Doing Business In... 2021 Comparisons

Last Updated July 13, 2021

Law and Practice


McDermott Will & Emery has 20-plus locations on three continents and works seamlessly across practices, industries and geographies to deliver highly effective – and often unexpected – solutions that propel success. With more than 1,100 lawyers, the firm brings its personal passion and legal prowess to bear in every matter for its clients and the people they serve. McDermott has been present in Italy since 2003 and offers a wealth of experience in highly complex finance transactions (acquisitions, banking and finance, equity and debt restructuring, and capital markets) and a stellar reputation in all aspects of tax law. The team comprises approximately 40 professionals who share a strong international background and work together to provide a collaborative multidisciplinary approach, offering the best solution and maintaining the highest level of quality and efficiency.

The Italian legal system is based on civil law.

The Italian judicial order is divided into ordinary and special jurisdictions, with multiple tiers of judgments.

Ordinary jurisdiction can be broken down into two sectors:

  • civil jurisdiction, referring to relations between private persons or between private persons and the public administration when the exercise of its powers adversely affects civil law rights; and
  • criminal jurisdiction, referring to decisions taken as a result of the prosecution of an individual for criminal liabilities.

Civil proceedings may be started by any person against any other person who receives the judicial request. Criminal proceedings are started by a prosecutor belonging to ordinary courts.

Civil and criminal proceedings are governed by two different procedural rules: the Code of Civil Procedure and the Code of Criminal Procedure.

Proceedings are subject to first-instance and appeal judgments.

The Court of Cassation (ie, the "last" tier) exercises jurisdiction on the legitimacy of judgments.

The Italian Constitution guarantees the rule of a fair trial, to take place in the form of a debate between the parties, on equal terms, before an independent and impartial judge.

The right to a reasonable duration of the case has been expressly recognised, giving the parties the right to request fair financial compensation from the state in case of violation.

Special jurisdictions are exercised by specific courts and can be broken down into the following areas:

  • administrative – ie, the review of administrative acts, aimed at obtaining their judicial annulment if they are flawed by incompetence, violation of the law or abuse of power;
  • accounting – this jurisdiction refers to the following:
    1. legal actions on public accounting and pensions;
    2. the responsibility of employees and officials of the state or other public entities;
    3. preventative control of legitimacy of numerous acts of the government and other public bodies; and
    4. follow-up on budget management and assets of the public administration;
  • military – military courts have jurisdiction over military offences by members of the Armed Forces; and
  • taxation – this jurisdiction refers to certain tax-related matters.

Lastly, Italian constitutional jurisdiction conferred to the Constitutional Court covers the following:

  • disputes on the constitutional legitimacy of laws;
  • jurisdictional disputes between the powers of the state and those between the state and the regions, and between the regions; and
  • charges brought against the President of the Italian Republic, in accordance with the Constitution.

International treaties may specifically regulate foreign investments in Italy.

At a national level, in addition to antitrust regulations, if applicable, investments in certain sectors may require prior approval from competent authorities and/or a notice to competent authorities that may exercise a range of powers in respect of such investments.

The main sectors regulated as such are banking, financial intermediation, insurance, defence and national security, energy, transport, communication, hi-tech and other sectors that are identified as strategic.

Italian regulations require prior authorisation from the European Central Bank (ECB) upon a proposal of the Bank of Italy (or from the Bank of Italy in the case of certain distressed acquisitions) in order to carry out transactions that result in acquisitions of controlling or certain other relevant shareholdings in banks or similar entities (whether such acquisitions are carried out by domestic or foreign investors).

Banking authorities may prohibit the acquisition of a shareholding where the conditions for sound and prudent management of the entity are not fulfilled.

The authorisation may also be suspended or revoked if the conditions and requirements for issue no longer apply or change.

Similar restrictions apply to investments in the financial intermediation and insurance sectors.

Furthermore, certain investments carried out in the following sectors shall be notified to the government, which may exercise specific powers ("golden powers"):

  • defence and national security;
  • energy, transport, communication and hi-tech; and
  • a number of other strategic sectors (this category has been enlarged as a result of the COVID-19 crisis).

Based on goods, activities and relations having strategic importance – as periodically identified by the government – a notification to the government in relation to specific acts and events regarding entities operating in any of these sectors may be required, including in connection with the acquisition by foreigners of relevant shareholdings in entities carrying out activities of strategic importance or holding assets of strategic importance, as identified by the law. The government may exercise one of the following golden powers:

  • impose specific conditions on the purchase of shareholdings;
  • veto the adoption of resolutions relating to certain extraordinary transactions or to the execution of agreements; or
  • object to the purchase of shareholdings.

The application of the golden powers to purchases of relevant shareholdings in the identified strategic sectors (other than those relating to defence and national security) was originally limited to purchases made by non-EU investors. As a result of the COVID-19 crisis, interim measures have been issued that expand the scope of application of the golden powers to acquisitions of controlling stakes made by EU purchasers in the identified strategic sectors and lower the thresholds triggering the notification of acquisitions made by non-EU purchasers in the same sectors, both currently until 31 December 2021.

The application for the authorisation required by banking regulations shall be presented to the competent authority, which decides within 60 business days (subject to extension in case of requests for additional information). Similar provisions are set forth by financial intermediation and insurance regulations.

The authority must be notified of the information required, within the timings set forth by the regulations.

In case of violation of the above regulations, certain rights (including voting rights) cannot be exercised. The authority may order the sale of shareholdings for which authorisation has not been obtained or has been revoked.

Moreover, sanctions may be applied, including financial sanctions of up to 10% of turnover or, if false information was provided, imprisonment for up to three years (save for more serious crimes).

With reference to strategic sectors in relation to which golden powers are granted to the government, the notification to the government shall be served within ten days of the relevant transaction (and in any event, in respect of certain corporate transactions, before such transactions are implemented).

The government may generally exercise its powers within 45 days of the date of notification (a different timeframe applies to transactions concerning 5G technology). Pending this term, the exercise of certain rights (including voting rights) in respect of the relevant shareholding is suspended.

The government may require additional information to be provided within a ten-day term. After the expiry of the above 45-day term, the transaction is deemed approved.

Violation of this regulation may trigger a financial sanction of up to two times the value of the transaction and no less than 1% of turnover of the entities involved; also, the resolution adopted with the vote of relevant shareholdings is null and void, as are resolutions adopted in breach of the conditions imposed or a veto. Furthermore, when opposing the transaction, the government may order the sale of the relevant shareholdings within a one-year term.

With reference to investors, the banking regulations – but also, mutatis mutandis, financial intermediation and insurance regulations – require shareholders to meet the reputational requirements and the criteria of competence and fairness to ensure the sound and prudent management of the entity. In the case of non-compliance, certain rights (including voting rights) related to shareholdings may not be exercised. In addition, certain shareholdings shall also be sold within the terms set forth by the authority.

