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The DL 34

The Italian Government has recently issued the Law Decree no 34 of May 19, 2020 (“DL 34”) – nicknamed “Relaunch Decree” (“Decreto Rilancio”) – in order to provide
stimulus for the Italian economy in the steps of the re-opening after the COVID-19 lockdown. In this context, the DL 34 provides for financial resources and tax
facilitations and incentives for the benefit of the small and medium-sized companies, which are the core of the Italian economy.

Among these measures, the DL 34 introduced a new category of PIR. As already explained (see our newsletters 2017 02 and 2019 05), PIR is the acronym for “Piani Individuali di Risparmio”, or “Personal Savings Plans” complying with regulatory requirements in terms of eligible assets, maximum invested amounts and duration, and for this reason a holder of a PIR has important tax benefits such as exemption from taxation on capital gains and income distribution.

Presently, the commercially available PIR reflect the UCITS ratios and eligible assets (the “UCITS PIR”). Also the maximum amounts eligible for PIR tax benefits reflect a purely retail audience (maximum Euro 30,000= per year and maximum Euro 150,000= for the entire PIR). The new PIR introduced by the DL 34 (the “AIF PIR”) are designed for a more sophisticated audience as they have to invest for two thirds of the year, directly or indirectly, at least 70%:

In financial instruments – including those not traded on regulated markets or multilateral trading facilities – issued by or stipulated with Italian companies or
EU/EEA companies with a permanent establishment in Italy, which are not included in the FTSE MIB nor the FTSE Mid Cap indices of the Italian Stock Exchange or equivalent foreign indices, OR

B. in loans granted to the above mentioned companies as well as in credits of the same companies.

The category B. is new, and adds to the eligible investments for PIR the sources of financing for companies, alternative to the banking channel, such as the granting of loans and the acquisition of company credits. In terms of ratios, the concentration constraint is raised to 20% per issuer, while it remains at 10% for UCITS PIR.

The intermediaries that will be able to operate on the new PIR are, in addition to the traditional open-ended collective investment schemes and insurance companies (life and capitalisation lines), also ELTIF and private equity, private debt and credit funds.

As anticipated, the maximum threshold for the tax benefits for AIF PIR has been raised to Euro 150,000= per year and Euro 1.5 million for the entire PIR plan, while it remains unchanged to Euro 30,000=/150,000= for the UCITS PIR.  It is important to mention that the same person may hold one UCITS PIR and one AIF PIR, involving that the aggregate tax exempt investment will be Euro 180,000= per year and Euro 1.65 million in total per person.

Finally, a “Law Decree” like the DL 34 is a statute issued by the Italian Government which has to be ratified by the Parliament through a “Law of Ratification” within sixty days. Since the DL 34 was published on May 19, the “Law of Ratification” will have to be approved by July 18, 2020. Failing ratification, the Law Decree will become null and void; furthermore, when elaborating the “Law of Ratification”, the Parliament may introduce changes to a DL. We will inform about the developments, if any, in the ratification process of the DL 34.