PIR (Individual Plans of Savings) and Social Lending – opportunities of alternative financing of companies and startups

During the last year, as a consequence of a few law enactments and subsequent clarifications by the competent Public Authorities (including the Bank of Italy), Italy has started to offer investors new financing opportunities to enterprises, including start-ups.

Individual Plans of Savings (known as “PIR”) have been first provided for in the 2017 Financial Law. PIR are investment instruments managed by Asset Management Companies (known in Italy as “SGR”); they can only be subscribed by a natural person and bring fiscal benefits to Italian residents (e.g. tax exemption from capital gains, taxes on dividends, tax on inheritance and donations).

Each PIR – in order to benefit of the tax exemption – should be kept for 5 years at least; it is issued for precise monetary values and should be used – at least for 70% – to support Italian companies or European companies which have a stable business branch in Italy.

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Social Lending (also known as Lending Based Crowdfunding) is a financing instrument by which entrepreneurs are entitled – by using specific on-line platforms – to collect funds from potential investors to finance a company or a project.

These funding activities are now allowed according to the interpretation of the Banking Law (known in Italy as “TUB”) recently issued by the Bank of Italy (see decision dated November the 9th 2016), provided that this alternative financing method be based on individual negotiations between the company and the potential financer through social lending platforms ensuring appropriate individuality in the negotiations and suitable public information.

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