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					Italian business entities
Forming a company
Foreigners planning to establish a business operation in Italy may choose from a range
of company types most suited to their business plan: partnerships (informal
partnerships, general partnerships, limited partnerships) or joint stock companies
(limited liability companies with one or more partners, stock corporations, limited stock
companies).
The essential difference between these two types is that, in the case of partnerships, no
net distinction is made between company stock and the personal capital of the
entrepreneur whose liability may therefore include his own assets; in the second case,
partners are responsible for the obligations they have assumed because this category
of company is a legal person with its own assets and partners may only make decisions
to the degree of their capital shareholding.
The law generally allows freedom of choice of company type, except where legislation
expressly requires that a particular company assume a particular corporate form, or in
the case of commercial activity.

                         Most common Italian business entities
                    S.r.L               S.p.a               S.a.p.a.
Characteristics     (limited liability  (joint stock        (limited stock
                    company             company)            companies)
Partner liability   Limited to invested Limited to invested Active partner:
                    capital             capital             unlimited liability.
                                                            Sleeping partner:
                                                            limited to capital
                                                            invested
Minimum capital     Lit. 20 million     Lit. 200 million    Lit. 200 million
Executives and      Partners / non      Partners / non      Active partners only.
duration of         Unlimited           Three years         Unlimited
mandate
Capital deposit     Yes                   Yes                  Yes
requirements
Authorized to issue No                    Yes                  Yes
stock
Joint Stock Companies

Partnerships are formed by stipulating a statute, while joint stock companies
require the stipulation of a charter and statute in the presence of a notary. These
documents must then be certified by a court of law followed by enrolment on the
business register.
Either individuals or groups of cooperatives may be partners (capital stock
companies and partnerships); foreigners may be partners in a company constituted
in Italy independently of their place of residence. Companies constituted in Italy are
considered Italian ad therefore subject to Italian law, as are companies formed
abroad which have their administrative headquarters in Italy or their main
operational base. Italian branches of foreign companies are required by Italian law
to publish their statute and accounts, and to observe several specific requirements.
The minimum amount of capital required by law to form a capital stock company is
Lit. 20 million for limited liability companies (with one or more partners) and Lit. 200
million for joint and limited stock companies. The
notary will certify that the partners have lodged 30% of the capital with the local
branch of the Bank of Italy or any bank. All stock must be underwritten in order to
form the stock company but conferments need not be in cash: initially, it is
sufficient to lodge three-tenths of cash conferments before the statute is signed.
The statute must include: the partners’ generalities, the name of the company, its
address, its aim, the capital underwritten, the capital paid up, the nominal value
and number of shares, the value of assets and credits conferred, the company’s
organic composition and the powers of these organisms. The statute will then be
submitted to a court of law which will certify all the information it contains.
Only after it has been enrolled on the business register can the capital stock
company be said to exist or to have legal status.

                        Taxation on Joint Stock Companies
Joint Stock      Corporate         Partner
Companies        Liability         Liability
Taxes and        IRAP, 4.25%           Only if dividends are distributed:
Percentages      IRPEG, 37%                - IRPEF, if partner is physical person
                 with possible             - IRPEG, if partner is legal person
                 reduction                 - Taxable = distributed dividends + tax
                 of up to 27%              credit
                 in the event              - Deduct tax credit from total payable
                 that DIT applies      The following percentages apply for
                                           distributed dividends:
                                           - 10% on account if dividends are
                                           distributed by unfloated companies
                                           - 12.5% as tax if distributed by floated
                                           companies (except in the case of options)
Tax Returns      Form 760          Form 740/1, if partner is physical person
                                   Form 760, if partner is legal person
The Italian tax system

Investor Considerations
The Italian tax system is mainly codified in the General Tax Code which is updated
each year by the annual Finance Act ( Legge Finanziaria).
    Italian resident corporations and individuals are subject to Italian tax on
       worldwide income
    Non resident corporations and individuals are subject to tax on Italian-source
       income only.
    A flat rate is applied to the total taxable income of a corporation.
    Progressive rates apply for individuals.

Direct taxes
      Income Tax
The tax payable by resident companies covers all earnings wherever they are
produced (in Italy or abroad), except where international conventions on dual taxation
exist between Italy and other countries. Companies are "resident" if they have their
legal address, administrative headquarters or their principal operational base in Italy.
      Taxation of Partnerships
Italian tax laws make a distinction between partnerships and capital stock companies.
In the case of partnerships, whose partners may be physical or legal persons, the so-
called transparency system is applied which considers partners the earners of income
generated by the company. These partners are therefore liable to pay personal
income tax. They are automatically taxed in relation to the volume of shares they hold,
independently of their effective receipt of company dividends.
      IRPEF- personal income tax
IRPEF, the personal income tax to which partners who are physical persons are
subject, is assessed by percentage of earnings according to recently reviewed tax
brackets, as shown in the above table.
Members of partnerships subject to ordinary accounting procedures may also apply
for Dual Income Tax (DIT) benefits.

                                  IRPEF Tax Brackets
Income in Lire        Percentage Regional Income tax payable on average (scale)
(bracket)                             surtax*    bracket earnings
up to 15,000,000      18.5            0.5        19% of total
15,000,001 -          26.5            0.5        2,850,000
30,000,000                                       27% of sum exceeding 15,000,000
30,000,001 -          33.5            0.5        6,900,000
60,000,000                                       34% of sum exceeding 30,000,000
60,000,001 -          39.5            0.5        17,100,000
135,000,000                                      40% of sum exceeding 60,000,000
over 135,000,000      45.5            0.5        47,100,000
                                                 46% of sum exceeding 135,000,000
* blanket percentage throughout Italy for 1998-1999
    
     IRPEG – corporate income tax
Unlike partnerships, capital stock companies are directly subject to IRPEG gains tax
(37%). Partners are liable only in the event of dividend distributi on.
    
