How to save with Pir? The Revenue Agency explains it. After the guidelines on the non-taxability regime introduced by the 2017 Budget Law, a new tax circular illustrates the main characteristics of the new regime and identifies the solutions to some critical issues that emerged in the comparison between the ministry, Revenue and the main trade associations (Abi, Ania and Assogestioni). But let's go in order.
WHAT ARE PIRs
Two years ago, a non-taxable regime was introduced into Italian law for investments in long-term individual savings plans (PIR). The income generated by these financial products is not subject to tax, therefore it is not taxed as capital and other income of a financial nature and is not subject to inheritance tax.
The aim of the law is to channel household savings towards long-term productive investments, thus promoting the growth of the Italian entrepreneurial system. A condition for benefiting from the regime is to make investments in financial assets attributable to Italian and foreign companies (rooted in Italy), respecting certain composition restrictions, concentration limits and prohibitions as well as maintaining the investments for at least 5 years. For a more detailed explanation, refer to a previous article.
THE NON-TAXABLE SCHEME
In general, the new non-taxable regime concerns natural persons resident in Italy for tax purposes who obtain income of a financial nature outside the exercise of a business activity. Among the main features of the regime is the ban on owning more than one Pir and the maximum limit of the amount invested, which cannot exceed the total value of 150 thousand euros, with an annual limit of 30 thousand euros. Furthermore, in order to benefit from the non-taxable regime, the investments must be held for at least 5 years. As regards the tax obligations relating to the PIR, these are carried out exclusively by the intermediary with whom the savings plan is established or transferred.
REVENUE CLARIFICATIONS
The most important clarification arriving from the Revenue Agency concerns derivative financial instruments, which are admitted under the Pir only under certain conditions. Another important clarification for operators concerns the possibility of using the overall weighted average cost criterion in the event of the disposal of investments as an alternative to the average annual cost envisaged by specific legislation.
HOW TO BEHAVE IN THE EVENT OF ASSIGNMENT OR REFUND BEFORE 5 YEARS
In the event of disposal before the five-year period or failure to comply with the conditions established by law, the income received is subject to taxation according to the ordinary rules and without the application of penalties. If the asset is sold or repaid, it is possible to remain in the subsidized regime provided for by the Pir if reinvestment in other financial instruments is made within 90 days, in compliance with the investment constraints established by the regime. In the event of non-reinvestment, however, the payment of taxes and interest must be made by the 16th day of the month following that in which the deadline for reinvestment falls.
