The Asset Management Review: Italy

Overview of recent activity

Unsurprisingly, the main actor in the Italian asset management industry during 2020 has been the covid-19 pandemic. Although it has been a tragedy in terms of loss of life, adverse effects on the economy and the slide towards the poverty line for many people with consequent social insecurity, covid-19 – unexpectedly – also triggered effective mechanisms of cooperation, or at least of non-belligerence, between the Member States of the European Union; between the 'frugal' states of northern Europe and the southern states, including Italy; and between the pro-European parties and those more sensible to national interests, which only an epoch-making event such as a pandemic (or a war, which fortunately did not take place) could have initiated. The main results of this 'mechanism' were, at the EU level, the enormous amount of liquidity placed at the disposal of the economy and the social resilience through the Next Generation EU, while at national level each Member State adopted measures for protecting or relaunching the economy, or both, that also affected the asset management industry in order to convey to the economy – severely hit by the pandemic – the still huge stock of savings of the Italians.

The measures for relaunching the economy were of various descriptions, including the guarantee by the state for loans to undertakings by banks, straight grants and negotiable tax credits for amounts proportional to the rental that the undertakings continued to pay during the lockdown from March 2020 to May 2020.

Other measures aiming at conveying the stock of private savings of the Italian families into investments in small and medium-sized companies (PMIs) leveraged on the tax exemptions for the benefits of holders of interests in specific vehicles complying with regulatory requirements. These vehicles are called personal savings plans (PIRs). PIRs were first introduced in Italy in early 2017, and benefit from an exemption from taxation of capital gains and dividend and coupon distribution – for which Italian tax law would ordinarily provide for a tax withholding of 26 per cent or 12.5 per cent – in the case of investments in PIRs by individuals.

The tax benefits of a PIR can be obtained through collective investment schemes that comply with the regulatory provisions in terms of eligible financial instruments, maximum thresholds for blue chips, maximum amounts eligible for tax exemptions and the minimum duration of the investment. Until early 2020, the requirements for the PIR appeared designed mostly for purely retail investors so long as the tax exemptions for capital gains and distribution was available for investments not exceeding €30,000 per year and a total investment into the PIR of €150,000; an individual could only hold one PIR. As to the eligible investments, a 2017 PIR had to invest at least 70 per cent of their assets in financial instruments – including those not traded on regulated markets or multilateral trading facilities – issued by or stipulated with Italian companies or EU or EEA companies with a permanent establishment in Italy, not included in the FTSE MIB or the FTSE Mid Cap indices of the Italian Stock Exchange or equivalent foreign indices (the 2017 PIR Assets).

However, in May 2020 a law decree of the Italian government (No. 34 of 19 May 2020, ratified by Parliament with Law No. 77 of 17 July 2020) introduced a new category of PIR (the alternative investment fund PIR (the AIF PIR)), which is suitable for a more sophisticated audience because in addition to investing in the 2017 PIR Assets, the AIF PIRs have also the option of investing at least 70 per cent of their assets in loans granted to the companies issuing the 2017 PIR Assets, as well as in credits of the same companies.

This new asset class has a systemic importance for the Italian economy so long as it adds to the eligible investments for PIRs the sources of financing for companies, alternative to the banking channel, such as the granting of loans and the acquisition of company credits. In terms of ratios, the concentration constraint is raised to 20 per cent per issuer, while it was at 10 per cent for 2017 PIRs.

The intermediaries that will be able to operate on the new PIRs are, in addition to the undertakings for collective investment in transferable securities (UCITS)-compliant open-ended collective investment schemes and the insurance companies (life and capitalisation lines), the European long-term investment funds (ELTIFs) and private equity, private debt and credit funds.

The maximum threshold for the tax benefits for AIF PIRs was also raised to €150,000 per year and €1.5 million for the entire PIR, and the same person may hold one 2017 PIR and one AIF PIR, provided that the aggregate tax exempt investment is €180,000 per year and €1.65 million in total per person.