     Dual Income Tax - DIT
To foster company capitalization, Dual Income Tax (DIT) has been introduced. This
carries a reduction (from 37% to 19%) for part of corporate gains and applies in the
event of any increase in net assets throughout the year in the form of capital
conferments by partners or of undistributed dividend reserves. The corporate earnings
to which the reduced percentage applies is established by multiplying the net asset
increase by a rate to be fixed every year by the government. The concessionary
percentage of 19% is not applicable to overall tax due in that a minimum fiscal
threshold must be observed, which has been set at 27% of average payable. If the
total IRPEG due constitutes an average taxable percentage of under 27, then part of
the earnings which would otherwise benefit from the 19% concession will be taxed at
the ordinary rate of 37%.
Other taxes (indirect)
     VAT
The sale of goods, services and imports is subject to Value Added Tax (IVA), except
in the case of derogations regarding certain activities and operations. The ordinary
rate is 20 per cent and is applied to all operations (except those which are exempt or
non-taxable), unless otherwise indicated in the two tables of reduced rates (four and
ten per cent). VAT is usually liquidated and paid monthly. By December 27 each year,
a VAT deposit is payable of 88 percent of the total due for the final period.
     Registration Tax
Registration Tax usually applies to the following operations: the constitution of a
company, increases in company stock, conferments by partners on capital account or
as venture capital, extraordinary operations (transformations, mergers and scissions),
pay-outs to partners, the cession of corporate shares, the issuing of stock.
INVIM (until January 1, 2003 on the sale, pledge or acquisition free of charge of
property rights or other rights to property, or on the expiry of a decade of ownership).
     revenue stamps for acts, documents and registers.
     tax on mortgages and land.
     tax on donations.
     Property Tax (ICI, a municipal property tax on buildings, building grounds and
        agricultural land).
     IRAP
A number of taxes were suppressed with the introduction of the Regional Production
Tax (IRAP) from January 1998. IRAP, which is not deductible from income tax, is
payable in each tax period according to the net value produced in the given regional
authority’s territory. The percentage payable differs for capital stock companies and
partnerships. The ordinary rate is 4.25%.
From January 1, 2000, Regional Authorities will be able to increase the rate by a
maximum of 1% and may introduce percentage differentiation according to sector and
category of liability. For banks and insurance companies, the rate at January 1, 1999
was 5%. This will be reduced to 4.75% in 2000.

Sale of shares
On July 1, 1998 some considerable changes were introduced regarding capital gains.
According to the new measures, one single tax may be paid in lieu at two possible
rates: at 12.5% of gains from financial investments (such as the sale of unqualified
shares); or at 27% of real asset values (such as the sale of qualified shares, or a
percentage of voting rights of between 2 and 20% or more, or equal to between 5 and
25% of capital or assets depending on whether they are shares of a floated company
or other shares). This tax in lieu is not applicable to companies whose capital gains fall
within corporate earnings.
Sanctions
The new sanctions for fiscal, non-penal violations have been in place since April 1,
1998 and are based on the principle of personal responsibility in defaulting or
complicity to default.
The sanctions’ point of reference, therefore, is no longer the tax subject in general but
the individual who has violated fiscal law. But the subject on whose behalf an
individual has defaulted is still liable to joint payment of sanctions, except where the
right to rescind applies, when the defaulter is an employee of the subject, or a legal
representative or administrator who violated the law in carrying out his functions or
mandate.
LABOR RELATIONS AND SOCIAL SECURITY
The labor market has been improving in the 1990s in terms of legislation, flexibility and
job creation. Union relations are less strained in that collective contracts are now
stipulated quickly and without conflict and wage rises are granted only in proportion to
higher levels of competitiveness and productivity.
Moreover the effects of the cost of living adjustment (COLA), whereby wages are
automatically revalued, have been mitigated by Italy's current low inflation rate. Out of a
working-age population of about 40 million, 2.7 million are unemployed, or 12.1%. In
some specific regions of the South, the unemployment rate is running at about 25%.
This high unemployment rate and its concentration in the South and other slow-growth
areas - 56.6% of young jobless - is now a fixture, the object of government
interventions. These have included general measures to boost labor market flexibility as
well as targeted action to resolve the chronically high unemployment.
Measures have also been introduced to facilitate the entrance of young people in the
workforce. They include on-the-job training, financing for socially useful jobs, working
scholarships (for young people in the South and in other slow-growth areas),
apprenticeships (for 16-24 year olds and for 16-26 year olds in the South), the extension
of training contracts from two to three years, vocational insertion plans and, finally,
temporary employment. Apprenticeship and training contracts are the least costly for
companies. Other labor market instruments worth considering are Area Contracts and
Territorial Agreements envisaging special benefits for boosting workforces in areas of
high unemployment.

Employment contracts
The law sets out certain basic rules and regulations which govern the hiring,
performance and dismissal of employees. Collective labor agreements are periodically
established between national trade unions and employers' associations.
     Wage Rates
Wage rates in Italy are established by collective contract, by agreement with employers
or, in the absence of either, by a court of law. The syste incorporates a series of
stipulations, some fixed, others depending on qualifications and services to be rendered
and still others to cover absenteeism for various reasons.
Wages may be supplemented by fringe benefits, such as cafeteria facilities or, in the
case of management, the right to specific utilities (company cars, accommodation,
insurance policies, concessionary loans).
In December, all employees are paid a Christmas bonus, the "tredicesima", equal to a
month's salary. Set holidays and national holidays are paid, as is annual leave for a
minimum of three weeks.
     Average Salaries
The following gross salaries for key positions in foreign-owned companies in Italy are
mean figures reflecting 0-10 years' experience and 12 salaries plus two bonuses a year.
In the case of clerks, secretaries and managers the employer is assumed to be paying a
premium for foreign language skills.
Accountant
Bookkeeper              1.5m - 3.95m
Chartered               2.8m - 6.65m
Clerk                   1.5m - 1.9m
Engineer                2.8m - 6.65m
Foreman                 2.2m - 3.4m
Laborer                 1.1m - 1.7m
Manager                 5.0m - 11.1m
Secretary               1.65m - 3.4m
Specialized
                        1.8m - 2.8m
mechanic
                       Source: EIU estimates
    
