Prepared by Fabrizio Cascinelli, Andrea Fusaro, Francesco Della Scala, Marco Vozzi
Introduced on January 1st, 2017, the PIR is an individual long-term investment plan that grants to Italian retail investors the tax-exemption on capital gains and financial incomes (usually subject to 26% tax rate) for certain investments held for a minimum 5-year period, if certain conditions are met.
The last law decree approved for the COVID-19 emergency, changed the PIR framework (already amended several times), in order to introduce – in addition to the “ordinary” PIR – a new type of tax exempt long-term investment plan designed to promote investments in the real economy and, in particular, in non-listed companies: the so-called “alternative” PIR.
The “alternative” PIR could be established in the form of investment funds and, accordingly, also in the form of alternative investment funds (which includes ELTIF, Private Equity funds, Private Debt funds and credit funds).
The “alternative” PIR
Portfolio composition requirements
The “alternative” PIR, for at least 2/3 of each calendar year, has to invest at least 70% of the assets, directly or indirectly, in financial instruments, even if not traded in regulated markets or multilateral trading facilities (MTFs), issued by Italian resident companies, or EU/EEA resident companies with a permanent establishment in Italy, other than those listed on the “FTSE MIB” and “FTSE Mid Cap” of the Italian Stock Exchange (“Borsa Italiana”) or similar benchmarks of other regulated markets, or in loans and credits granted to foretold companies.
Concentration limit
No more than the 20% of the overall “alternative” PIR portfolio can be invested in financial instruments issued by the same entity, or by an entity belonging to the same group, or can be held in the form of deposits or current accounts.
Investment limits
Italian individuals can invest through the “alternative” PIR a maximum amount of Euro 150,000 per year, with an overall limit of Euro 1,500,000 (for “ordinary” PIR the limits are, respectively, Euro 30,000 and Euro 150,000).
Those limits do not apply to Italian “pension funds” (which are also entitled to benefit of the tax exemption on their investments in PIR; other conditions should be met).
Furthermore, an individual is entitled to hold, simultaneously, one “ordinary” PIR and one “Alternative” PIR only (i.e., no more than one of the same kind). In this respect, the financial intermediary establishing / distributing the PIR should acquire a self-certification from the holder in which he/she states that he/she doesn’t hold any other PIR of the same kind.
PIR Compliant Funds
In case of PIR Compliant Funds, the portfolio composition requirements:
- Should be reached by the deadline stated in the prospectus / rules of the Fund.
- Should cease to apply when the Fund starts selling its assets to refund the units or shares to the investors.
- Should be suspended for a maximum of 12 months, when the Fund raises additional funding or reduces its existing capital.
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PwC TLS Avvocati e Commercialisti
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PwC TLS Avvocati e Commercialisti
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PwC TLS Avvocati e Commercialisti
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PwC TLS Avvocati e Commercialisti
Senior Manager