At the end of 2020, the total assets under management (AUM) of PIRs was €17.8 billion, with 71 available products.2

With regard to the measures to protect the economy from potential raids targeting companies weakened by the pandemic, measures were adopted by the National Commission for Companies and the Stock Exchange (CONSOB) – duly authorised by statutory provisions – to lower the thresholds that trigger the reporting requirements for holdings in Italian listed companies. Particularly, CONSOB lowered to 1 per cent from 3 per cent the ordinary threshold for reporting the acquisition of holdings in Italian listed companies qualifying as large cap and with 'high free float' (HFF) (meaning with no shareholders holding 50 per cent of the shares with voting rights plus one) appearing in a list prepared by CONSOB, while for HFF PMIs, also shown in a list issued by CONSOB, the threshold was lowered to 3 per cent from 5 per cent. The above measures were accompanied by lower thresholds (i.e., from 10 per cent to 5 per cent, for the disclosure of the statement of intentions of the purchaser in the six months following the initial acquisition), meaning that the purchaser has to disclose to CONSOB whether it intended to, for example, take over a listed company after the initial acquisition of its shares on Italian Stock Exchange. These measures were issued by CONSOB for the first time and on a temporary basis (as required by the law) on April 9 2020, then renewed every three months in July 2020, October 2020 and January 2021, while in April 2021, CONSOB informed that it would have not renewed them.

Accordingly, from 14 April 2021, the following ordinary thresholds for the disclosure of holdings in Italian listed companies apply again:

  1. 3 per cent for large caps;
  2. 5 per cent for PMIs; and
  3. 10 per cent for the duty of transmission of the statement of intentions of the purchaser of holdings.

For completeness, other (higher) thresholds ordinarily apply in the case of holdings by asset managers.

Other developments affecting the asset management industry in 2020 were the consequences in Italy of the end– on 31 December 2020 – of the transition period after the exit of the United Kingdom from the European Union (Brexit), and the execution of a memorandum of understanding (MOU) between CONSOB and the US Securities and Exchange Commission (SEC) (e.g., in terms of opportunities for the delegated management of Italian pension funds).

Regarding Brexit, from 1 January 2021, all of the UK financial intermediaries previously carrying out regulated activities in Italy through a Markets in Financial Instruments Directive (MiFID) or Alternative Investment Fund Managers Directive No. 2011/61/EU (AIFMD) passport for a local branch or on a cross-border basis became third-country entities and, as such, subject to authorisation from CONSOB or, when applicable, the Bank of Italy. Therefore, these entities had to either obtain a new authorisation, similar to the one required for an Italian entity, or discontinue the activities from that date. Given the duration of the authorisation procedure and the potential adverse effects for the Italian clients of UK intermediaries that should have had to interrupt their services at year-end although an application for authorisation was filed, Italy unilaterally allowed an extra grace period during which the UK intermediaries that applied for an Italian authorisation (branch or local subsidiary) before 31 December 2020, could continue to carry out their operations in Italy until 30 June 2021, with the understanding that the authorisation will likely be granted before that date. Otherwise, the UK financial intermediaries that didn't take advantage of the above extra grace period relabelled their Italian branches by opening branches of their Irish, Luxembourg or even German subsidiaries and assigning to them the business of the branches of the UK affiliates, or opened Italian investment firms (SIMs) that will act as European hubs with operations also in other EU Member States via the ordinary MiFID passport. A very approximate distinction in terms of nationality and typology shows that the new Italian local offices of financial intermediaries replacing those of the UK entities are branches of Irish and Luxembourg UCITS management companies, because they are the existing management companies of funds domiciled in these two jurisdictions, while the new Italian branches of MiFID investment firms belong, in several cases, to German intermediaries.