     Sick Leave
In the case of sick leave, the employee is paid an advance on wages which will be
reimbursed by the National Social Security Institute (INPS). They have the right to
demand that their jobs be safeguarded for the duration established by collective
contracts.
     Maternity leave
Maternity leave guarantees jobs, all rights, financial security for the duration, and leave
of absence until the child is a certain age or when he or she is seriously handicapped.
Compulsory maternity leave starts two months before the birth and ends three months
after it during which time the worker will receive 80 per cent of her wages advanced by
her employer and reimbursed by the INPS. Maternity leave may be extended for a
further six months until the child's first birthday during which time workers are entitled to
30 per cent of their wage.
     Termination of Employment (Trattamento di Fine Rapporto, T.F.R.)
On termination of employment workers receive a monthly wage with reevaluations for
the number of years worked or proportionate equivalent.
     Overtime
A 40-hour week is the norm although collective contracts may envision shorter hours.
While the law does not generally recognize overtime, there are some exceptions but it
may not exceed two hours per day, 12 per week or 170 throughout the year. Overtime is
allowed in the industrial sector only if it is of a temporary nature and it must be
negotiated by specific agreement between employer and employee on an individual
basis or by the unions under collective contracts.
     Night shifts
Night shifts are also possible and payable separately with a specific wage supplement.
Nightshift working remains prohibited for minors and adolescents, including those
employed in the world of entertainment, for apprentices, and for women except those
engaged in a managerial capacity in the manufacturing sector or in providing in-house
medical services. Workers must have 24 consecutive hours off per week.
     Part-time contracts
Efforts to reduce unemployment have simplified existing flexibility devices in recent
years and introduced new forms to the Italian labor market.
Part-time contracts, now less complicated to apply, may be issued to all categories of
employees. They may take the form of fewer working hours throughout the week, two or
more full days a week, or they may be cyclical in nature, in pre-established relation to
certain periods of the year or working month. Young college or vocational trainees, or
young people looking for work, may take part in company training sessions in the
private sector and, despite the special nature of such cases, employers are obliged to
insure trainees against accidents.
     Vocational insertion programs
In addition, unemployed 19-32 year olds may benefit from vocational insertion programs
launched in 1998 and to be completed in1999.
     Apprenticeship
Apprenticeship contracts must be of a minimum 18 months' duration and a maximum
four years. They usually concern 15-24 year olds. Apprentices, who may also be hired
part-time, must be paid according to the collective labor contract stipulations. To
encourage this type of contract, the law envisions special benefits for the employer to
off-set labor costs.
     Fixed contracts
In the case of fixed contracts, a trial period is allowed (a maximum of six months for all
workers including management and white collars, and three months for other
categories). During this time employment may be terminated without incurring
obligations of any particular kind. However, collective contracts may establish trial
periods of differing durations for individual categories.
     On-the-job training
Again in support of the insertion of young people within the world of work, on-the-job
training contracts are a possibility for 16-32 year olds. These contracts are designed
either to develop intermediate or high-level skills or to guarantee professional insertion
by means of job experience. This also allows skills to be up-dated in correspondence
with the productive or organizational context (low-level skills). The on-the-job training
contract, with a maximum duration of 36 months, is not renewable and envisions labor
cost discounts for the employer (25% reduction in social security contributions).
     Limited contracts
The limited contract, which is the exception in a general context of fixed contracts, is
allowed only in relation to certain activities established by law (seasonal jobbing,
intensification of operations, extraordinary or occasional works and services, stand-ins
for absentee workers whose jobs are protected).It may also be established by collective
contracts.
     Temporary employment
To respond to company demands for such staff, temporary employment has recently
been introduced in Italy. Under this type of contract, a company may hire workers
through temporary employment agencies. These workers are therefore in the pay of the
agencies which are also responsible for administration and training.
     Foreign workers
The labor laws and contracts applicable to Italians also generally apply to regularly hired
foreign workers. In particular, workers from a European Union country enjoy favorable
treatment: they are free to enter Italy (or any Union Member State) for reasons of work
and, on presentation of an identity card or passport, they will be issued a permit by their
place of residence (the Union citizen's permit of stay). This permit, valid for at least five
years, allows workers to be hired under the law and is obligatory only for employment of
a duration of three years or more. The regulations for non-Union citizens are different,
with specific laws on their entry and sojourn in Italy.
Individual dismissal procedure
Under Italian law, there are two dismissal procedures: individual and collective. In the
first case, dismissals need not be justified in workforces of under 15 and procedures
differ according to the employer's own characteristics (whether company or non), or
according to the type of working relationship. These procedures will generally be
outlined in the labor contract. Notice may vary from six days to five months according to
qualifications and seniority.
      Collective dismissal procedure
Lay-offs are considered collective when employers with workforces of 15 or more intend
to dismiss at least five employees from a productive unit within a period of 120 days, or
from more than one productive unit in the same province. The law also establishes the
conditions and form of notice to be issued to the unions (22.5 days' notice for lay-offs of
fewer than ten employees and 45 days in other cases). Moreover, collective lay-offs are
only possible by law in the event of reduced production, of operational transformation or
cessation of business.
      Redundancy
Although there has been less and less recourse to it in the past two years, the
possibility remains for workers to compensate for their loss in earnings by applying to