Persons having administrative, management and control functions shall meet the requirements of professionalism, good repute and independence, meet criteria of competence and fairness, and dedicate the time necessary for the effective performance of their duties, to ensure sound and prudent management of the entity.

Regarding investments in strategic sectors that are subject to its golden powers, the government has adopted various solutions – on a case-by-case basis – in terms of conditions to and requirements for investments (implementing measures for the protection of technology, maintaining R&D activities in Italy, implementing monitoring measures, etc).

Decisions by authorities may be challenged in court by investors.

Decisions taken by the ECB in respect of the authorisation for the purchase of relevant shareholdings in Italian banks can be first be appealed before an internal committee and then before the European Court of Justice.

Administrative courts have jurisdiction over the decisions of regulators in the banking and insurance sectors.

Disputes concerning measures taken in the exercise of golden powers in the strategic sectors are subject to the jurisdiction of the Regional Administrative Court of Lazio.

The most common types of legal entities are companies, particularly joint stock companies (società per azioni) and limited liability companies (società a responsabilità limitata).

The main features of joint stock companies are as follows:

  • they have a minimum corporate capital of at least EUR50,000;
  • shares represent their corporate capital, and each share represents an identical fraction of the capital; and
  • only the company, with its assets, is liable for corporate obligations.

The joint stock company is best suited to medium and large-sized businesses.

Corporate bodies of joint stock companies (with certain differences applicable to alternative forms of management) are generally as follows:

  • shareholders’ meetings, where shareholders take certain decisions, such as appointing and dismissing corporate bodies, approving financial statements, and adopting decisions reserved by law;
  • an administrative body, consisting of a sole director or a board of directors, with management powers; and
  • a control body, which is the board of statutory auditors, with control powers over the management of the company and, in some cases, over accounting aspects. Controls over accounting aspects are mainly given to an external audit body.

The main features of limited liability companies are as follows:

  • they have a minimum corporate capital of at least EUR1;
  • quotas represent their corporate capital; and
  • similar to joint stock companies, only the company, with its assets, is liable for corporate obligations.

Limited liability companies are intended for smaller companies, even if this type is also used for large companies in practice, as it allows greater organisational flexibility.

The management of such companies can be given to a sole director, a board of directors, or directors operating in conjunctive or disjoint management.

Corporate resolutions can be adopted not only within corporate meetings, but also by virtue of written consultation or written consent.

The appointment of a control body is required only under certain conditions.

Further types of corporate vehicles available under Italian law include:

  • companies limited by shares (società in accomandita per azioni), to which the legal provisions regarding joint stock companies generally apply;
  • partnerships (società di persone), the liability for shareholders of which is unlimited, joint and several, and subordinated to the company; and
  • co-operatives (società cooperativa), which differ from companies and partnerships due to their mutual purpose, consisting of providing its members with work, consumer goods or services at better conditions than those available on the market.

The incorporation of a limited company requires the execution of a deed of incorporation and the payment of the corporate capital, or part thereof depending on the number of shareholders.

The deed of incorporation is executed in a notarial form. After receiving the deed of incorporation and verifying its compliance with the law, the notary shall file it with the relevant Companies’ Register for registration. Upon such registration, the company obtains the legal status and starts to operate.

If any activity is performed in the name and on behalf of the company before its registration, those who have acted in its name and on its behalf, including those authorising such activities, are unlimitedly liable towards third parties for the activities performed before the registration.

Specific information and documentation referring to limited companies are publicly available, including the following:

  • annual financial statements;
  • deed of incorporation;
  • by-laws;
  • corporate capital;
  • legal seats and local units;
  • dissolution and insolvency procedures and cancellations;
  • directors and powers;
  • other corporate bodies;
  • shareholders and holders of certain rights over the corporate capital; and
  • mergers and demergers.

The management of joint stock companies may be structured in different ways:

  • the traditional (default) system, providing for the presence of a board of directors (or sole director) with management functions and a board of statutory auditors with supervision functions, both of which are appointed by the shareholders’ meeting;
  • the "one-tier" system, whereunder the management and control are exercised respectively by the board of directors, appointed by the shareholders’ meeting, and by a committee for the control of the management; and
  • the "dualistic" system, providing for the presence of a supervisory board appointed by the shareholders’ meeting and a management board appointed by the supervisory board.

The management of limited liability companies can be granted to a sole director, a board of directors or directors operating in conjunctive or disjoint management.

Directors are liable for their actions towards the company, the corporate creditors and individual shareholders or third parties.

Directors are liable for damages suffered by the company when they do not fulfil their fiduciary duties.

Directors are liable towards corporate creditors for failure to comply with their obligations relating to the preservation of the company’s assets. Creditors can bring such action when the company’s assets are insufficient to satisfy their claims.

A shareholder or third party may request compensation from directors for unlawful acts in the exercise of their office that have caused direct damages to the assets of such shareholder or third party (ie, not simply a reflection of damages to the company’s assets).

The provisions governing the liability of directors also apply to the general managers appointed by the shareholders’ meeting or by order of the by-laws, in relation to the tasks entrusted to them, except for the actions that may be exercised based on the employment relationship with the company.

Liabilities may also be incurred by quotaholders of limited liability companies for damages intentionally caused through their decisions or approvals, and by entities carrying out the "management and co-ordination" activities over Italian companies if there is any violation of the sound management principles.

There are three main sources of Italian labour law:

  • law;
  • collective bargaining agreements; and
  • individual employment agreements.

The most important legislative sources are as follows:

  • the Italian Constitution;
  • the Italian Civil Code;
  • Law No 604 dated 15 July 1966 on individual dismissals;
  • Law No 300 dated 20 May 1970 (also known as the Workers’ Statute);
  • Legislative Decree No 165 dated 30 March 2001;
  • Law No 92 dated 28 June 2012 (the so-called Fornero Law);
  • Legislative Decree No 23 dated 4 March 2015; and
  • Legislative Decree No 87 dated 12 July 2018 (the so-called Dignity Decree), converted with amendments by Law No 96 dated 9 August 2018.

Employment is also regulated by the specific provisions of the employment agreement and by collective agreements, which can be negotiated on a national, territorial or corporate basis. In particular, employment is usually also regulated by the National Collective Bargaining Agreement (NCBA) applied by the employer. NCBAs are collective agreements negotiated between the employers’ associations and the trade unions based on the different business sectors. These agreements provide for minimum base wages and legal standards applicable to the employees working in such specific business sector.

Individual agreements can never derogate to more favourable provisions provided by the law and NCBAs in favour of the subordinate employees.

While theoretically not binding, case law plays an influential role.

Italian law does not provide for a particular form of employment agreement. They can be concluded orally, but the written form may be required by the NCBA or by the law for particular kinds of employment agreements, clauses or covenants (eg, fixed-term, probationary period, non-compete covenants, etc).

