[Newsflash n. 32]
From day one after Brexit, rumours have been spreading throughout Europe about which city, if any, will become the new financial centre after London. In this race, Italy has been consistently left aside during mainly on the grounds of unfavourable taxation and employment system. For this reason, a timely reaction was strongly desired at legislative level.
On 3 May 2017, the Italian Parliament issued the Law Proposal No. 4456 to attract investments to Milan municipality, with the view to making it the new financial centre in Europe.
The aim of the Proposal is to establish an International Financial District in Milan, by granting several tax reliefs and incentives to those companies which establish their registered office within its municipality. In particular, the Proposal introduces (i) a reduction to the regional tax on productive activities (IRAP), (ii) several fringe benefits for expatriates employed by a company established in the municipality of Milan, (iii) a flat tax on real estate transactions (which are nowadays levied in proportion of the amount of the investment), subject to the condition that the beneficiary of the tax incentive employs at least 50 persons without fix term.
A further measure is the possibility to directly liaise with the administrative and tax authority before any investment in order to get certainty about tax and administrative compliance of any prospective investment (Article 2 of Law Decree No. 147/15), subject to the same condition as above that the entity availing itself of this preliminary assessment employs at least 50 persons without fix term.
The move of the Italian Parliament is without doubt an innovative and commendable move, however, there are a few open questions mainly concerning the extent to which the final adoption of the law would comply with the EU restrictions in the matter of state aids and with the Italian tax law principle of uniformity of property tax (differently from the regional tax that may be reduced). In any case, the Proposal, if adopted, would be to date the first effective measure to attract international investments in Italy, specifically Milan.
Legália will monitor the next developments of this proposed law. Meanwhile, your usual contact in Legália is at your disposal if you wish to receive clarification or discuss any topic in relation to the subject matter of this Newsflash.