the Redundancy Fund (Cassa integrazione guadagni, CIG). This follows reductions in
their working hours or the cessation of business by their employer whether classified as
"ordinary", for causes of a temporary nature, or extraordinary in the event of structural
change (crisis, restructuring, insolvency and so on).
      Social security system
Employers and employees in Italy must contribute to the social security system which
covers:
      Old age and disability pensions
      Sickness benefits
      Unemployment indemnity
      Health and medical care
All workers and their families are covered. The major part of the contribution is borne by
the employer; the balance is withheld from the employee's remuneration. The amounts
of the contributions are determined by reference to the remuneration paid and the
percentage rates applicable to the type of employment.
                Flexibility Comparison in Five European Countries
                   Italy       Denmark         Ireland       Netherland        U.K
                                                                  s
 Maximum        48 by law,    No limit,      48 by law.     45 by law,      No limit,
 working        about 40      with some      Under 40       36-40           37-45 by
 week           by            exceptions     by             by collective   agreemen
                agreemen                     collective     contract        t
                t                            contract
 Minimum        To be         To be          To be          To be           None by
 wage           agreed        agreed         agreed         agreed          law
                under         by             by             by collective   or
                constitutio   collective     collective     contract        contract
                nal           contract for   contract in    for over-23s
                provision     new            some
                              employees      sectors only
Part-Time     6.4          21.6            12.1         37.4          24.1
(% of         Regulated    A fixture for   Incentives   Incentive     Increased
working       ,            several         since 1991   policies      since
age           no           decades                      applied in    1983
population)   incentives                                recent        in various
                                                        years         forms

Limited       7.2          2.1             10.2       11.4          7
Contracts     Rigidly      Regulated       Regulated  Regulated     Similar
(% of         regulated    similarly to    separately more          to fixed
working       separately   fixed           from       restrictively contracts
age           from fixed   contracts       fixed      separate      in
population)   contracts                    contracts  from          facilitating
                                                      fixed         dismissal
                                                      contracts
Temporary New law         Codified       Uncodified   Codified      Uncodifie
Employmen still           three-month                 (excluding    d,
t            to be        employer                    building      infrequent
             enacted      limit                       industry )    (1.4%)
                                                      one-year
                                                      employer
                                                      limit
Source: Business International elaboration of European Commission data
Business Incentives
In its efforts to stimulate and support the growth of new investment and job creation
particularly in the South and in other slow-growth areas of the country, the Italian State
in keeping with European norms has now provided a series of financial incentives for
new activities and for the modernization and development of existing businesses.
Italy offers a significant range of financial support programs for the development of
existing business and the launching of new industrial initiatives in certain areas:
Fixed investments: grants are available for the launch of new initiatives, for
expansions, modernizations, restructuring, re-conversion and re-activation in the mining
and manufacturing sectors and may cover- or exceed in some cases- up to 65% of real
investments.
The principal laws on fixed investment financing are the 488/92, the 341/95, the
"Sabatini Law" No.1329/65, the Programming Contract and the Territorial Agreements.
Each of these instruments has its own well-defined goals and beneficiaries. A large
company, for example, or business consortium planning to implement or expand their
productive plants would ideally be supported by the Programming Contract, whereby
the contract and the incentives are decided in collaboration with the Budget Ministry
itself.
The Territorial Agreements and the Area Contracts were devised to foster business
projects involving several inter-active initiatives within one highly structured plan.
To encourage local enterprise development in concessionary areas and in certain
sectors, SME have priority access to automatic incentives and financing under Laws
488/92 and 341/95.
Job creation: Grants are available for companies increasing their full time workforce,
worth an average year’s salary for each new employ
Vocational training; grants are available of up to 90% of costs sustained for vocational
training activities following company reorganization or restructuring or the launch of new
initiatives
Research and innovation: Grants are available for process / product innovation
projects and programs and may cover up to 50% of sustained costs, together with soft
loans for a total of 70% of costs. Current Italian legislation on financial assistance for
applied research features two separate provisions, under Law 46/82 (Special Fund for
Applied Research) and Law 488/92. While their objectives are the same, these two
measures present different territorial eligibility criteria (Law 46/82 covers the whole of
Italy while the488/92 incentivates initiatives only in concessionary areas, including
financing for the construction of research centers). They also provide for different
incentives. The former allows for grants and soft loans while the488/92 is a grant facility
only.
Marketing development: Soft loans covering up to 85% are available for marketing
development programs targeting non-EU countries and to sustain exports. Major
Incentives for Internationalization are:
      Law 227 (Ossola) of May 24,1977;
      Law 394 of July 29, 1981: on financing for international marketing programs;
      Law 49, Art. 7 of February 28,1987 on financing the venture capital of Italian
         businesses interested in setting up joint ventures in developing countries;
      Law 100 of April 24, 1990 which, after instituting a public merchant bank,
         envisions soft loans for the creation of joint ventures abroad.