With regard to the CONSOB and SEC MOU, signed on 22 December 2020, the two regulators signed it for the purpose of reciprocal cooperation in the supervision over the regulated entities of their respective jurisdictions. This cooperation will take place through either 'informal consultations' and 'more formal cooperation' between CONSOB and the SEC, and each regulator represented that there are no internal regulatory constraints applicable to it that may adversely affect its ability to provide assistance to the other under the MOU. The MOU is very important for the operations of the US asset managers as delegated managers for the investment portfolios of Italian clients, including pension funds, as explained below.

The MOU points out the cases in which cooperation and consultation are particularly important: for example, actual or threatened crisis of a supervised entity, especially those of systemic importance; the acquisition of information by one regulator in connection with an application by an entity that is subject to the supervision of the other regulator; and the exchange of information in relation to ongoing supervision.

The MOU also provides details on the procedures for the exchange of information, which can be either event-triggered (i.e., in the case of regulatory changes or sanctions or disqualification to a regulated entity) or request-based (i.e., when one regulator is asking for information from the other).

As anticipated, the MOU will qualify the US asset managers for acting – without any authorisation – as delegated portfolio managers of Italian and EU portfolio managers. This is because, under the European (Regulation (EU) No. 600/2014) and Italian regulations (e.g., Bank of Italy Resolution of 5 December 2019), the possibility of delegation of the management of an investment portfolio to a non-EU financial intermediary is conditional upon the existence of a cooperation agreement between the competent Italian regulator (i.e., CONSOB) and the regulator of the country of domicile of the relevant third-country delegated asset manager. In this regard, the recent guidance of CONSOB was that the existing pre-MiFID II cooperation agreements with the US of 1993 and 2013 were obsolete and thus that delegation to US entities was not actually possible. Therefore, the MOU covers this gap and makes fully lawful the delegation of the management of the investment portfolio by an Italian investment firm or management company to a US entity, provided – as required by EU and Italian regulations – that the latter is authorised in that country and is subject to the supervision of the SEC.

The MOU will also allow the US asset managers to take advantage of a ruling of COVIP, the Italian pension funds regulator, published on 30 July 2020 (the COVIP Ruling), according to which the Italian or EU passported managers of Italian pension funds can delegate the management to non-EU asset managers. Whereas, the COVIP Ruling provides that this delegation to non-EU entities is subject to these entities being qualified under the applicable regulations, the MOU, as a cooperation agreement with the regulator of the relevant jurisdiction, gives this ability to the US portfolio managers for the above-explained reasons. UK asset managers, as new non-EU intermediaries, can also take advantage of the COVIP Ruling so long as the post-Brexit arrangements between the European Union and the United Kingdom covering the supervision on the financial industry can be considered as complying with the requirements set out by Regulation (EU) No. 600/2014 in order to delegate the management to UK firms. In the market practice, UK asset management firms were already named as delegated managers in some investment management agreements with Italian pension funds. Finally, the COVIP Ruling expressly recognised that also the non-EU asset managers authorised to carry out their business in Italy – either through a local branch or on a cross-border basis – are within the scope of the Italian statutory provision, stating that the local pension funds can be managed by 'entities authorised to manage investment portfolios in Italy', whereas this provision, until the COVIP ruling, was always considered as referring only to Italian firms: in this regard, COVIP clarified that the 'authorisation' granted by CONSOB or the Bank of Italy to a non-EU player, which, as such, is not based on the mutual recognition, has the same value as the one granted to an Italian company.

General introduction to the regulatory framework

The main piece of Italian legislation concerning financial instruments and services, including asset management and collective investment schemes, is Legislative Decree No. 58 of 24 February 1998 (Consolidated Text of Rules on Finance) (TUF), as amended. The TUF is a statute issued by the government by delegation of Parliament. The TUF, in turn, delegates power to certain government and administrative bodies such as, without limitation, CONSOB and the Bank of Italy, in order to issue second level regulations to implement the provisions of the TUF.

