2. FOREIGN INVESTMENT IN ITALY

Exchange control and other restrictions

All foreign exchange control regulations in Italy where abolished by Law 599/1986 which established the principle that all international economic transactions are unrestricted unless expressly prohibited. A series of EU directives concerning the free circulation of funds and services within the EU have also been implemented. Foreign investments in Italy are, therefore, substantially unrestricted as is the repatriation of profits and capital. Certain restrictions concerning investments from specific countries may be imposed from time to time pursuant to national or international embargo.

There is, however, a certain amount of form-filling involved in the transfer of funds to and from abroad due to regulations imposing monitoring obligations on banks and financial institutions of all such transactions and generally on transactions exceeding a certain amount of money.

In common with most other countries, the payment abroad of royalty, interest and dividends will be subject to the withholding tax rates foreseen in the applicable double tax treaty or EU directive.

Certain areas of the economy were for a long time restricted to State enterprises because of their strategic importance to the economy. These areas extended from the telecommunication industry, oil and hydrocarbon exploitation, certain banks and even tomato factories! However all of these sectors either have been or are in the process of being privatised. This has opened up the market to foreign investment in major industries and monopolies previously restricted to nationals are now open to private investors. Similarly the Milan stock exchange has become more active since Italy has joined the first phase of the Euro and under-capitalised companies are being targeting for takeovers through public offerings.

Incentives

No specific incentives are provided by Italian law for foreign investors. However, they may benefit from government incentives introduced either to encourage the restructuring of certain business sectors or to promote investment in depressed areas in conformity with EU regulations.

Purchase of Property

Property in Italy is registered with a Land Registry (c/o Uffici del Territorio) . Any sale and purchase agreement must be filed with said Registry to be effective against third parties. Registrar maintains details of the property and records other matters that may affect the title and financial charges against the property. When you have decided upon a property to purchase, the agreement (in writing) will be contained in a private contract (Contratto Preliminare / Contratto Definitivo di Vendita) The document should contain details of the agreed price; payment of deposit; any schedule for payment of the balance; any extras that you have agreed to purchase, and the intended date for completion, transfer of the possession, and all other relevant terms and conditions. A due diligence on the conformity of the property with urbanistic laws is always advisable as so as an investigation on seller’s status (to avoid risk connected to a possible seller’s bankruptcy). As mentioned above there are no restrictions on purchase money being imported into Italy, but to insure that the proceeds of any resale can be repatriated, it is recommended that the purchaser obtain official documentation of the importation of purchase funds and incidental costs. The funds should be deposited in an Italian bank, and this can be easily arranged through purchaser own bank. The Expenses incurred in a purchase – including taxes- should not in an average exceed 12% of purchase price. The EEC citizen who intends to move its domicile to purchased property may be granted a reduction of due taxes.