Financial assistance for the Internationalization of Italian Business
Even if a company has highly competitive products, it must be able to count on a
financing system such as to offer equally competitive conditions in terms of export
finance, project finance, credit insurance and marketing. Businesses must also be in a
position to exploit interventions which have a direct impact on their economic-financial
structures, such interventions being direct investment support by means of financial and
insurance concessions for underwriting the capital stock of joint ventures.
The EU has some specific instruments in place designed to support initiatives of this
type and deploying the Fund for the Creation of Joint Ventures - the Joint European
Venture program (JEV). The JEV program is managed by a network of financial
institutions with offices in all Union Member States. They are the exclusive link between
the beneficiary company and the European Commission offices.
These are joined by international cooperation whose direct goal is not support for Italian
business, though it has represented a means by which our businesses have been able
to penetrate markets particularly at risk, such as those of the developing countries.
FIXED INVESTMENT FINANCING
Law 488/92
Beneficiaries
Law 488 is designed for three types of companies:
     mining or manufacturing
     service companies
     tourism companies
Eligible Initiatives
Law 488 offers incentives for the implementation of a new productive unit, for the
expansion, modernization, restructuring, conversion or re-activation of an existing unit
or for its transfer. Initiatives must be part of an operational program for each productive
unit that is by itself sufficiently structured to pursue pre-set production, financial and
employment goals.
Eligible Areas
All areas eligible for EU Structural Fund interventions.
Incentives
The incentives are disbursed in two or three annual installments in the form of capital
account grants. The grant ceiling will vary according to the investment’s location (the
ceiling is highest in the slowest-growth areas), and according to the size of the applicant
company (Small, Medium, Large, with the maximum for small-scale).
Eligible Costs
Eligible after VAT are the costs of land purchase (no more than 10% of the total
investment); its preparation and geognostic surveys, planning, works management,
feasibility studies and environmental impact assessment, planning permission and
certification (all to a value of no more than 5% of the total investment); building or
building purchase and related costs; acquisition of "brand new" machinery, plant and
equipment; vehicles and means strictly necessary for the productive cycle or for
climatized transport; software purchase and the acquisition of patents; installation of
plant, machinery and equipment.
Service companies, except suppliers registered as "Industries" with the Italian social
security institute (INPS), may only apply for incentives to cover the costs of brand new
machinery, plant, equipment and software. To be eligible, costs must be sustained from
the day after the closing date of the tender immediately prior to the current invitation to
apply for incentives. The specific cost items eligible for grants if sustained in the 12
months prior to the date of application for incentives are: land purchase, planning,
feasibility studies and planning permission.
Application Procedures and Conditions
Companies applying for incentives must submit their application on a special form to an
authorized bank or appointed leasing company by one of two closing dates set every
year by specific Industry Ministry Decree. A copy of the form should then be sent to the
Regional Authority in whose territory the initiative is to be launched.
Preliminaries
The authorized banks will have terminated their preliminary examination of all
applications within the second or third consecutive month of the closing date of the
application’s presentation. The banks will then submit their findings to the Ministry of
Industry, notifying the applicants and Regional Authorities concerned accordingly. The
preliminary examination will certify all the documentation submitted, conformity with
requirements and the coherence of company assets and its declared financial status.
The examination will also express an opinion on the project’s technical, economic and
financial validity and on the congruity of its budget estimate. This preliminary report will
highlight other elements as well which will serve to determine the project’s "indicators"
for its placing in the shortlist.
The Shortlist
Within one month (except for August, in which case two months) of the deadline for
submission of the banks’ preliminary reports, the Ministry of Industry will draw up the
regional or area shortlists classifying eligible initiatives and arranging for their
publication in the Official Gazette. Under the system of shortlists formed for each
tender, projects which have passed the preliminary examination will be awarded points
according to five basic indicators:
      The value of the company’s own investment in the initiative in ratio to the total
         eligible investment Source
      The number of jobs created by the initiative in ratio to the total eligible investment
      The value of the incentive ceiling in ratio to the sum requested
      Regional priorities
      Environmental impact.
Provisional Decree on Incentives
On publication of the shortlists, the Ministry of Industry will grant the incentives
requested to each project according to reserves (50 per cent of funds are reserved for
SME) and according to ceilings (no more than 5% of funds may be allocated to service
companies) until all financial resources have been exhausted. Projects which have been
approved but which have received no incentives owing to fund exhaustion may re-apply
in one only of the next two tenders.
Incentive Disbursement Procedures
The incentives may be disbursed in two or three equal annual installments depending
on the initiative’s scheduled completion, within two years or four years respectively of
the date of application. The first installment, available within one month of the
classification’s publication, may also be paid in advance on presentation of an adequate
bank surety or insurance policy. Installments are disbursed according to the rate of
progress made in the incentivated works and at the request of the beneficiary company
which must also submit documentary justification. Disbursement of the final installment
will follow submission of the final account and relative declarations. If the incentive total
has still to be calculated, the final installment will be paid minus 10% of the total grant
approved.
Final Account Declarations
Within six months of completing its investment program, the beneficiary company is
required to present a certified final cost account to the authorized bank.
Prohibitions and Obligations
The incentives approved under Law 488/92 may not be accumulated with other public
incentives in relation to the same project. In addition, the incentives approved may not
otherwise be deployed for five years after the date of the plant’s operational launch. The
initiative must be completed within either two years or four years, according to type, of
the date of presentation of the incentive application. In the event of a violation of these
or other obligations, incentives would be partially or totally revoked.
Inspections
The Ministry of Industry and the authorized bank may carry out inspections at any time
during and after the investment program’s completion.
Law 341/95 - Art. 1 - AUTOMATIC INCENTIVES
Beneficiaries
Law 341/1995 provides for additional incentives for mining and manufacturing
companies and for service companies. Also eligible are telecommunications companies.
Eligible Investments
The implementation of a new productive unit or the extension, modernization,
restructuring, conversion, re-activation or transfer of an existing unit.
Eligible Territories
Territories eligible for EU Structural Fund interventions
Incentives
Incentives are disbursed in the form of a "tax bonus" which the beneficiary company
may use to pay revenues on fiscal account. The total incentives will be a percentage of
the investment value, in keeping with EU ceilings.
Eligible Costs
Costs are eligible if sustained for the acquisition of machinery and plant, production
control equipment, electronic units and systems for data elaboration, computer
programs, consultant’s services and telecommunications. Also admissible are the costs
of transport, packing, assembly, testing and building works, if any, strictly necessary to
the installation of machinery and plant. Total costs may not exceed 10% of the overall
cost of machinery and plant. To be eligible for incentives, these costs must be sustained
no earlier than the year prior to the date of application to book funds. All goods must be
"brand new".
Forms of Purchase
     Outright
     By installment
     By leasing
     Under the "Sabatini law" according to non-concessionary procedures.
Incentive Application Procedures
Applications must be presented to the Ministry of Industry (or authorized body) which,
having certified compliance with requirements and verified the availability of financial
resources, will "book" the sum of incentives requested on a "first come first served"
basis. Within 20 days of the presentation of their applications, companies will be notified
that funds have been "booked". The company must implement all of the investments, as
indicated in their application to book funds, within 30 months of the date of their request.
The company will then submit their request for incentive liquidation, complete with
documentation. Having verified compliance with requirements, the Ministry of Industry
will liquidate the incentives due and will notify the beneficiary company that its receipt of
the tax bonus form to off-set onuses is imminent. From the 30thday after receipt of their
tax bonuses, companies may utilize them to off-set revenues on their fiscal accounts.
Following liquidation, the Ministry of Industry will verify the coherence of company
declarations with final documentation and, where necessary, apply sanctions.
Conditions and Obligations
Delivery, final invoicing and payment of the goods in question must be complete within
30 months of the date of application to book funds. In the case of leasing or purchase
as per the "Sabatini Law", payment will be considered complete providing the total sum
of installments or bills of exchange paid over the 30 months exceeds the sum of
incentives approved or 30 percent of the cost of the goods.
Restrictions and Prohibitions
Total eligible investments for each productive unit may not exceed Lit.10 billion in 12
months. The benefits under Law 341 may not be accumulated with other forms of
incentives.
Programming Contracts
Beneficiaries
Beneficiaries of this procedure may be large-scale companies, national / international
groups of considerable industrial dimensions, or consortia of small and medium-scale
enterprises operating in the same or different sectors.
Eligible Initiatives
Programming Contracts envision that projects by large-scale enterprises must come
complete with territorially structured plans or plans for definitive areas such as to
generate significant spin-offs for the local productive apparatus in the form of new
installations and jobs. In the case of Programming Contracts proposed by SME
consortia, initiatives must be incorporated within articulated plans to implement new
production initiatives or expand on existing plants.
Eligible Territories
Eligible territories are those to which EU Structural Fund interventions apply
Incentives
The form and type of incentives will be agreed when the contract is definitive and in
relation to concurrent aid systems applied and calculated in NGE.
Eligible costs
As indicated in the project plan and successively in the Programming Contract.
Application Procedures
Companies must submit their application with their project plan to the Budget Ministry
once the Regional Authority concerned has approved the location of the activity.
The Procedural Stages

