[ESTABLISHING A BUSINESS ENTITY IN ITALY] 284
maximum withholding tax indicated in the applicable convention, that, on a case-by-case basis, varies from 5% to 15%. The provisions mentioned above do not apply to dividends paid to receivers that are income taxpayers in the EU white-listed member states (or in the European Economic Area - EEA). Such receivers, according to Art. 3 of Presidential Decree nr. 600 of 1973, are in fact subject to a 1.375% withholding tax. With the so called “Mother -Daughter Directive” (i.e. 435/90/CEE), the distribution of dividends is not subject to any withholding tax, unless the following conditions are met: (i) both payer and receiver are resident in two EU member states; (ii) the stockholding is not lower than 25%; (iii) the Italian company is a S.p.A or an S.r.l. (plus other minor and less used types of company listed in the Directive); (iv) the companies are subject to income taxation; (v) the stockholding belongs to the Mother Company for not less than twelve months. Specific anti-elusive provisions exist in order to avoid the mother company constitutes a fictitious entity that hides the ultimate stockholding of a non-resident entity. 7. Startups By Law no. 221/2012, Italy is one of the first European countries to adopt a special regulation for startups , aimed to support and facilitate economic activities with a high scientific and technological value. To benefit from the special startup regulation, a company must meet the following mandatory requirements: - it needs to be in the form of a S.p.a., S.r.l., s.a.p.a., cooperative company, European company.
- It must not derive from the sale of a business entity or a branch of the same. - it needs to have as exclusive or prevalent corporate purpose the development, the production and the marketing of innovative products or services of high technological value; - to have its headquarters in Italy; - not be quoted on a regulated market; - prohibiting the distribution of profits for a period of four years from the incorporation of the startup. - to maintain an annual value of production not exceeding five million Euros. The above-mentioned company must also have one of the alternative requirements listed below: - to incur research & development expenditures equal to or greater than 15% of the higher value between cost and total value of the production; - to have at least one-third of the workforce holding a PhD or a degree with a 3-year certified research activity or, alternatively, two-thirds of the workforce holding a master’s degree. - to hold as owner or as licensee an industrial patent title (patent, trademark, model, copyright, etc.) relating to the sectors of industry, biotechnology, semiconductors, plant varieties and recorded software. All companies that meet these requirements may apply for the registration in the special section of the Italian Corporate Register dedicated to startup companies. In this way, they will benefit from the favorable regulation provided for losses of the share capital under the legal minimum as well as non-submission to
ILN Corporate Group – Establishing a Business Entity Series
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