The employment contract normally contains the following:

  • the identity of the parties;
  • the place of work;
  • the hiring date;
  • the duration;
  • the probationary period, if any;
  • the qualification/position, task, level and type of employment contract;
  • the working time;
  • the salary;
  • the holiday allowance; and
  • the notice periods in the event of withdrawal.

Normal weekly working time is set at 40 hours per week (Article 3 of Italian Legislative Decree No 66 dated 8 April 2003).

Hours worked above 40 hours per week are considered overtime hours, and are remunerated with the remuneration increases provided for by the national collective agreement. Collective agreements, including territorial or corporate agreements, may stipulate that the normal scheduled weekly working time has a duration of less than 40 hours. The maximum weekly working time is set at 48 hours per week every seven days, including overtime (Article 4 paragraph 2 of Legislative Decree 66/2003). NCBAs may establish the reference period and reduce the maximum weekly threshold.

Pursuant to Italian Law, an employee hired on an open-term basis can be dismissed only in the following cases.

  • In the event of guilty behaviour by the employee – this is known as disciplinary dismissal and, depending on the gravity of the act committed by the employee, there is (i) dismissal for just cause (licenziamento per giusta causa), which can be ordered in the event of an act so serious as not to allow the continuation of the employment relationship even for one day (such as an employee who harms his employer or colleagues at work), in which case the dismissal can be ordered without any notice (nor compensation in lieu of notice), and (ii) dismissal for justified subjective reasons (licenziamento per giustificato motivo soggettivo), which can be ordered in the event of a less serious infringement and can be served if a notice period is given. During the notice period, the employee continues to work and is paid normally. Either the company or the employee may waive the notice, but the party that does so, requesting the immediate termination of the relationship, must pay the other party so-called compensation in lieu of notice.
  • For issues related to the company structure, organisation, technical and production needs, such as the need to close a sector or outsource a company’s function, which is so-called dismissal for justified objective reasons (licenziamento per giustificato motivo oggettivo). In this case, it is necessary to give notice to the employee (or to pay the relevant indemnity in lieu of notice).

Whenever an employer with more than 15 employees, including executives (dirigenti), intends to dismiss at least five employees in the same province within 120 days due to reduction, transformation or cessation of its activity, Law No 223 dated 23 July 1991 regulating collective dismissals shall apply, whereunder employers have to complete the following procedure before they can implement a collective dismissal, the maximum duration of which is 75 days (such duration is halved if the dismissal involves fewer than ten employees from the beginning):

  • To begin with, a written notice of the intention to start a collective dismissal must be given by the employer to the work council and to the competent trade unions (including the managers’ trade union if the dismissal concerns dirigenti), with a copy given to the Provincial Labour Office (PLO). Among other details, the notice shall indicate the reasons for the dismissals, the number and qualification of the normal staff and of the redundancies, and the date on which the proposed dismissal will be effective.
  • If requested by the works council or the trade unions, a consultation phase shall take place, which shall last no longer than 45 days.
  • If no agreement is reached with the trade unions within this 45-day period, an "administrative" phase will be started, which shall not exceed 30 days.

There are two kinds of employees’ representatives (Works Councils):

  • the rappresentanza sindacale aziendale (RSA), regulated by Article 19 of the Workers Statute and based on the unions’ appointment of Works Councils; and
  • the rappresentanza sindacale unitaria (RSU), regulated by agreements between unions and based on elections within the employer’s business units.

Works Councils are not mandatory in Italy. However, if employees elect trade union representatives within the company, the management must consult the Works Council.

The Works Council also plays a crucial role in the achievement of collective agreements at a company level.

Tax-resident individuals are generally subject to individual income tax (IIT) on all income they realise, while non-tax-resident individuals are subject to IIT only on the income that is deemed to be realised in Italy, based on territoriality requirements provided by law. For employment income purposes, non-resident individuals are taxable only on employment income related to the work activity performed in Italy.

The definition of employment income under Italian tax law is very broad and includes any and all compensation, in cash or in kind, received during a year in connection with an employment relationship. As a consequence, benefits in kind are included in the individual’s taxable base in the amount corresponding to the difference between the fair market value and the consideration paid to acquire such benefit in kind.

With regard to the determination of the taxable base of the benefit in kind granted to employees, Italian tax law establishes that reference shall be made to the "normal value" of the goods/services attributed/rendered. The normal value is defined as the price normally applied to similar goods or services at a similar commercial stage (eg, wholesale, retail), taking into consideration pricing lists, tariffs and normal discounts, if available.

No deductions for expenses are allowed from employment income. The taxable base is generally calculated on a cash basis. IIT is determined on a yearly basis. Individuals’ fiscal year (FY) corresponds to the calendar year.

The Italian legislator has introduced an optional tax regime to promote the immigration of employees (and self-employed individuals).

In particular, based on provisions currently in force, a 70% exemption applies to employment income (ie, employees are taxed on only 30% of their employment income) realised in Italy by individuals who:

  • transfer their tax residence to Italy and commit to remain in Italy for at least two FYs;
  • were not Italian tax residents in the two FYs preceding the transfer; and
  • are mainly working in the Italian territory.

Such tax regime is applicable for five FYs, either by the employer (a specific written request shall be sent to the employer by the employee) or directly by the employee in his or her tax return.

If certain conditions are met, the special tax regime may be available for an additional five FYs and/or at a 90% super-reduced rate (ie, employees are taxed on only 10% of their employment income).

Once the taxable base is calculated, the final tax burden shall be determined by applying the relevant tax rates. In this regard, IIT is usually levied on a progressive basis. A tax bracket refers to a range of incomes that are subject to a given tax rate.

The brackets and tax rates provided under Italian tax law are as follows:

  • 23% on that part of income not exceeding EUR15,000;
  • 27% on that part of income between EUR15,001 and EUR28,000;
  • 38% on that part of income between EUR28,001 and EUR55,000;
  • 41% on that part of income between EUR55,001 and EUR75,000; and
  • 43% on that part of income exceeding EUR75,000.

Employment income received by individuals is also subject to regional and municipal income tax.

Regional income tax depends on the region of residence of the individual, with rates ranging from 1.23% to 3.33%.

Municipal income tax depends on the municipality of residence, with rates ranging from 0% to 0.8%. Municipalities can establish progressive tax rates applicable to the IIT brackets.

Where employment income is paid by a tax-resident entity or by an Italian permanent establishment of a foreign employer, such entity would be required to act as an Italian withholding tax (WHT) agent with respect to the income paid to the Italian employees.

Indeed, Italian employers must withhold IIT and additional local taxes from the salaries paid to their employees. The employer must compute the tax on the basis of the applicable progressive rate for IIT and local taxes. The tax so determined must be adjusted on the basis of the actual and personal position of the individual employee (eg, by family credit and other applicable tax deductions and incentives).