The TUF is periodically amended to implement the EU directives applicable to the financial sector. Among the last material changes brought to the TUF are those contained in Legislative Decree No. 129 of 3 August 2017, which transposed in the Italian legal order the Second Markets in Financial Instruments Directive No. 2014/65/EU (MiFID II) and its second-level provisions such as Regulation EU No. 600/2014 (MiFIR).

The TUF was previously amended through Legislative Decree No. 44 of 4 March 2014 (Decree 44) to implement at the statutory level the AIFMD. Decree 44 has, inter alia, amended the definitions of the TUF and inserted in the Italian legal system the AIFMD definitions for, for example, 'AIF' and 'AIF manager' (AIFM).

Article 39 of the TUF delegates the Minister of Economy and Finance (MEF) the role of issuing second-level rules determining the different types of Italian collective investment schemes (CISs) based on the type of assets in which they can invest, the closed-end or open-ended type and the authorised participants. In exercising this delegation, the MEF issued Ministerial Decree No. 30 of 15 March 2015 (the MEF Decree) concerning the general criteria applicable to Italian CISs.

The MEF Decree provides for the following types of Italian CISs: (1) UCITS; (2) Italian open-ended AIFs (non-harmonised CISs that can invest up to 20 per cent in unlisted financial instruments), which may also be available to retail investors and called 'non-reserved); (3) Italian closed-end AIFs (a structure that is required in order to invest in real estate, loans and other assets for which there is a market and their value can be measured at least every six months); (4) Italian real estate AIFs (a category of closed-end AIFs); and (5) Italian 'reserved' AIFs, for which the Italian rules do not provide requirements as to the eligible assets.

The term 'reserved' means that this category of AIFs is only available to the categories of investors mentioned in the MEF Decree, which are either: (1) professional investors – as defined in the MiFID and its national implementing regulations; or, (2) if allowed by the relevant AIF rules, non-professional investors investing at least €500,000 (in cash, in a one-off payment, with no commitment); the article of the MEF Decree providing this €500,000 minimum investment by non-professional investors is currently under consultation in order to be brought to €100,000, subject to some conditions in terms of the percentage of the investment in the relevant AIF out of the investor's total assets.

Common asset management structures

Regarding UCITS funds, the MEF Decree expressly states that they can only be organised as either contractual, unincorporated mutual investment funds or as SICAVs that are legal persons.

Regarding AIFs open to retail investors, called 'non-reserved' (see Section II), they can be open-ended where they invest in listed financial instruments, unlisted financial instruments (up to 20 per cent of their portfolio – see Section II above) or cash deposits. Following the implementation of the AIFMD, the definition of 'open-ended' CISs has been broadened in order to include all the CISs for which the redemption of units or shares can be obtained with the 'procedures and the frequency' provided for by the CIS offering or constitutional documents (Article 9 of the MEF Decree), or both. In addition, redemption must be possible at least every 15 days for the UCITS funds and at least once per year for the AIFs qualified as open-ended.

An Italian CIS must be closed-end when it invests in real estate, or in unlisted financial instruments representing more than 20 per cent of the portfolio.

At the end of the first quarter of 2021, there were 5,419 open-ended funds distributed in Italy, of which 1,194 domiciled in Italy and 4,225 abroad (including foreign-domiciled funds of Italian asset managers), as well as 86 closed-end funds (57 Italian ad 29 foreign).3

Main sources of investment

Notwithstanding the pandemic, the AUM representing investment products or services marketed in Italy continued to grow in 2020 and in early 2021.

The total assets under management (CIS plus segregated portfolios) at the end of the first quarter of 2021 were €2,468,973,000,000 – a new historical high – compared to €2,306,777,000,000 at the end of 2019. The € 2,468,973,000,000 AUM were almost equally split between collective investment schemes (UCITS and AIFs) and segregated portfolios (retail segregated portfolios, pension funds and insurance products), as the CISs accounted for €1,242,392,000,000 (or 50.32 per cent of the total AUM) and the segregated portfolios for €1,226,583,000,000 (or 49.68 per cent of the total AUM).

