Taxation in Italy

University of Mississippi eGrove Touche Ross Publications Deloitte Collection 1977 Italy Touche Ross International G. K. Dykes G. J. Power Follow this and additional works at: https://egrove.olemiss.edu/dl_tr Part of the Accounting Commons, and the Taxation Commons Recommended Citation Touche Ross International; Dykes, G. K.; and Power, G. J., "Italy" (1977). Touche Ross Publications. 739. https://egrove.olemiss.edu/dl_tr/739 This Article is brought to you for free and open access by the Deloitte Collection at eGrove. It has been accepted for inclusion in Touche Ross Publications by an authorized administrator of eGrove. For more information, please contact [email protected]. business study Italy Touche Ross International business study italy Contents I. ITALY IN BRIEF II. INVESTMENT FACTORS III. COMMERCE AND TRADE IV. LABOUR CONDITIONS V. BUSINESS PRACTICES AND INFORMATION VI. FORMS OF BUSINESS ENTITIES VII. ACCOUNTING AND AUDITING VIII. TAXATION IN ITALY Touche Ross International Preface This study is one of a series of Business Studies designed for the use of Touche Ross professional staff in all countries and for interested clients. Users of the study should ascertain whether the information given here has been superseded by later de- velopments. Specific business questions or problems may have legal and tax ramifications that are beyond the scope of this Business Study and the assistance of professional advisers is recommended. Suggestions for revisions should be sent to the Touche Ross International Executive Office. The amounts quoted in this Business Study are in Italian lire (Lit.). At the time of writing, the approximate Italian lire exchange rates with other currencies were: Lit.1,000 = US $ 1.16 £ Sterling 0.70 Deutsche Marks 2.78 French Francs 5.76 Swiss Francs 2.98 Japanese Yen 342.00 Dutch Guilders 2.89 Readers should check in the financial press for any subsequent variations in these rates. December 1977 © 1977 Touche Ross & Co., all rights reserved Printed in the United States of America Introduction The Touche Ross Business Studies endeavour to provide businessmen considering trade or investment in a country with practical information on business conditions, set against a background of that country's long-term economic structure. They are not concerned with short-term considerations, nor are they commentaries on the current economic scene, other than as necessary to describe regulations in force at the time of writing. On superficial review, Italy's recent problems of high inflation and un- employment rates and huge balance-of-payments deficits sometimes appear to foreigners to be almost insuperable. A closer look at the period since the end of World War II, however, shows a very different picture. Italy is one of the principal member-states of the European Common Market (EEC) and has developed at a formidable pace over the last 30 years. Some of its present problems derive from its very strength and from the power it has regained as a result of the radical change effected in the country — the conversion of a largely agricultural economy into a major industrial one. Italy's economic growth is a testimony to the creativity and energy of its people. In the past, Italian culture has had untold influence on Western civilisation, and today, Italian civil engineering and construction techniques and flair for design — to mention but two aspects of the country's industry — are making Italian corporations and their products known throughout the world. 'A man,' said Doctor Johnson, the English man of letters, in 1776, 'who has not been in Italy is always conscious of an inferiority.' Two hundred years later, his view might be paraphrased by saying that a businessman who ignores Italy and the Italians may come to realise that he has missed a great opportunity. This Business Study was written by G. K. Dykes and J. G. Power of the Touche Ross office in London, England, with the active cooperation of several members of Touche Ross Milan. Linda S. Avelar Director of International Publications December 1977 Table of Contents CHAPTER I ITALY IN BRIEF 1 The Country 1 Location and area 1 Natural features 2 The regions and major cities 2 The Northwest 2 The Northeast 3 Central Italy 3 The South 3 The islands 3 Climate 4 Natural resources 4 The People 4 Population 5 Labour force 5 Language 6 Education 6 Religion 7 History 8 Life in Italy 9 Government and the Economy 9 Executive and legislative powers 10 The legal structure and the judiciary 10 Religion and local governments 10 Advisory and other bodies 11 Political parties 11 Economic patterns 12 Government participation in the economy CHAPTER II INVESTMENT FACTORS 15 Investment Incentives 15 The investment climate 15 Foreign investment 16 Tangible investment