At the beginning of each year, the employer must withhold the difference between the taxes due by the employee for the previous year and the taxes withheld during the previous year. Any excess amount reduces the taxes to be withheld for the subsequent pay period.

Employment income is also subject to social security contributions and gives rise to obligations in the hands of both the employee and the employer.

The aggregate social security contributions range from approximately 40% to 45% of the aggregate remuneration accrued in the relevant year. As a general rule, a cap on social security contribution is provided for employees who started working after 1996 (ie, no additional social security contribution is due on employment income above a certain threshold, usually set to approximately EUR100,000).

The employer pays most of the social security contributions for an employee (ie, approximately 80% to 85% of the aggregate social security contributions); the rest is borne by the employee through WHT by the employer on salaries paid.

Employment income and social security contributions payable by employers are generally deductible for corporate income tax purposes.

Under Italian tax law, any entity (eg, a company or a partnership) is deemed to be resident in Italy if, for the greater part of the tax period, either its legal seat (sede legale), its main business purpose (oggetto principale) or its place of effective management (sede dell’amministrazione) is in Italy.

Although the concept of "place of effective management" is not defined in Italian law, it is generally identified as the place where the key management and commercial decisions that are necessary for the entity’s activity, as a whole, are made in substance.

Tax-resident corporate entities (ie, limited liability companies, joint stock companies and companies limited by shares), as well as non-tax-resident entities, are subject to corporate income tax (IRES) at a rate of 24%. Banks and other financial intermediaries are subject to a surtax of 3.5%, except for asset management companies and financial brokerage companies.

Tax-resident commercial partnerships – ie, limited partnerships (società in accomandita semplice) and general partnerships (società in nome collettivo) – are treated as fiscally "transparent" entities for tax purposes. Their taxable income, calculated at the level of the partnership, is allocated to the partners proportionally to their contributions in the partnership or, if otherwise established in the by-laws or by a separate agreement, according to their profit entitlements and regardless of the actual distribution of profits.

Resident companies, as well as resident commercial partnerships, are also subject to Italian local operating profit tax (IRAP) applied at a variable rate starting from 3.9% (the IRAP rate depends, inter alia, on the kind of activities performed and on the regions where the entities operate) on a taxable base equal to the "operating profits" (net value of production) as shown in the profit and loss account.

Resident companies are taxed on their worldwide income, whilst non-resident entities are subject to IRES only on Italian-sourced income.

All income derived by companies that carry on business activities is considered business income and is subject to IRES.

The IRES taxable base is the worldwide income shown on the profit and loss account prepared for the relevant FY according to company law rules and adjusted according to the tax law provisions concerning business income.

The taxable period for IRES purposes is the company’s FY as determined by law or the articles of association. If the FY is not so determined, or if it is longer than two years, the taxable period is the calendar year.

As per the general rule applicable to the determination of "business income", companies may deduct costs and expenses only if they are incurred for the production of income. Such general principle defines the so-called concept of inherence. Accordingly, any cost or expense shall be deductible from the taxable income if it is functional to the business activity, even if it is not strictly related to a specific revenue. This rule does not apply to certain deductible items, such as interest subject to a special rule, certain taxes, social security contributions and costs incurred for the general benefit of employees (eg, recreational facilities).

The deduction of business expenses is allowed on an accrual basis, with some exceptions (eg, directors’ fees) and some limitations (eg, maintenance expenses).

Examples of the most relevant corporate income and expenses, and the criteria for their inclusion/deductibility, are summarised below.

Tax Losses

Taxpayers subject to corporate income tax realise a tax loss if the allowable deductions in a FY exceed the income.

Taxpayers subject to corporate income tax may use their tax losses to offset the taxable income of subsequent FYs, up to 80% of the taxable income of any given FY. Such 80% limitation does not apply to tax losses incurred in the first three FYs of business activity, which may be set off in full.

Any amount of tax losses not utilised shall be carried forward indefinitely in subsequent FYs.


Dividends paid to Italian-resident companies are subject to IRES on 5% of their amount. As a consequence, dividend distributions are subject to an actual IRES rate of 1.2% (ie, IRES at 24% on 5% of dividend amounts).

Special rules apply where dividends are paid by entities that are resident/established in low-tax jurisdictions.

Dividends are generally not relevant for IRAP purposes.

Dividend payments made between Italian resident companies are not subject to Italian WHT.

Capital Gains

Capital gains or losses from the disposal of fixed assets are equal to the difference between (i) the sale price, reduced by the costs directly attributable to the sale, and (ii) the acquisition cost of the asset, net of tax-deductible depreciation accrued.

A taxpayer may choose to include realised capital gains in the taxable income of the FY when they are realised or to spread them in equal instalments over that year and the following years, up to the fourth year. The second option is only available in the disposal of assets held for at least three years.

In a sale of participations, the taxable base of the capital gain (if any) shall be determined as the positive difference (if any) between (i) the sale price and (ii) the tax value of the participation in the hands of the seller (ie, the initial purchase price plus ancillary acquisition costs).

The capital gain upon the transfer of participations shall be either fully included in the taxable income or taxable for an amount equal to 5% of the capital gain if the following requirements for the participation exemption regime are fulfilled:

  • the participation has been held continuously from the first day of the 12th month prior to the disposal;
  • the participation has been accounted for amongst the fixed financial assets in the first financial statements of the holding period;
  • the participated company has never been resident in a jurisdiction that is deemed to have a low-tax regime; and
  • the participated company has performed an actual business activity since the beginning of the third tax period preceding the tax period of disposal.

Losses on the disposal of participations that qualify for the participation exemption are not deductible.

Special rules apply where capital gains arise from the sale of entities that are resident in low-tax jurisdictions.

Outbound Payments


In general, Italy levies a 26% WHT on dividend distributions to non-residents.

A reduced 1.2% WHT applies – corresponding to 5% (ie, the domestic taxable amount of dividends) of the 24% corporate tax – on dividends distributed to entities (subject to corporate tax) that are resident in EU and EEA (which entered into a tax information exchange agreement (TIEA) with Italy) countries.

Italian WHT on dividends to non-residents may also be reduced where a double tax treaty (DTT) is in place with the state of the payee and the latter is entitled to the benefit of DTT protection.

Outbound dividends may be exempt from Italian WHT if the EU Parent-Subsidiary Directive (PSD) conditions are met.

Non-residents (different from savings shareholders), EU and EEA (which entered into a TIEA with Italy) pension funds (subject to 11% WHT) and entities already benefitting from a reduced WHT rate can also claim a partial refund (up to 11/26 of the WHT) of the final tax paid in the state of residence if they prove that it has been paid on the same income (and so basically reducing the effective WHT to 15%).