Applications for access to Programming Contracts must provide the following
information in the form of a project plan for a pre-evaluation of the initiative:
     a general illustrative report;
     a technical report;
     a management plan;
     a financial report.
The main feature of every "Project Plan" must be a high degree of innovation. If found
by the Budget Ministry to comply with Programming Contract requirements, the plan will
proceed to the preliminary stage.
Prohibitions and Obligations
Accumulation with other incentives is prohibited.

Territorial Agreements
Beneficiaries
Territorial Agreements envision the participation of various promoters and underwriters.
They may be local bodies, local authorities, local business and workers’ associations
and private sector exponents. The Regional Authority whose territory has been targeted
for intervention may also underwrite the Agreement as may banks and regional financial
institutions as well as surety ship and industrial development consortia. Within each
Agreement, the underwriters must appoint a coordinator for its enactment. This
coordinator will also:
     represent the interests of the underwriters;
     activate technical and financial resources;
     guarantee performance monitoring;
     certify fulfillment of agreed commitments and obligations;
       certify and guarantee the new initiatives’ coherence with the goal of local
        development;
     submit a six-monthly progress report to the Budget Ministry on the Agreement’s
        enactment.
Eligible Initiatives
Territorial Agreements are specifically designed to foster local development. In
programming them, therefore, the following must be specified:
     the specific and primary development goal;
     the name of a supervisor;
     the commitments and obligations underwritten;
     the activities and interventions to be implemented;
     the financial plan and cost schedules as well as financing sources.
To enact the Agreement, the public bodies concerned will draw up an accord on
respective mandates and procedures.
Eligible Territories
Territorial Agreements may be enacted throughout the country although the incentives
regard only those territories eligible for EU Structural Fund interventions
Incentives
The incentive ceiling for each Agreement is Lit.100 billion.
Eligible Costs
In keeping with the Agreement’s set goals, the costs of implementing each productive
investment as well as the infrastructures strictly necessary to pursuit of these goals are
eligible. No more than 30% of the sum of incentives granted maybe designated to the
implementation of infrastructures. Productive investment incentives must therefore fall
within the EU ceilings established by Law 488/92 and will be in ratio to the dimensions
of the company and to the initiative’s location. Moreover, the company’s own investment
in the business initiative must amount to 30% or more of the total investment. Average
investments for all the business initiatives must not exceed Lit. 500 million per
employee.
Procedure
The Territorial Agreement project should be presented to the CIPE by its promoters
(local authorities, Chambers of Commerce, business associations and unions, or private
sector operators). The Regional Authority will also be kept informed.
In the case of coordination by the National Economy and Labor Council (CNEL), it will
certify the initiative’s coherence with the socio-economic development goals outlined in
the proposal.
Should CIPE funds be utilized (Agreements underwritten for slow-growth areas) projects
must be approved by a body authorized by the Budget Ministry. Approval will come
within 90 days of receipt of the request for preliminary examination(applicants may also
request Budget Ministry assistance in preparing their documentation on the investments
in question).
The Budget Ministry will:
     consult the Regional Authority (which will express an opinion within 30 days);
     certify the Agreement’s overall validity;
     certify that resources are available from the pool of CIPE funds;
     approve the Agreement by decree within 45 days of receipt of the proposal;
     underwrite the Territorial Agreement within 60 days of its approval.
Within 30 days of receipt of the list of approved initiatives, the Deposits and Loans Bank
(Cassa Depositi e Prestiti) will proceed with disbursement.
Prohibitions and Obligations
Accumulation with other incentives is prohibited.
Area Contracts
Beneficiaries
The Area Contract must be promoted by representatives of workers and employers who
will underwrite an ad hoc agreement to this effect. The Area Contract will be the means
to implementing new business initiatives in a given
economic environment and to creating new jobs in industry, agro-industry, services and
tourism. Two fundamental factors will be union relations and access to particularly
concessionary credit. The Contract will be signed by the promoters, by State bodies, by
the regional and local authorities concerned, by companies which have formulated the
investment project and by at least one intermediary with the faculty to accede to EU
global subsidies.
Eligible Territories
The Area Contract may be stipulated in industrial areas with declining unemployment
figures and in zones falling within Objectives 1,2 and 5b.
Eligible Initiatives
The Area Contract must indicate:
     the set goals of the business initiatives being proposed and the relevant
        infrastructures;
     the interventions to be implemented, the executive bodies, schedules and
        working procedures;
     the supervisor in charge of the implementation and coordination of the
        interventions, who must also be one of the public subjects who has underwritten
        the Contract;
     the costs and financing needed for the various interventions;
     the agreement reached between the unions and employers;
     an agreement between the public bodies concerned with the Contract’s
        implementation to accelerate and simplify administrative procedures.
Procedures
The Area Contract may be launched:
     if the target area is equipped for productive installations;
     if investment projects are designed to boost production figures appreciably in the
        area and in the entire region and if they are approved by the relevant bodies;
     if an intermediary has been appointed with the faculty to accede to EU global
        subsidies.
The Treasury and Budget Ministry will certify that criteria have been met and that
resources are available. It will then stipulate the Contract within 60 days of approval.
Disbursements
After the Contract’s stipulation, the supervisor will lodge the list of envisioned initiatives
with the Deposits and Loans Bank (Cassa di Depositi e Prestiti). He will also indicate
the public resources required for each initiative complete with all the relevant
documentation produced by the preliminary examinations. Within 30 days of receipt, the
Bank will proceed with disbursement for the investment project.
Restrictions and Obligations
Accumulation with other incentives is prohibited.
The "Sabatini Law" - Law 1329/65
Beneficiaries
The "Sabatini Law" No. 1329/65 provides incentives for small and medium-scale
industries, and for commercial, services, agricultural and crafts enterprises which fall
within the parameters established by Ministry of Industry Decree and by the EU.
Eligible Initiatives
Incentives may be granted for the acquisition or rental of brand new machine tools or
production equipment of a total value of over Lit. 1 million. These items include machine
systems, additional parts, accessories, fixed or semi-fixed plant and equipment for the
manipulation, transport or lifting of goods (cranes, forklifts, trolleys and conveyor belts).
Eligible Territories
Nationwide.
Eligible Costs
The incentive ceiling is Lit. 3billion for, as follows:
     cash installments to cover the cost of machinery. The costs of assembly,
        running-in, transport and packing are eligible to a ceiling of 15% of the costs of
        machinery; excluded are VAT, any leasing redemption quota or any other fiscal
        or financial onus;
     hire purchase interest calculated at a rate no higher than the quoted rate on the
        issue of bills of exchange.
Incentives
Incentives are disbursed in the form of special discounts on bills of exchange issued in
relation to deeds of sale or machinery rental contracts guaranteed by lien arrangements
as per Art.1 of the law and with a five-year expiry from the date of issue. The grant,
calculated according to the sum of the deferred credit plus interest at the rate of
reference, will represent the difference between the net earnings of the aided operation
at the rate of reference and the net earnings at the rate of reference current at the date
of the incentive’s disbursement.
Application Procedures
Applications for incentives under the Sabatini Law must be submitted to Mediocredito
Centrale by a bank or leasing company authorized by Mediocredito.
     Incentive Disbursement Procedures
The grant is disbursed in full and in advance.
Financial Aid Envisioned for Job Creation
To reduce social shortfalls in high unemployment areas, especially in the South, Italy
has formulated a specific norm for grant-aiding businesses intent on increasing their
labor forces in these regions, including their management.
Norms regulating this assistance are both circumstantial (with specific incentives each
with its own terms for application) and permanent. They are constantly up-dated.
Currently, small and medium-scale enterprises hiring new employees in slow-growth
areas (between October 1,1997 and December 31,2000) may benefit from a "tax credit"
of Lit. 10,000,000($6,500) for the first new employee, and Lit. 8,000,000($5,200) for
each successive employee up to a ceiling of Lit. 60,000,000 ($39,000) a year. In
addition to this Government law, regional authorities have the faculty to grant similar
contributions on the basis of ad hoc regional laws.
Financial Assistance for Vocational Training
In company restructuring processes or during the launch of new production lines,
businesses must develop their vocational training activities to a considerable degree.
This will regard employees whose skills will have to be re-converted as well as new
workers to train for the specific production lines. To support an ongoing policy designed
to raise the professional profiles of industrial workers, the Italian State assists
businesses with training needs. They maybe granted contributions for up to 90 per cent
of sustained costs. To obtain these grants according to the training program’s
characteristics and aims, businesses must present their projects to the Ministry of Labor
or to Regional Authority Labor Office.