incentives 16 Southern Italy and the islands 17 Capital expenditure subsidies 18 Other incentives 18 Additional assistance in Sicily and Sardinia 19 Central and northern Italy 20 Applying for incentives 20 Restrictions on investment 21 Formalities and Procedures 21 Rules applicable to new businesses 21 Register of Enterprises 22 Chambers of Commerce 22 Other rules 22 Status of foreign-owned businesses 23 Checklist for investors 23 Sources of Finance 23 Financial and credit institutions 24 The central bank 24 Banking institutions 25 Special credit institutes 26 Types of bank and special institute finance 26 Restrictions on borrowing by foreign-owned enterprises 26 Share capital 27 The stock exchanges 27 Requirements for listing 28 Other sources of finance 29 Banking customs and payments procedures 30 Controls over Foreign Exchange 30 Currency 30 Exchange markets and practices 31 Controls on inward investments 31 Capital accounts 31 Productive and nonproductive investments 32 Borrowings by foreign-owned enterprises 33 Borrowings by Italian-owned enterprises 34 Relaxation of the borrowings rules 34 Repatriation provisions 34 Imports and exports 35 Foreign nationals' funds 35 Controls on outward investment 36 Exchange controls of foreign investors' own countries CHAPTER III COMMERCE AND TRADE 37 Foreign Trade 37 Licences and controls 38 Customs duties 40 Other duties and taxes 40 Documentation 41 Free ports and transit arrangements ii 41 Marketing Practices 41 Advertising and promotion 42 Selling and distribution methods 44 Trade credit conditions 44 Patents, Trademarks, and Copyrights 44 Patents 46 Trademarks 46 Copyrights 47 General Regulation of Business 47 The Civil Code 47 Fair trade laws 47 Price controls 48 Mergers 48 EEC legislation on fair competition 50 Insurance practices 51 Environmental and health considerations 51 Information required on business documents 51 Real estate 53 International trade organisation membership CHAPTER IV LABOUR CONDITIONS 55 The Labour Force 55 Availability 56 Recruitment 56 Position of Foreign Nationals 56 Documents and procedures 58 Labour law and social security 58 Terms and Conditions of Employment 58 Wage rates 59 Bonuses and extra compensation 60 Overtime 60 Annual and other paid leave 61 Payment methods 61 Working hours and conditions 61 Working hours 62 Employment contracts 62 Termination of employment 64 Other employment matters iii 64 Fringe Benefits and Social Security 64 Fringe benefits 65 Social security 65 Benefits 67 Costs 68 Labour-Management Relations 68 Collective agreements 68 Unions 70 Employers' associations 70 The courts 70 Worker participation in management CHAPTER! V BUSINESS PRACTICES AND INFORMATION 73 General Information 73 Best travel months 73 Entry requirements and currency restrictions 74 Communications and transportation 75 Hotels and restaurants 76 Tipping 76 Business Hours and Holidays 76 The working day 77 Working hours 77 Public holidays 78 Time factors 78 Business Practices 78 Cards 78 Dates 79 Writing conventions 79 Weights and measures CHAPTER VI FORMS OF BUSINESS ENTITIES 81 Principal Business Entities 81 Summary of forms 82 Corporations — The SpA Form 82 Formation 82 Formation by direct constitution 84 Formation by public subscription iv 84 General conditions 85 Formation costs 85 Ownership — shares and shareholders 87 Management 88 Directors 88 Appointment, removal, and remuneration 88 Powers and duties 89 Meetings and procedures 90 Statutory auditors 91 Shareholders in general meeting 92 Capital, reserves, and dividends 92 Share capital 92 Loan capital 93 Reserves and distributions 93 Losses 93 Registration and publication requirements 95 Dissolution 95 Companies — The Sri Form 96 Branches 97 Partnerships and Other Entities 97 General partnership 98 Limited partnership 99 Partnership limited by shares 99 Sole proprietorship 99 Joint venture 100 Other forms CHAPTER VII ACCOUNTING AND AUDITING 101 Form of Financial Statements 101 Layout and content 102 Publication requirements 103 Accounting Principles and Practices 103 Effects of tax law 105 Financial statements for proprietors 105 General principles 105 Inventories 106 Fixed assets and depreciation 106 Goodwill and other intangibles V 107 Investments 107 Consolidation practices 108 Receivables 108 Provisions for severance pay 108 Taxation 108 Reserves 109 Mergers 109 Profit and loss account 109 Other points 110 Inflation accounting 110 Audit Requirements and Practices 110 Legal requirements 110 New requirements for listed companies 111 Qualifications of independent audit firms 113 Duties of independent auditors 113 Relationship with statutory auditors 113 Audit standards 113 Statutory auditors 114 Independent audit firms 114 Audit reports 114 Statutory auditors 115 Independent audit firms

Load more