The total inflow in the asset management industry in the first quarter of 2021 almost reached €30 billion, compared to the only €508 million of inflows in the last quarter of 2020, which were mostly determined by a collapse in the inflows into insurance products. Among these inflows, €19.959 billion were into collective investment schemes and only €9.915 billion into segregated portfolios, showing a strong preference of Italian investors for funds rather than for discretionary solutions.

In the same period, the portion of the €19.959 billion inflows into collective investment schemes attributable to open-ended funds – almost exclusively UCITS – was €18,683, with an undisputed prevalence of the equity funds (€13.060 billion), followed by the asset allocation funds (€4.312 billion) and bond funds (€2.774 billion). The flexible funds experienced decreases in the inflows.

Among segregated portfolios, whose total inflows amounted – as pointed out – to €9.9 billion, insurance product management recorded inflows of €3 billion, while retail portfolio management stood at €2.5 billion.4

Key trends

With regard to inflows, the trend continues to be positive, with more than €5 billion in April 2021, consisting of €4.263 billion into CISs and €804 million into segregated portfolios. Among the funds, the inflows into asset allocation funds (€2.331 billion) passed those into equity funds (€1.948 billion).

With regard to the products, one of the most important trends is the rise of the environmental, social, and governance (ESG) funds, also determined by the entering into force, on 10 March 2021, of the Sustainable Finance Disclosure Regulation (Regulation (EU) 2019/2088 of 27 November 2019 (SFDR)). Specifically, at the end of the first quarter of 2021, almost 25 per cent of the assets of the open-ended funds (€275 billion out of €1,173 trillion) consisted of ESG funds, of which 90 per cent promoted, among others, environmental or social characteristics (Article 8 of the SFDR), and 10 per cent featured specific sustainability objectives (Article 9 of the SFDR). In terms of asset classes, the ESG equity funds have AUM for about €100 billion, the bond funds for €81 billion, followed by flexible funds (€46 billion) and asset allocation (€36 billion).5

With regard to the actions taken by the Italian government in response to the crises that have impacted asset management, please refer to Section I, especially the discussion on PIRs.

Sectoral regulation

i Insurance

The reference legal text on insurance matters is Legislative Decree No. 209 of 7 September 2005, called the Private Insurance Code, as amended and supplemented. The Private Insurance Code consolidated in a single text the pre-existing insurance regulations, except those contained in the Civil Code, the law establishing the Institute for the Supervision of Insurance (IVASS) (Law No. 135/2012, converting, with amendments, the Law Decree 95/2012) and some accounting regulations.

The Private Insurance Code establishes the fundamental rules for the insurance industry and defines the competences of IVASS. In particular, it grants IVASS the power to issue second-level rules such as regulations and measures and to adopt prudential measures. Furthermore, IVASS pursues the sound and prudent management of supervised entities, their transparency and fairness towards customers, and the stability of the system and the financial markets. IVASS performs supervisory functions by exercising powers of an authoritative, prescriptive, ascertaining, precautionary and enforcement nature. Insurance and reinsurance undertakings, insurance groups, financial conglomerates in which undertakings are included, persons performing functions partly included in the operational cycle of undertakings, and insurance and reinsurance intermediaries are subject to its supervision.

One of the main regulatory developments in the insurance industry during 2020 was IVASS Regulation No. 45 of 4 August 2020 (Regulation 45) with provisions on the governance and oversight of the insurance products, which transposes the Commission Delegated Regulation (EU) 2017/2358 of 21 September 2017 supplementing Directive (EU) 2016/97 of the European Parliament and of the Council with regard to product oversight and governance requirements for insurance undertakings and insurance distributors. In particular, Regulation 45 disciplines the elaboration and implementation of procedures for the approval of the insurance products, as well as the relevant distribution mechanisms.

ii Pensions

The Italian regulatory framework applicable to pension funds consists of statutory provisions, some of them implementing European directives, issued by the government by delegation of Parliament, of which the main one is Legislative Decree No. 252 of 2005, as amended (LD 252); ministerial decrees; and rules issued by COVIP.

