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Investment management exemption: the new Italian rule to attract foreign investors

Investment management exemption: the new Italian rule to attract foreign investors
The Italian budget law 2023 (“Budget Law”) has introduced the so-called ‘Investment Management Exemption’ (IMEX) in order to give certainty to Investment Fund Management practices, with a particular focus to the risk for a permanent establishment in Italy (“PE”) for a non-Italian resident fund or its investors.

In such cases, the general risk is that tax authorities may argue that the local activities trigger the threshold for a PE, with the known tax consequences (local taxation, double taxation and most probably administrative and criminal sanctions). General implications may also involve the need for fund managers (eg. Private equity) to spend time in the country of the target investment. Italy is also experiencing an inflow of high skilled personnel, due to relocation tax benefits.

It is exactly here where the new law makes its impact. The IMEX Italian rules provide that, under certain conditions, investment management activities in Italy do not determine the existence of a permanent establishment (PE). With this provision, the legislator aims to boost Italy’s attractiveness to foreign investors by offering a ‘safe harbour’ for managers assisting the investor company.

The new Budget law amends Article 162 of the Italian Consolidated Tax Code (“ICTC”), dedicated to PE, and provides the conditions under which investment funds/investors can avoid being considered as having a PE in Italy due to the activities carried out by managers.

More specifically, the notions of Agency PE and Physical PE have been updated as following:

individuals (including non-residents) who, in the name of or on behalf of the foreign investment vehicle, habitually conclude purchase, sale or negotiation contracts, or contribute to the purchase, sale or negotiation of participations, financial instruments, derivatives and credits, are to be regarded as independent agents.

– the fixed place of business at the disposal of a resident enterprise which carries on business activities therein shall not be deemed to be at the disposal of the foreign investment vehicle merely because the activity carried on therein benefits the foreign vehicle.

These presumptions are specifically conditioned to:

  • the residency of the investment vehicle and its foreign subsidiaries in a jurisdiction that allows the exchange of information
  • the independence requirements of the investment vehicle to be specified in further decrees
  • the manager requirements in relation to the investment vehicle:
    1. absence of positions in the management and/or control bodies of the investment vehicle
    2. absence of a participation of more than 25% in the profits of the investment vehicle
    3. a fair market value remuneration.

Some requirements still need to be specified in further decrees and implementing provisions and some issues shall be clarified by the tax authorities.

It should be also considered that the positive effect for asset managers could be even greater by combining the tax regimes offered in Italy to attract new tax residents.


Our Italian desk in London and Milan will be happy to follow up and support interested parties by providing:

  • advice on the legal framework of the investment management exemption provisions
  • advice on immigration and relocation issues for managers
  • accounting and administrative assistance
  • assistance for the manager’s tax obligations.

At your request we can provide further specific information and clarification

  • Daniele Carlo Trivi
  • Luigi Belluzzo
  • Ivan Mastrototaro
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