As of FY 2021, no WHT is applicable on outbound dividends paid to the following categories of foreign investment funds:

  • UCITS funds;
  • non-UCITS funds established in EU/EEA “white list” countries, the manager of which is subject to regulatory supervision under the AIFMD in its country of incorporation.

The same categories of foreign investment funds are entitled to an exemption from Italian taxation on capital gains upon the disposal of participations in Italian entities.


In general, 26% WHT is applicable on interest payments to non-residents.

Italian WHT on interest payments to non-residents may also be reduced where a DTT is in place with the state of the payee and the latter is entitled to the benefit of DTT protection.

Interest arising from medium/long-term loans (a maturity of 18-plus months) paid to EU banks, EU insurance companies and “white listed” foreign "institutional investors" is exempt from WHT. A wide subjective exemption from WHT applies in respect of interest on the following bonds:

  • those issued by Italian banks and Italian listed entities;
  • those listed on regulated markets or multilateral trading facilities of an EU or EEA country; and
  • those that are not listed and can be subscribed only by (and circulated between) “qualified investors”, according to Italian regulatory provision.

Outbound interest payments may be exempt from Italian WHT under the EU Interest-Royalties Directive (IRD) provisions.

Value-added tax

A value-added tax (VAT) taxable transaction includes any supply of goods or services carried out for a consideration in the course of business or an independent professional activity within the Italian territory. Imports and intra-Community acquisitions are also considered taxable transactions.

To be a taxable person for VAT purposes, a person must supply goods or services in the course or furtherance of business, or artistic or professional enterprise. This generally means on a regular or habitual basis. Accordingly, an isolated transaction or occasional supply shall not qualify a person as a VAT taxable person.

The taxable base for VAT is generally identified with the consideration in cash paid under the relevant transaction. Should such consideration be in kind, the taxable base shall be valued in accordance with the normal value.

The following rates of Italian VAT are applicable:

  • a standard rate of 22%;
  • a reduced rate of 10% (eg, on tea, mate spices, meat, fish, natural honey, chocolate and house refurbishing works); and
  • a super-reduced rate of 4% and 5% (eg, on flour and wheatmeal, fresh milk, vegetables and edible greens).

R&D Tax Credit

The R&D tax credit aims to encourage investments in R&D activities.

The tax credit, previously determined on an incremental basis, is determined based on qualifying expenses incurred in the relevant FY.

According to the new regime, the eligible R&D activities are classified into three different categories and the measure of the tax credit changes for each category, as follows:

  • R&D activities – the tax credit amounts to 20% of the eligible expenses with a maximum annual amount granted to each company of EUR4 million;
  • technological innovation – the tax credit amounts to 10% of the eligible expenses (raised to 15% in the case of ecological transition or if the relevant activity qualifies as a “digital innovation” under the so-called Industry 4.0 Plan) with a maximum annual amount granted to each company of EUR2 million; and
  • design – the tax credit amounts to 10% of the eligible expenses with a maximum annual amount granted to each company of EUR2 million.

Under the new provision, taxpayers are entitled to use tax credit as a form of payment for income or regional taxes as well as social security contributions in three equal annual instalments (and no longer in one FY), as of the FY following the one in which the relevant expenses have been incurred.

A technical appraisal illustrating the R&D projects and certifying the eligible expenses is necessary.

Patent Box

The patent box regime is a tax bonus introduced in order to improve the development of IP, granting tax benefits to resident and non-resident taxpayers carrying out R&D activities.

The intangible assets eligible for such optional tax regime are as follows:

  • software protected by copyright;
  • patents (which can be granted or in the process of being granted);
  • business and technical-industrial know-how; and
  • other legally protected IP, such as designs and models.

The patent box optional tax regime provides for partial tax exemption for income arising from direct use or licensing of qualified intangible assets. Under this regime, taxpayers can partially exclude from their tax income, for income and IRAP purposes, those qualifying incomes deriving from the direct exploitation of intangibles or from licensing of the IP, such as royalties earned by the taxpayer, net of all IP-related costs. The patent box businesses shall be entitled to exclude up to 50% of their income derived from such assets.

The election of the regime shall be exercised in the tax return by holders of the right to use the qualifying IP (eg, owners or licensees), and it is deemed irrevocable for five FYs.

Investment in Innovative Start-ups

Individuals and companies investing into so-called highly innovative start-ups are granted a tax benefit for income tax purposes (credit/deduction).

In particular, a "highly innovative start-up" is an Italian tax-resident company that meets the following criteria:

  • it is not listed on a stock exchange;
  • it has carried out business for no more than 60 months;
  • it has had an annual turnover below EUR5 million since its second year of operation;
  • it does not distribute dividends;
  • it is mainly engaged in the development, production or sale of highly technological and innovative goods/services;
  • it is not incorporated as a result of extraordinary transactions; and
  • it meets one of the following additional requirements:
    1. a qualifying percentage of annual R&D expenses;
    2. a qualifying percentage of highly skilled personnel; or
    3. holds a relevant patent.

The benefit is determined on the cash investment made into the share capital of the start-up and is equal to either:

  • a tax credit of up to EUR300,000 per FY (ie, 30% of an investment up to EUR1 million) for individuals; or
  • a tax deduction of up to EUR540,000 per FY (ie, 30% of an investment up to EUR1.8 million) for companies.

No further incentives are granted where a start-up has received incentivised cash contributions exceeding the threshold of EUR15 million. The incentive is granted provided that the investor does not sell the participation in the start-up within three years from the date of the investment (holding period).

As an alternative to the above regime, since 19 May 2020, for individuals only, the percentage of creditable investment into highly innovative start-ups has been increased to 50% (up to EUR100,000 per FY). The three-year holding period applies for such investments as well.

Similar incentives apply to investments made into highly innovative small-medium enterprises.

Tax Credit for the Purchase of New Tangible Assets

The tax credit aims to encourage investments into certain new tangible assets and replaces the previously applicable extra-depreciation regime (Iperammortamento and Superammortamento).

In general, for new tangible/intangible assets (other than assets having an annual tax depreciation rate lower than 6.5%), the tax credit amounts to 10% of the purchase cost (6% for investments made in FY 2022), with a maximum annual investment of EUR2 million for tangible assets and EUR1 million for intangible assets.

For new hi-tech assets qualifying under the so-called Industry 4.0 Plan, the tax credit amounts to either:

  • 50% of the purchase cost for investments up to EUR2.5 million (40% for investments made in FY 2022);
  • 30% of the purchase cost for investments from EUR2.5 to EUR10 million (20% for investments made in FY 2022); or
  • 10% of the purchase cost for investments from EUR10 to EUR20 million (there is no additional tax credit for investments above EUR20 million).

For new software-related investments (ie, software, IT systems and platforms) qualifying for the Industry 4.0 Plan, the tax credit amounts to 20% of the purchase cost, with a maximum annual investment amount of EUR1 million.