European Directive 2016/2341 of 14 December 2016 (the IORP II Directive) was transposed in Italy through Legislative Decree No. 147 of 13 December 2018, which thoroughly amended LD 252.

On 29 July 2020, COVIP issued a resolution that is a first set of second-level rules for the implementation of LD 252, as amended, in order to transpose the IORP II Directive. Other second-level rules of COVIP will follow.

As to the rules contained in ministerial decrees (of the Minister of Economy and Finance), Ministerial Decree No. 166/2014 replaced the old rules of 1996 on the eligible assets and investment criteria for Italian pension funds.

iii Real property

The regulatory updates introduced by AIFMD also involved real estate CISs; the relevant piece of regulation is included both in the TUF and in Bank of Italy Regulation of 19 January 2015, as amended, on collective portfolio management.

According to Italian regulation, real estate CISs are of closed-end type (see Section III). As the funds raised are intended to be invested in real estate assets, the possibility of redeeming the unit before maturity is generally not allowed, so the investor can only liquidate this type of instrument by selling it on the secondary market, either regulated (if the fund is ordinary) or over the counter. Real estate CISs are set up as closed-end, and the units of funds with a minimum subscription below €25,000 need no longer be listed.

Italian real estate CISs invest no less than 66 per cent of their assets (or 51 per cent, in certain circumstances) in real property, real estate rights, stakes in real estate companies and units of other real estate CISs. For the valuation of real estate assets and real estate rights in which the fund's assets are invested, as well as shareholdings in unlisted real estate companies, the fund management company (SGR), which has not delegated to third parties the task of valuing the fund's assets and calculating the value of the share in the fund, makes use of independent experts who meet the requirements established by the MEF Decree; however, this valuation will not be binding and if the SGR intends to deviate from the valuation made by the experts, it must inform them of its reasons.

In addition to the real estate CISs, Law No. 130 of 1999 introduced 'real estate special purpose vehicles', in addition to the special purpose vehicles on credits, and, subsequently, the Italian tax administration confirmed that the fiscal benefits that were granted to the securitisation of credits are also applicable to the securitisation of real estate.

iv Hedge funds

While there is not an express definition of 'hedge funds' in Italian legislation, vehicles of this type are usually included in the category of reserved AIFs, for which, as mentioned in Section II above, Italian rules do not provide requirements as to their eligible assets, and therefore their assets can be invested by way of derogation of the prudential rules of risk containment and fractioning established by the Bank of Italy.

The other characteristics of hedge funds are provided in the description of Italian AIFs in Section II above.

v Private equity

In the case of private equity funds, the AIFMD has substantially amended the relevant Italian regulations, in particular the TUF. However, that there is no definition of 'private equity' in either European or Italian regulations.

CISs that, descriptively, fall within this category are generally, from a regulatory point of view, closed-end CISs but with potentially very diverse characteristics.

European regulations only consider sector-specific rules for some specific types of CISs in the broad sense of the term, such as European venture capital funds, European social entrepreneurship funds or ELTIF CIS, which have appeared in the EU regulatory landscape following the AIFMD. In Italy, the Italian Association of Private Equity, Venture Capital and Private Debt (AIFI) has defined 'private equity' as the 'activity of investing in the risk capital of unlisted companies, with the aim of enhancing the value of the company being invested in with a view to its disposal within a medium to long term period'.

According to the AIFI, in 2020 private equity and venture capital funding was equal to €2.612 billion, of which €2.072 billion was raised on the market (with overall growth of 64 per cent).

The amount invested (private equity and venture capital infrastructure) was equal to €6.597 billion, down 9 per cent compared to the previous year (€7.223 billion). Excluding infrastructure, the amount was equal to €5.275 billion, down from 2019 (€6.713 billion).

