The European Commission approved the proposal to make the whole of Southern Italy a Special Economic Zone

Edited by Vitalba Passarelli, Giovanni Marra, Fabrizia Portaro 

Last 13 July the Minister for European Affairs, the South, Cohesion Policies and the PNRR, Raffaele Fitto, met in Brussels with the Executive Vice-President of the European Commission and Commissioner for Competition, Margrethe Vestager, who welcomed the proposal relating to the establishment of a whole Special Economic Zone (ZES) which includes all the regions of the South. The Government’s proposal aims to extend to the whole of Southern Italy the procedures of simplification and acceleration of the investments and the tax supports provided to companies that set up or invest in the ZES.  

During the meeting, discussions were also initiated with the Commission regarding the “South Decontribution” measure expiring on 31 December 2023, the purpose of which is to support employment in Southern Italy, especially for women and for young people. Also on this issue, Vice-President Vestager expressed the Commission’s full willingness to make this instrument a more structural and permanent measure and more investment-oriented, thus meeting the needs and challenges for the economic growth of the South Italy. These are therefore important opportunities for the revitalization and development of the economy of the South, the objective of which is to strengthen and support the growth and competitiveness of the businesses.  

The ZES were introduced into the Italian legislation with the D.L. no. 91/2017 (“Urgent provisions for the economic growth of the South” or “Southern Decree”, converted into Law n.123/2017), which in art. 4, co. 2, establishes that “ZES means a geographically delimited and clearly identified area” in which “existing operational companies and those that will establish can benefit from special conditions, in relation to the incremental nature of the investments and business development activities” .  

The regions affected by these measures are Abruzzo, Campania, Puglia, Basilicata, Molise, Calabria, Sicily and Sardinia, for which municipalities and areas classified as ZES are generally identified within of the regional Strategic Development Plan. In particular, it is envisaged that new and existing businesses, which start a program of entrepreneurial economic activities or incremental investments in the ZES, can take advantage of special tax incentives for investments made (tax credit) and procedures of administrative simplifications.  

In fact, the ZES provides for the application, in relation to the investments made, of the tax credit pursuant to art. 1, paragraphs 98 and following, of the law n. 208/2015 (so-called tax credit for the South), as well as the reduction to 50% of the CIT rate, for the first years of activity, usable under the de minimis aid regime. The art. 1, paragraph 267, of the 2023 Budget Law, amended art. 5, paragraph 2, first par. of the D.L. no. 91/2017, extending to 31 December 2023 the tax credit for investments made in the ZES. The utilization of the benefit – following the changes incurred – is commensurate with the share of the total cost of the assets acquired by 31 December 2023, within the maximum limit, for each investment project, of 100 million euros and extended, starting from 1 June 2021, to the purchase of properties used for investments, then extended from 1 May 2022 also to the purchase of land and the acquisition, construction or expansion of properties used for investments.  

In general, the tax credit rates on eligible investments vary according to company size and, except for the Abruzzo region which discounts reduced rates, apply as follows:

  • 45% small and micro enterprises;
  • 35% medium enterprises;
  • 25% large enterprises;
  • or at the different rates envisaged, starting from January 2022, by the new “Carta per gli aiuti a finalità regionale 2022-2027”.

It is worth noting that the tax credit can be combined with other concessions that focus on the same costs, provided that this accumulation does not lead to exceeding the cost incurred, and can only be used offsetting other tax payments due, starting from the tax period in which the investment has been made and it must be indicated in the tax return relating to the tax period in which the credit is accrued and in the tax returns relating to subsequent tax periods up to the one in which the utilization ends.  

Following the approval of the Government’s proposal by the European Commission, it is therefore necessary to wait for the regulatory passages for the implementation of the new configuration of the SEZ, also considering that the tax credit for the South / SEZ is currently expiring on 31 December 2023, and then it is legitimate to expect an extension that will allow the companies concerned to be able to plan new investments in a suitable time frame. This novelty could in fact determine a concrete and unrepeatable opportunity for the development of the southern regions and the convergence towards the employment and economic levels of the more advanced areas of the country.

For a deeper discussion, please contact:

Vitalba Passarelli

PwC TLS Avvocati e Commercialisti


Giovanni Marra

PwC TLS Avvocati e Commercialisti