The eligible assets have to be purchased in the period from 16 November 2020 to 31 December 2022, with an extension to 30 June 2023, provided that purchase orders are accepted by the seller by 31 December 2022 and at least 20% of their price is paid by the same date.

The tax credit can be used only to offset other tax liabilities in three equal annual instalments (one instalment for certain investments made by 31 December 2021 by taxpayers with turnover below EUR5 million), as of the year in which the assets come into operation.

Under Italian tax law, an Italian resident company and one or more of its Italian resident eligible subsidiaries may elect to apply for the domestic tax consolidation regime.

An eligible subsidiary is an Italian resident company in which the parent company:

  • holds, directly or indirectly, the majority of the voting rights that can be exercised at the shareholders’ meeting;
  • holds, directly or indirectly, more than 50% of the subsidiary’s share capital; and
  • is entitled, directly or indirectly, to more than 50% of the profits of the subsidiary.

Non-resident companies may apply for the domestic tax consolidation, under certain conditions, as a consolidating entity.

The rules governing the determination of the consolidated taxable base can be summarised as follows:

  • the consolidating company determines the consolidated taxable base as the algebraic sum of 100% of the taxable income/loss of each participating company, regardless of whether the participation actually amounts to 100%;
  • tax losses incurred by the consolidated companies after the exercise of the option may be consolidated with the income of other group companies (and carried forward at the consolidated level, if the consolidated taxable base is negative), while tax losses incurred before the exercise of the election may be offset only against the income of the company that incurred the losses;
  • financial expenses that have not been deducted by an entity of the tax group and that occurred after the exercise of the option can be used to offset the consolidated taxable income, provided that other entities within the tax group have earnings before interest, tax, depreciation and amortisation (EBITDA) carried forward; and
  • the payments (if any) made between the companies of the tax consolidation as consideration for the transfer of tax attributes (eg, tax losses, interest expenses carried forward) to the tax group are not relevant for the computation of the taxable base.

The election for the domestic tax consolidation may not be revoked for a period of three FYs and is deemed to be renewed at the end of the three-year period unless it is expressly revoked. The consolidating company will be liable for the filing of the consolidated tax return and for the IRES payments, if due.

Taxpayers liable to IRES, other than financial intermediaries, are subject to a limitation on deduction of net interest expenses (ie, passive interest minus active interest) up to 30% of the company’s tax-relevant EBITDA.

Any amount of non-deductible interest shall be carried forward in the subsequent tax periods, without limitations. Any excess of 30% EBITDA not used to grant the interest deduction may be carried forward for five FYs.

The scope of the interest expenses limitation rule covers interest expenses qualifying from both accounting and tax purposes, arising from transactions that have a financial nature.

Under Italian tax law, the price and the conditions of an intra-group transaction with a non-resident counterparty shall not differ from those that would have been agreed between independent parties under arm’s-length conditions and in comparable circumstances.

The Organisation for Economic Co-operation and Development (OECD) transfer pricing methods (both traditional transaction methods and transactional profit methods) are explicitly accepted under Italian tax law, even though traditional transaction methods, and mainly the Comparable Uncontrolled Price, are to be preferred in situations where more than one method can be applied in an equally reliable manner.

In the case of an audit, where a taxpayer fully complies with the above requirements, the Italian Tax Authorities shall verify the arm’s-length nature of the transaction, based on the transfer pricing method chosen by the taxpayer.

In the case of an assessment of higher taxes due to a transfer price adjustment, penalty protection applies where the taxpayer sets up proper transfer pricing documentation that illustrates the transfer pricing policy applied to intra-group transactions and its compliance with the arm’s-length principle, and discloses its possession in the relevant yearly tax return for IRES purposes.

According to the Italian anti-abuse general provision, transactions that lack economic substance and, even if formally respecting Italian tax law, essentially achieve undue tax advantages are deemed abusive.

As a consequence, a transaction qualifies as abusive if:

  • it lacks economic substance;
  • it achieves undue tax advantages, in the sense that these advantages conflict with the purpose of specific tax provisions or with the general principles of the tax system; and
  • the achievement of these advantages constitutes the essential aim of the transaction.

However, transactions that are based on sound and non-marginal non-tax reasons (including organisational and managerial purposes), and that are devoted to a structural or functional improvement, cannot be considered abusive by the Italian Tax Authorities.

Under Law No 287 of 10 October 1990 (the Italian antitrust law), a prior notification to the Italian antitrust authority is required if one of the following transactions occurs and involves businesses whose aggregate turnover in Italy exceeds EUR511 million, and the aggregate domestic turnover of each of at least two of the businesses concerned exceeds EUR31 million:

  • where two or more businesses perform a merger;
  • where one or more persons controlling one or more businesses acquires, directly or indirectly, by way of purchase of shares or assets, by contract or other means, control of the whole or portions of one or more businesses; or
  • where two or more businesses are setting up a joint venture through the creation of a new company.

The above thresholds are adjusted every year, and specific rules are laid down for the calculation of the turnover.

In the case of an acquisition of a business, only the turnover of the acquired business is taken into account for the calculation.

Specific calculation criteria are set forth for financial companies, banks and insurance companies.

The Italian antitrust law provides that a merger of "national importance" shall be notified to the competent authority (ie, the Autorità garante della concorrenza e del mercato) before its completion.

The authority can suspend the transaction when initiating the investigation phase.

The national control procedure may consist of two stages:

  • the first stage is started upon receipt of the notification by the authority and is aimed at verifying whether the transaction is likely to be prohibited; and
  • the second stage (the investigation stage) shall be initiated if, following the first-stage assessment, the authority considers that the merger is likely to be prohibited.

During the first phase, the authority can take a number of actions that may affect the position of the parties or can make significant assessments, including taking a position on certain important issues such as the adoption of a definition of the markets in which the parties operate. It may impose penalties for providing false or incorrect information.

This phase shall end within 30 days of the notification, although this term may be interrupted if the information is incorrect, incomplete or untrue.

Within such 30-day period, the authority may:

  • decide not to initiate an investigation;
  • decide not to initiate an investigation, subject to the implementation of corrective measures;
  • initiate an investigation because the transaction is likely to be prohibited;
  • decide not to handle the notification because the transaction does not constitute a merger under Italian antitrust law, the thresholds are not met, or the transaction is outside its jurisdiction; or
  • refer the case to the European Commission.

If the second phase is started, the investigation shall commence within 30 days of the receipt of the notification (or within 30 days of having knowledge of the transaction in lieu of the notification).

This second phase shall end within 45 days, through the communication by the authority of its conclusions to the parties and the Italian Ministry of Economic Development. This time limit may be extended if the authority requests additional information or data.

The authority shall notify the parties of the opening of the investigation. The opening is also published, to inform customers and competitors and allow them to intervene by submitting observations.

