Open a Foundation in Italy
Open a Foundation in ItalyUpdated on Thursday 22nd November 2018
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A foundation in Italy can be registered by any person, as specified by the Article 18 of the Italian Constitution. This type of legal structure can benefit from a set of tax exemptions, provided that the foundation was set up with the purpose of developing an activity that is in the benefit of the general public (for various social causes).
When opening a foundation in Italy numerous legal aspects have to be accomplished and our team of Italian lawyers, who have an in-depth legal experience regarding the registration of this business form, can assist with advice on the tax regulations available in this case, depending on the type of foundation the investors are interested in.
What are the tax exemptions applicable to Italian foundations?
As mentioned above, Italian foundations can benefit from numerous tax exemptions, but only in the situation in which they perform specific social purposes. Our team of lawyers in Italy can further advise on the below tax benefits to which Italian foundations are entitled, as follows:
- • foundations which develop institutional activities can benefit from a full exemption on the regional taxes;
- • institutional activities developed through foundations are exempted from the stamp duty;
- • foundations that provide social services, hospital and health services, education, training and nursing services are exempt from the payment of the value added tax (VAT);
- • several municipal taxes may not be applicable to foundations and such structures can also benefit from simpler accounting procedures.
What are the main rules of law for Italian foundations?
As a general rule, a foundation is set up as a nonprofit organization which develops services for a charitable purpose. In Italy, charity is not specifically defined by the local legislation, but the term is partly defined under the ONLUS concept, which refers to a non-profit organization for social purposes.
Regulations concerning the activity of a foundation in Italy are given by the provisions of the Italian Civil Code, the Legislative Decree No. 460 (ONLUS Decree), the VAT Decree, Article 6 of the Decree No. 601 - which stipulates the legal framework for the taxation system applicable to corporate tax in the case of non-profit organizations.
Persons interested in investing in Italy through a foundation should know that the legal framework addressed to this structure is also given by the Third Sector Reform Law, which regulates the third sector as being an industry which if formed only by entities that provide civil or social services, and which operate as non-profit organizations.
However, it is important to know that the legislation – Code of the Third Sector (Legislative Decree No. 117 of 3 July 2017), has not yet become applicable in Italy, due to the fact that it was proposed in 2017 and the European Commission still needs to provide its authorization on the matter.
What are the characteristics of the Italian foundation?
The Italian foundation represents a legal entity under the legislation available in this country, which can be incorporated by a single person or more (corporate bodies may also set up a foundation). The main purpose of a foundation is generally to assist a societal need of a type or another and thus, the assets of the foundation have to assigned for the specific goal for which it was incorporated; the foundation can also be registered through a will.
It is necessary to know that the legislation in Italy does not stipulate a minimum capital for the registration of a foundation, but this structure is required to provide annual accounts and financial reports. Investors should also consider the fact that a foundation in Italy is not required to undergo an audit procedure.
In order to open a foundation in Italy, it will be necessary to sign a foundation deed, the endowment act and the foundation’s statutory documents, signed as a public deed. Further on, the foundation will need to be registered with the Italian Tax Authority.
What are banking foundations in Italy?
Besides the above mentioned types of Italian foundations, the country also fosters the concept of banking foundations. This type of foundation appeared in Italy under the Decree Law No. 153/1999 and it is regulated by the Ministry of Economy and Finance. The banking foundation is also registered as a non-profit organization, which is set up with the purpose of assisting economic development.
The financial assets of a banking foundation have be invested solely in non-profit activities and it is important to know that Italy has 88 such structures. Businessmen are invited to contact our law firm in Italy for further legal assistance on the legal framework regulating the Italian foundations.