Through regulatory change, Italy has taken steps in the right direction to promote foreign investment while at the same time fostering the increase of liquidity in Italian banks. The savvy investor will need to stay up-to-date on current deal flow and evolving market trends, but there is no denying that a strong foundation has been laid.
Diane Vanderson is an associate and Carl Winkworth is a partner at Richards Kibbe & Orbe
KEY POINTS
Regulatory reforms
Last year, the Italian government adopted Law Decree 145/2013, converted in Law No 9/2014, which created a more favourable regulatory and tax climate for the issuance of notes by non-listed small and medium-sized companies. Changes include:
• The extension of the substitute tax regime (previously available only for bank loans) to the security package for corporate bonds; and
• The extension of the withholding tax exemption to interest payments on notes held by investment funds that are ‘qualified investors’ and whose assets are primarily invested in corporate bonds or similar financial instruments.
A ‘qualified investor’ can include both Italian and foreign entities that are authorised and regulated to operate in financial markets. Examples are banks, investment firms, other authorised or regulated financial institutions, insurance companies, pension funds and broker dealers.
The definition also extends to other institutional investors whose principal activity is investment in financial instruments, including securitisation entities and large corporations.