Law 488/92 – RESEARCH
Beneficiaries
These incentives are designed for goods and/or services producers, consortia,
institutes, organizations, companies and centers in the field of research which have a
stable operational base in slow-growth areas.
Eligible Initiatives
Eligible are projects envisioning research of an industrial and/or pre-marketing
development nature, as follows:
Industrial Research
Planned research or analyses in view of the acquisition of know-how for the definition of
new products, productive processes or services or to improve existing such activities.
For industrial research projects, the incentive ceiling is 50% in GGE of the eligible cost.
Pre-Marketing Development
Applied research for: the plan, project or design of new products; productive processes
or services; streamlining or improvement whether sales- or user-oriented; a prototype.
This activity may include the design and projection of additional products, productive
processes or services as well as demonstration or pilot projects, on condition that these
projects not be converted or used for industrial or commercial ends. Research center
building projects may also be eligible for incentives (or works to extend, modernize or
restructure existing centers), along with projects proposed by large-scale enterprises in
addition to the company’s ordinary research activities. The incentives are in the form of
a grant which, for pre-marketing development projects, may not exceed 25% in GGE of
the eligible cost. For projects both of industrial research and pre-marketing
development, the incentive ceiling is35% in GGE of the eligible cost. Further incentives
may be granted for both types, in the form of a grant to off-set costs and according to
the scale of the enterprise and its location. The additional intervention, however, cannot
represent more than 25% in GGE of the project’s eligible cost.
Eligible Territories
Slow-growth areas also eligible for EU Structural Fund interventions
Eligible Costs
Costs which may be covered by incentives are staffing (researchers, technicians and
research-related auxiliaries); research equipment in permanent use (except in the case
of cession at commercial rates); research consultancy services and similar, including
the acquisition of the findings of other studies, of patents and know-how, of copyrights;
general expenses directly incurred by the research activity; other running costs directly
incurred by the research activity and eventual training activities up to a value of 10% of
eligible costs. Projects involving research commissioned outside EU Member States
and worth more than 20% of the total cost are not eligible. Costs are eligible if sustained
from the date of the Ministerial Decree or from the 90th day after the project’s
presentation.
Application Procedures and Terms
Application is made to the Ministry of Universities and Scientific and Technological
Research on a special form accompanied with the documentation required. To be
eligible to apply, the company’s own capital must amount to more than half the cost of
the project and its financial onuses must not total more than 8% of turnover, according
to the most recent certified statement of accounts.
Incentive Disbursement Procedures
The Ministry will disburse the funds, calculated in GGE, to the authorized bank in equal
annual quotas to be determined according to the project’s duration.
Law 46/82 –SPECIAL REVOLVING FUND FOR TECHNOLOGICAL
INNOVATION
Beneficiaries
Industries.
Of the large-scale enterprises, only those operating in the following sectors are eligible:
automotive industry, electronics, steel, aeronautics, chemical refineries, agro-industry,
mechanical engineering (relating to industrial automation and control systems),
motorcycles and spare parts, environment.
Eligible Initiatives
Programs are eligible if they concern planning, tests, development and pre-
industrialization as one activity, as well as programs already under way at the date of
application for incentives providing that the part still to be implemented represents 60
per cent or more of the total eligible costs.
Incentives
Soft loans (repayable in 15 years or under, the first five years of which as utilization and
pre-amortization period) may vary from between 35%and 80% of eligible costs. The
incentive may never exceed 25% in GGE. A quota of no more than 50% of the financing
may be disbursed in grant form. he concessionary rate is 15% of the rate of reference
for the five-year pre-amortization period. The rate for the amortization period varies from
between 25% and 60% of the rate of reference according to the company’s dimensions
and the location of the plant which will implement the program.
Eligible Territories
Nationwide.
Eligible Costs
Eligible are the costs of staffing for program implementation, general expenses (equal to
25% of staffing costs), in-house commissions/orders, third-part y services, purchase of
equipment, tools and other materials for program implementation, travel; real estate,
general installations; furniture and fittings are excluded even if program-related.
Application Procedure
Applications should be sent to the Ministry of Industry, Trade and Crafts.
Law 46/82 - SPECIAL FUND FOR APPLIED RESEARCH
Beneficiaries
Industries, agro-industries, consortia, institutes, organizations, companies and research
centers are eligible providing they have a permanent operational base in Italy.
Incentives
Incentives take the form of grants and soft loans.
Eligible Initiatives
These are projects envisioning research of the industrial and/or pre-marketing
development type, as follows:
Industrial Research
Planned research or surveys for the development of new products, productive
processes or services or to improve existing such activities; For industrial research
projects, the incentive ceiling is 50% in GGE of the eligible cost and is granted as
follows:
     25% to off-set certified costs
     70% of certified costs in the form of a soft loan.
Pre-Marketing Development
The application of the findings of research in the form of a plan, project or design for
new products, productive processes or services, for their streamlining or improvement
whether sales- or user-oriented and including the creation of a prototype unsuitable for
commercial ends. This may include the design and projection of additional products,
productive processes or services as well as demonstration or pilot projects, on condition
that these projects not be converted or used for industrial or commercial ends. For pre-
marketing development projects, the incentive ceiling is 25%in GGE of the eligible cost
and is granted as follows:
     10% to off-set certified costs
     70% of certified costs in the form of a soft loan.
Loans are repayable in 10-15 years including a pre-amortization and utilization period of
no more than five years. For projects both of industrial research and pre-marketing
development, the incentive ceiling is35% in GGE of the eligible cost and is granted as
follows:
     20% to off-set certified costs
     60% of certified costs in the form of a soft loan.
Further incentives may be granted for both types, in the form of a grant to off-set costs
and according to the scale of the enterprise and its location. Additional interventions,
however, cannot represent more than 25% in GGE of the project’s eligible costs. In the
event of excess, the percentage of the intervention in the soft loan form would be
reduced to45% for both types of activity.
Eligible Territories
Nationwide.
Eligible Costs
As follows:
     staffing (researchers, technicians and research-related auxiliaries);
     research equipment in permanent use (except in the case of cession at
       commercial rates);
     research consultancy services and similar, including the acquisition of the
       findings of other studies, of patents and know-how, of copyrights;
     general expenses directly incurred by the research activity, also quantifiable as a
       forfeit of staffing costs;
       other running costs (materials, supplies, related products) directly incurred by the
        research activity.
     Costs are eligible if sustained from the date of the decree of admission to the
        incentive scheme.
Application Procedures and Terms
Application is made to the Ministry of Universities and Scientific and Technological
Research on a special form accompanied with the documentation required. To be
eligible to apply, the company’s own capital stocks must amount to more than half the
cost of the project and its financial onuses must not total more than 8% of turnover,
according to the most recent certified statement of accounts.
Incentive Disbursement Procedures
Incentives will be disbursed in accordance with pre-set rates of progress. Disbursement
is subject to certification of statements of account by the executive institute and sector
expert. Should the expert and executive institute find scientific or financial contradictions
of the original data and goals of the project, they are obliged to notify the Ministry which
will submit the case for CTS scrutiny. Financing will be revoked if necessary.

