Clients’ Investments

By Luigi A. M. Rossi, Loconte & Partners

Through the 2019 Italian Budget Law and the so-called decreto crescita (Growth Decree), the Italian government has improved some attractive measures for those who want to invest in the Italian innovative start-ups and small- and mediumsized enterprises (SMEs), granting many tax benefits to the investors, for both individuals and legal entities.

The investor can benefit from a significant reduction on Italian income tax (IRPEF allowance for individuals, IRES deduction for corporations) since the 2019 Italian Budget Law increased it from 30% to 40% (if the investment is made from 01 January 2019 to 31 December 2019) of the amount invested up to EUR 1,000,000 (maximum annual benefit available is equal to EUR 400,000).

New rules have also been provided for a specific investment tool, the Piani individuali di risparmio, or PIR (Individual Saving Plans), which were introduced by the Italian Government in 2017, with the goal of matching the tax benefits of the investor with the need to increase the cash flow of the Italian SMEs.

The investor who subscribes to a PIR, under the condition of a holding period of a minimum of five years, will be exempted from any tax on profits, capital gains, and inheritance and gift tax.

The tax incentives are subject to investments limited to EUR 30,000 per tax year, with a holding period of five years, and a maximum of EUR 150,000 per investor. With the 2019 Italian Budget Law, has been provided that the PIR fund must be distributed up to 7% investing in small- and medium-sized enterprises, and in venture capital funds, thus giving a big support to the Italian economy.

New tax savings have been established in relation to the European long-term investment funds (ELTIFs), which have lately entered into the Italian market and Italian legislation.

This investment tool is particularly addressed to high-net-worth individual investors, which can allocate an investment limited to EUR 150,000 per year, and a maximum of up to EUR 1,500,000 per investor.

The aim of ELTIFs is to finance projects with an average duration from seven to ten years and, often, the instruments through which investments are made do not allow an early liquidation of their shares.

According to the new Growth Decree, the income derived from the above investments is tax-exempted and the investments’ asset transferred to the heirs is exempted from inheritance tax.


Luigi A. M. Rossi

Luigi A. M. Rossi

GGI member firm
Loconte & Partners, Studio legale e tributario
Advisory, Auditing & Accounting, Corporate Finance, Fiduciary & Estate Planning, Law Firm Services, Tax
Bari, Italy
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Loconte & Partners is a law firm specialising in tax and legal consultancy that assists its Italian and international clients, helping them to preserve and grow their wealth.

Luigi A. M. Rossi is a tax lawyer and chartered accountant, based in Milan. Since the beginning of his career, he has assisted family businesses regarding legal and tax aspects of estate planning and generational transfers. His expertise includes tax planning for HNWI, corporate reorganisation, and trust and art law. An associate of Loconte & Partners since 2018, he is a member of the Global Wealth Management Team.
 


Published: Trust & Estate Planning Newsletter, No. 04, Autumn 2019 l Photo:Vladimir Sazonov - stock.adobe.com

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