During this phase, the authority has wide powers of investigation: it may request information (also from customers, suppliers and competitors) and documents, carry out inspections, and authorise expert opinions and economic analyses.

Entities with public or private interests and trade associations may intervene in the proceeding.

The representatives of the businesses concerned are entitled to be heard, may submit observations and opinions, and may be consulted.

At the end of the investigation, the authority issues the final decision, which may be:

  • the prohibition of the transaction;
  • the authorisation without imposing conditions on the transaction; or
  • the authorisation with conditions.

Italian antitrust law prohibits agreements and concerted practices between businesses, as well as resolutions, consortia, associations of businesses and other similar entities.

Agreements and concerted practices among businesses that have as their object or effect the prevention, restriction or substantial distortion of competition within the national market (or a substantial part thereof) are prohibited, including:

  • fixing, directly or indirectly, purchase or selling prices, or other contractual conditions;
  • preventing or restricting production, market access, investments, technical development or technological progress;
  • sharing markets or sources of supply;
  • applying objectively different conditions to equivalent transactions with other contracting parties in such a way as to place them at an unjustified competitive disadvantage; and
  • making the conclusion of agreements subject to acceptance by the other parties of supplementary obligations that, by their nature or according to commercial usage, have no connection with the subject of such agreements.

Such agreements are null and void.

In order to combat these "cartels", the Italian antitrust authority has adopted its own leniency programme, which applies to self-reporting businesses and provides the evidence for establishing the infringement. In this case, the authority will not apply or will reduce the pecuniary sanction provided for, depending on the timeliness and quality of the information provided by the businesses for discovering the cartel.

The abuse of a dominant position by one business within a national market (or in a substantial part thereof) is null or void. It may consist of one of the following conducts:

  • imposing, directly or indirectly, purchase or selling prices, or other unjustifiably burdensome contractual conditions;
  • preventing or restricting production, market access, investments, technical development or technological progress, to the detriment of consumers;
  • applying objectively different conditions to equivalent transactions with other contracting parties in such a way as to place them at an unjustified competitive disadvantage; and
  • making the conclusion of agreements subject to acceptance by the other parties of supplementary obligations that, by their nature or according to commercial usage, have no connection with the subject of such agreements.

The Italian antitrust authority may intervene in an abuse of dominant position or an abuse of economic dependence, which occurs when a business is able to determine, in its commercial relations with another business, an excessive imbalance of rights and obligations, taking into account also the real possibility, for the party that has suffered the abuse, of finding satisfactory alternatives on the market.

A patent is a title granting its owner the exclusive right to own, use and dispose of an invention for 20 years.

Inventions are patentable if they comply with the following requirements:

  • novelty – the invention is considered new if it is not included in prior art;
  • inventiveness – the invention is not obvious to an expert of the field;
  • industrial character – the invention is suitable for industrial application; and
  • lawfulness – the invention does not violate public policy or accepted principles of morality.

A patent application can be filed through the Chambers of Commerce or directly with the Italian Patent and Trade Mark Office.

The Italian Patent and Trade Mark Office does not investigate the validity of the patent. A novelty search is carried out by the European Patent Office, the results of which are communicated to the applicant within nine months, with a term to reply to possible objections or to limit or clarify the description or the claims. Following the examination and within 18 months of its filing, the patent application is published and the patent is then granted.

Applicable regulations allow an Italian patent application based on a Patent Co-operation Treaty application to be filed (ie, with no need to obtain a European patent).

A patent infringement occurs when patent claims are literally reproduced or counterfeited (the so-called equivalence case – ie, when a product/procedure essentially performs the same function as the patent even though it uses at least partially different means that, however, could be considered substitutable for those that are the subject of the claims).

The patent owner has the right to prohibit the supply (or offer) to third parties of any means referring to an element essential for the invention and necessary for the implementation of the invention itself.

Emergency measures can be requested if there is danger of imminent violation or repeated violations.

An injunction is normally strengthened with the provision of a penalty for each violation, payable to the owner of the right infringed.

The trade mark is the most important distinctive sign.

Protection is granted to both registered trade marks (granted by the Italian Patent and Trade Mark Office for a period of ten years, renewable without limits for equal periods) and non-registered trade marks (protected on the basis of the use and reputation achieved on the market and with no fixed expiry date).

A trade mark must consist of a reality that consumers perceive as a "sign". It shall also be "distinctive" – ie, the sign must be perceived as an indicator (also) of the existence of the exclusivity of its use in a certain sector.

Another requirement is its lawfulness: registration of, inter alia, signs contrary to law, public order or morality and those likely to deceive the public is prohibited.

If the distinctive character or legality is lost after registration, the trade mark is subject to revocation.

Limitations on the right to register a trade mark refer to signs whose use would constitute an infringement of another person’s copyright, industrial property or another exclusive right of third parties.

The trade mark is an exclusive right.

Revocation of a trade mark could occur if it has become capable of deceiving the public, giving rise to a position of responsibility on the owner as to the truthfulness of the message that the public links to it.

Among other things, possible infringement could be the use of a sign that is identical to the trade mark for goods or services that are identical to those for which it is registered.

Italy has implemented the EU Trade Marks Directive, introducing, among other measures, the possibility of using cross-border measures and reacting against preparatory acts of counterfeiting regarding goods in transit.

Trade mark protection is now extended to non-distinctive uses of an identical or similar sign causing parasitical exploitation or damaging the distinctiveness or reputation of the earlier mark. Trade mark protection is also extended to the cross-border transit of goods and to preparatory acts of infringement.

Design is the IP right that protects the aesthetical expression of a product (or of its detail) resulting, in particular, from its lines, silhouettes, colours, shape, surface, decorations and/or materials. To be protected as a design, such aesthetical expression shall be new, generate in the eyes of informed users an overall impression different from any impression generated by earlier designs available to the public and licit for not being contrary to public order and/or accepted moral principles.

A design shall be considered disclosed and not protectable where it has been made available to the public, presented or commercialised before the filing of the relevant registration application (unless it was disclosed under confidentiality restrictions).

Registered design protection lasts five years from the filing of the relevant application and can be extended by the holder for one or more periods of five years, up to a maximum of 25 years. Moreover, the registered design grants its holder the exclusive right to use and prohibit third parties from using such design or other similar designs generating the same overall impression on the informed user without his or her consent.

Regarding the registration process, the design author should file an application with the Italian Patent and Trade Mark Office, which then proceeds with an administrative and technical verification. An interim request for clarification/integration may follow, to which the applicant has to reply within 60 days (extendable up to six months). After such verification (and the interim phase, if any), the Office registers the requested design or refuses the application. If the Office refuses the application, such decision could be appealed before the Office Appeals Commission within 60 days.

The registered design holder can sue any third party infringing his or her design before IP courts.