LAW 227/77 - "OSSOLA"
Objectives
Law 227/77 is designed to incentivate Italian exports of capital goods, services and
works implementation abroad. It permits Italian exporters to offer deferred payment to
foreign buyers at competitive interest rates within the limits established by the
international Consensus agreements. Mediocredito Centrale intervenes to cover the
difference between the market rate of export credit financing and the concessionary rate
payable by the foreign importer. Italian businesses of any dimension may benefit from
the law for direct export operations to all countries in the world, including the European
Union.
Eligible operations are the supply of plant, installations, studies, planning and relative
services. Following are duction in concessions decreed in January 1997, operations of a
duration of under 24 months are no longer eligible. Also excluded from the incentive
scheme are supplies of consumer goods, durables, semi-processed and/or intermediate
goods not exclusively destined for integration with the investment-related goods.
Financing may also be granted in a pre-supply preparatory phase for a duration of no
more than 3 years. This applies to goods requiring preparation of at least six months.
Eligible Costs
The financing ceiling may be up to 85% of the value of supplies but may not exceed the
total value of goods of Italian origin. No limits, either maximum or minimum, are
established for this latter sum. The deferment conditions for the importer may not
exceed five years for exports to countries classified as
"relatively rich", or ten years for exports to countries classified as "relatively poor".
Incentives
Supplier Credit
Financing is granted to the Italian exporter to off-set the credit he provides for the
foreign buyer. It maybe in the form of an advance against the guaranteed cession of
credit lines submitted by the importer
Buyer Credit
Financing is granted directly to the foreign counterpart or to his bank. This intervention
allows for:
     the exporter to be paid in cash;
     the buyer to benefit from medium-long term hire purchase at concessionary
        rates;
      the bank to provide financing on which it earns a market rate of interest, tied to its
       variable cost of collection plus fixed spread.
Application Procedures and Terms
The Italian exporter will apply for incentives to the financing bank which, in its turn, will
operate through Mediocredito Centrale. On termination of the preliminary phase and
following a ruling by the Incentives Committee, Mediocredito notifies eligibility within 10
days of the date of the ruling. Mediocredito adopts an incentive eligibility ruling within 90
days of receipt of application complete with all the documentation required.
Incentive Disbursement Procedures
The request for grant disbursement must be presented to Mediocredito Centrale the day
after notification of eligibility and must be made by applicants by filling in the specific
Mediocredito Centrale forms. In the event of incomplete documentation, Mediocredito
Centrale will request clarification and eventual additional material within 30 days but the
grant is normally disbursed to the applicant.
      Union Funds for the Creation of Joint Venture in Europe
Beneficiaries
JEV beneficiaries may include all small-scale enterprises answering EU criteria (see
chart on page 30). All types of joint ventures are eligible (including those undertaken by
consortia and associations),providing the partners are SME and operate in the
industrial, commercial, crafts and services sectors.
Eligible Initiatives
The joint ventures must be constituted by at least two SME from different Member
States of the European Union and no partner may hold more than 75% of capital stock.
It is prohibited to transfer existing activities or to purchase shares in already constituted
ventures. Partners must play active roles in the new joint venture and bear a sufficient
degree of responsibility. Any change in joint venture shareholdings within three
consecutive years after the signing of the contract with the European Union must be
submitted to the European Commission for an eventual review of its financial
participation.
Incentives
European Union financing for the creation of joint ventures takes the form of a grant to
off-set some of the costs entailed in their launch and the total sum disbursable may not
exceed ECU 100,000 per joint venture. Specifically, the intervention will finance at no
interest up to 50% of the eligible costs sustained by the applicant in constituting the joint
venture (to a ceiling of ECU 50,000); with a grant of up to 10% of the overall investment
implemented by the joint venture (to a ceiling of ECU 50,000).
Eligible Costs
Eligible costs regard: the venture’s elaboration and planning phase (market research,
legal status, environmental impact assessment, technical norms, business plan);
outside interventions (legal and other consultants, accountants); real expenses (up to
ECU 650 a day); transport, travel and accommodation abroad (up to ECU 200 a day).
Incentive Disbursement Procedures
The EU will advance 50% of the first sum (up to ECU 25,000) immediately after
approval of the project and the remaining 50% (up to ECU 25,000) after presentation by
the applicant of a final statement of accounts complete with invoices. Then, 10% of the
total invested will be disbursed once the whole investment has been implemented and
on presentation of documentary proof of the activity’s launch. Each beneficiary of this
third disbursement must keep the EU regularly informed for the following five years of
the joint venture’s activities and, in particular, of staffing levels.
Applications
The points of reference in Italy for the JEV program are: Banca Commerciale Italiana,
Banca di Roma, Banca Nazionale del Lavoro, Banca Popolare di Bergamo, Banca
Popolare di Novara, Banco Ambrosiano Veneto, Finlombarda, Cariplo, Instituto
Bancario S. Paolo di Torino, Mediocredito Centrale, Monte dei Paschi di Siena.
    Law 394/81
Law 394 of July 29, 1981 is another tool for the internationalization of Italian business.
At a rate of just over 2%, it finances non-EU market penetration programs. This
financing, for a maximum of 7 years, will cover up to 85% of the investment but may not
exceed the real sum of Lit. 4 billion or Lit. 3 billion if permanent structures are not
envisioned. All Italian companies may accede to the394’s incentives - although SME
have priority - and the following initiatives are eligible: commercial networking, after-
sales services abroad, warehousing and specific promotional activities such as market
research and advertising.
    Law 100/90
Law 100/90 of April 24, 1990 is also designed to support business outside the European
Union and it envisions incentives for Italian companies interested in buying into the
venture capital of foreign counterparts. The incentives take two forms: the direct
purchase of venture capital shares by the Simest; soft loans with which Italian
businesses may confer their share of the joint venture capital. Eligible sectors are
industry, crafts, commerce as well as tourism. Incentives may cover either the purchase
of additional joint venture shares by an Italian company or increases in the capital stock
of foreign companies already formed. The Simest may purchase minority shares to a
ceiling of 15% of the joint venture capital and for a maximum of eight years. Total
financing, however, must fall within the EU’s incentive criteria for SME and large-scale
companies.
    Law 49/87 - Arts. 6 and 7
Articles 6 and 7 of Law 49 of February 28, 1987 are directly connected with the
government’s international policy strategies. Respectively, they regulate soft loans for
developing countries and financing for the purchase by Italian companies of shares in
joint ventures in these same countries. Soft loans are directed at action areas
presenting a per capita annual income of under $3,035 as listed by the Ministry of
Foreign Affairs.
These loans will cover the total cost of a project at particularly favorable payback
conditions over a period of between 17 and 30 years according to the recipient country’s
general circumstances. The potential recipient country itself must present the project to
the Foreign Ministry. If the project is approved, the recipient country will then select an
Italian company to implement it and it is to this company that funds will be disbursed
according to the works’ rate of progress.
Article 7 of Law49/87 incentivates share-buying by Italian businesses in joint ventures in
countries with a per capita income of no more than $3,250 on condition that the local
partner, either public or private, holds more than 25% of capital stock. There is a
preference for initiatives in which the local partner holds 50% of the capital and for
activities designed to develop the production of consumer goods, agro-industry and
import substitutes or to reconvert the weapons industry and restructure the local
industrial fiber using local raw materials.
Also favored are infrastructural investments designed to generate production spin-offs.
The incentivated intervention may not total more than Lit. 20 billion. The incentive will
cover up to 70% of the first Lit. 10 billion of the Italian purchase of joint venture capital
and up to 50% of sums exceeding Lit. 10 billion. The financing is repayable at interest
rates of under 2% within ten years with a two-year capital and interest guarantee.
                                 SME Classification

                               Mining and                  Services
                               manufacturing
SME identification             Small and Small-            Small and     Small-
parameters                     medium      scale           medium-       scale
                               scale                       scale
1            Employees         250         50              95            20
             Fewer than
             (number)
2 (*)        Turnover          40            7             15            2.7
             not exceeding
             (mECU)
             Total assets      27            5             10.1          1.9
             Not exceeding
             (mECU)
3            Corporate         No more than 25% of company capital or voting rights
             Autonomy in       may be held by one company or jointly by several
             relation to       companies not falling within the small and medium-
             partner           scale enterprise definition.
             companies
EU Criteria for Business Financing and Incentives
The three criteria must be simultaneously satisfied.
(*) To qualify for this 2nd dimensional category, a firm must satisfy at least one of
the two parameters.

				
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