The number of deals (private equity and venture capital infrastructure) was equal to 471 compared to 370 in 2019 (up 27 per cent).6

Tax law

The main piece of Italian tax legislation is the Consolidated Text on Income Tax (TUIR), issued by means of the President of the Republic Decree No. 917 of 1986, as amended. The TUIR is regularly amended through changes introduced by the Budget Laws, according to the financial needs of the state.

However, the main principles and types of taxable income remain the same. With regard to CISs, there is no taxation at the level of the vehicle (subject to exceptions), while at the level of the investors, tax is levied when income or capital gain is actually received by the investor, except in the case of segregated accounts, where taxes are paid on the positive difference, if any, in the net asset value of the managed portfolios between the initial and the last day of the fiscal year. In the case of losses, they can be deducted for the next four years.

A specific aspect of the Italian system compared to other legislations is the distinction between 'capital income' (Article 44 of the TUIR) and 'other income' (Article 67 of the TUIR), whereas the investor is not allowed to offset gains and losses earned in the different types of income mentioned above.

'Capital income' includes, in general, foreseeable interest and income obtained from a stable use of capital, such as interest and coupons; 'other income' consists of income of a financial nature that generates capital gains or losses in relation to uncertain events, such as capital gains. The 'other income' category also includes, on a residual basis, all other income derived from other forms of capital employment, which is taxed net of capital losses, losses and costs.

These two income categories are autonomous and distinct and cannot be offset against each other: for example, capital income consisting of a dividend may not be offset against a capital loss consisting of a lower redemption value of a fund compared to the subscription price.

The situation of income deriving from participation in a CIS is quite peculiar: if positive, it is qualified as capital income and if negative, it constitutes capital losses.

In particular, income deriving from the participation in a CIS, either UCITS or some AIFs, the units or shares of which are placed in Italy in accordance with the TUF, are subject to a withholding tax of 26 per cent, with a reduced rate of 12.5 per cent for the part of the above income, if any, that originated from the portion of the assets of the relevant collective investment scheme invested in government bonds of Italy and other foreign countries specified by the Italian Finance Administration – known as 'white list bonds'. This withholding is levied upon redemption of the units and shares by the entities that are in charge of the payment of the above income, and is levied also in the case of conversion between sub-funds and the transfer of the units or shares to another party. The withholding is levied by way of tax advances with respect to professional investors and by way of tax with respect to all the other cases (e.g., retail investors).

The Italian 2021 Budget Law (Law No. 178 of 30 December 2020) has exempted the EU and EEA CISs from taxation on capital gains and dividends deriving from investments in Italian companies. Italian CISs already benefit of this exemption, and thus the 2021 Budget Law has eliminated discrimination between Italian and foreign players that was also condemned by the European Court of Justice.


Whereas Italians were still allowed to keep their liquidity on bank deposits with interest at zero or near to zero, the fact that holding cash in banks will become a cost owing to the recent guidance of the European Central Bank will likely persuade the holders of bank accounts to seek more remunerative use of their monies. In this context and on the basis of the most recent trends, financial products like UCITS funds seem to be the most valid alternative, as well as in light of the tax facilitations provided by products like the PIRs (see Section I). Within these products, ESG compliant funds are presently the most popular, although it may be expected that the reduction in the companies available for investments owing to the relevant filters will bring some changes in the next few years so long as the investors realise that non-ESG companies still offer decent performance and have interesting prices.


1 Francesco Paolo Crocenzi is a partner and Elda Cassetta is an associate at Studio Legale Crocenzi e Associati.

2 Source: Assogestioni.

3 Source: Cubo, Italian Fund Hub Database of Assogestioni.

4 Source for all the data in this section: Assogestioni.

5 Source for all the data in this section: Assogestioni.

6 Source of all the data in this paragraph: AIFI.

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