Under Italian law, copyright does not need any registration or publication process in order to exist. However, in order to make it easier for the holder to prove the origin and date of a work, an application can be filed with an entity that is able to certify such details, such as SIAE (the Italian copyrights collective management organisation).

However, such filing cannot offer protection to a work when it does not meet the legal requirements for protection. In fact, Italian copyright law (ie, Law No 633 of 22 April 1941) protects any work resulting from creativity per se and, in particular, creative works of literature, music, figurative arts, architecture, theatre and cinematography.

The protected work or software confers on its author two types of copyright:

  • moral and economic exploitation rights – the moral right allows the author of the work to be recognised as such, and to preserve its integrity; such rights have no expiry date; and
  • economic exploitation rights, consisting of the author’s exclusive right to make any economic use of his or her protected work.

In general, these rights last until 70 years after the death of the author (or, in the case of a collective work, of the last surviving co-author). Copyright law regulates some of these exclusive rights to exploit the work.

All copyrights belong to the author(s) of the protected work from the time of its creation. However, according to scholars and case law, when a protected work has been created on commission or during the performance of an employment agreement, copyright belongs to the client/employer, unless there is a specific agreement that provides otherwise.

The copyright holder can assign or license his or her (economic exploitation) rights to third parties. Such transfer shall be proven in writing.

Any person that uses a copyright-protected work without the consent of its holder violates such copyright. However, some unauthorised uses of protected works do not constitute copyright infringement, including the summary, quotation or partial reproduction of a work for criticism, discussion or educational purposes, when such uses are basically of no profit.

The violated copyright holder can enforce his or her copyright against any infringer before IP courts.

The main other IP right to be considered is the right to confidential information, referring to technical information (ie, drawings, methods, etc, regardless of their patentability) or commercial information (ie, lists of suppliers or customers, etc).

Legal protection is granted only to information that is secret, that is subject to appropriate measures of secrecy and that has an economic value because it is secret.

The enforcement of a trade secret requires proof of the existence of such requirements. The relevant right could last until the relevant information enters into the public domain.

The holder of confidential information cannot prohibit third parties from using it if it has been obtained independently.

Unauthorised exploitation or disclosure of information entitles the legitimate holder to all the remedies normally available for IP rights infringements (such as provisional measures, damages claims or disgorgement of the infringer’s profits).

The two main regulations applicable in Italy to data protection are:

  • Regulation (EU) 679/2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, also known as the General Data Protection Regulation (GDPR); and
  • Legislative Decree of 30 June 2006 No 196 (the Privacy Code), which is also the transposition of Directive 95/46/EC and Directive 2002/58/EC.

The GDPR is the first source of data protection provisions in Italy. The Privacy Code only provides for additional provisions, to the extent permitted by the GDPR.

Further noteworthy regulations include the following:

  • Legislative Decree 51/2018, implementing Directive (EU) 2016/680 on the protection of natural persons with regard to the processing of personal data by competent authorities for the purposes of the prevention, investigation, detection or prosecution of criminal offences or the execution of criminal penalties, and on the free movement of such data;
  • Legislative Decree 65/2018, implementing Directive (EU) 2016/1148 measures for a high common level of security of network and information systems across the EU;
  • Legislative Decree 101/2018, adapting the Italian legislation to the GDPR and providing for transitional provisions; and
  • Presidential Decree 149 of 8 November 2018 amending Presidential Decree 178 of 7 September 2010 on the public register of objections to the use of paper mail.

Guidelines, recommendations, best practice, opinions, binding decisions and authorisations may be issued and approved by the Italian Personal Data Protection Authority (the Garante per la protezione dei dati personali, or Garante) and the European Data Protection Board.

Moreover, the Italian Constitution sets forth principles that apply to data protection – ie, Article 2 on fundamental human rights, Article 14 on domicile, Article 15 on freedom and secrecy of correspondence and all other forms of communication, and Article 21 on the freedom to express one’s own thought.

Aspects on data protection may also be found in other laws regulating various sectors, such as Law 300/1970 (also known as the Workers’ Statute) and Law 633/1941 on copyright.

Lastly, general principles on data protection may be found in international conventions.

The GDPR expressly applies to the processing of personal data in the context of the activities of a controller or a processor in the EU, regardless of whether the processing takes place in the EU.

A "controller" is defined as a natural or legal person, public authority, agency or other body that, alone or jointly with others, determines the purposes and means of the processing of personal data; a "processor" is a natural or legal person, public authority, agency or other body that processes personal data on behalf of the controller.

The GDPR also applies to the processing of personal data of data subjects who are in the EU by a controller or processor that is not established in the EU, where the processing of activities is related to either the offering of goods or services to such data subjects in the EU, irrespective of whether a payment for the data is required, or the monitoring of their behaviour as far as their behaviour takes place in the EU.

Lastly, this regulation also applies to the processing of personal data by a controller that is established not in the EU but in a place where EU Member State law applies by virtue of public international law.

At a European level, the European Data Protection Board (the Board) can issue guidelines on the interpretation of the principles of the GDPR and can also rule binding decisions on disputes concerning cross-border processing activities, ensuring uniform application of the European regulations. It performs its tasks and powers independently, and it can examine any question referring to the application of the GDPR, either on its own initiative or upon the request of a member of the European Commission.

The Board issues binding decisions in certain cases, mostly related to disputes among supervisory authorities, and advises the Commission on data protection issues in the EU, including proposed amendments to the GDPR and EU regulation proposals.

The Garante is the supervisory authority in charge of monitoring the application of GDPR in Italy and is vested with specific powers, including:

  • checking whether the processing is carried out in accordance with the applicable rules, including in the event of their cessation and with reference to the retention of traffic data;
  • dealing with complaints submitted pursuant to applicable regulations;
  • promoting the adoption of ethical rules;
  • reporting facts that can be classified as offences punishable by law of which it becomes aware; and
  • ensuring protection of the fundamental rights and freedoms of individuals by implementing the GDPR and the Privacy Code.

Among the upcoming legal reforms, it is worth mentioning the Italian Consolidated Insolvency Act, which was enacted in 2019 and should come into force on 1 September 2021. It would significantly change the rules governing insolvency procedures and the duties (including alert mechanisms) imposed on companies to prevent insolvency situations.

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Law and Practice in Italy


McDermott Will & Emery has 20-plus locations on three continents and works seamlessly across practices, industries and geographies to deliver highly effective – and often unexpected – solutions that propel success. With more than 1,100 lawyers, the firm brings its personal passion and legal prowess to bear in every matter for its clients and the people they serve. McDermott has been present in Italy since 2003 and offers a wealth of experience in highly complex finance transactions (acquisitions, banking and finance, equity and debt restructuring, and capital markets) and a stellar reputation in all aspects of tax law. The team comprises approximately 40 professionals who share a strong international background and work together to provide a collaborative multidisciplinary approach, offering the best solution and maintaining the highest level of quality and efficiency.