The rules on PIRs change again, but this time it seems that the news has managed to bring politics and insiders together. The Individual Savings Plans, a true financial phenomenon of 2017, go back to their origins, but with some changes that could tangibly affect a market that was literally paralyzed in 2019.
The revision of the PIR is contained in an amendment to the unanimously approved tax decree on November 25 by the House Finance Committee. The text will now have to be examined by the House and Senate, but given the widespread support that the new regulation has received among all political forces, no further changes are expected.
Before talking about the news, however, we need to take a step back.
PIR, WHAT THEY ARE AND HOW THEY WORK
Individual savings plans can be described as real tax containers that contain various financial instruments, including shares, bonds, derivatives, collective investment undertakings, etc.. They were introduced in Italy by the 2017 Budget law in order to channel the money of savers, exclusively natural persons, towards small and medium-sized Italian enterprises.
To try to attract as many investors as possible, the legislation establishes concessions. In detail, anyone who decides to take advantage of an individual savings plan can count on an exemption from taxation of the income deriving from the investment made. In other words, the main advantage is that of being able to count on a detaxation of profits, capital gains and dividends on condition that the PIR is maintained for at least 5 years.
PIR: WHAT ARE THE RULES
To invest in PIRs, precise rules must be respected which above all concern the composition of the assets. The first provides that at least 70% of the total value of the Pir must be invested in financial instruments issued or entered into by companies resident in Italy or in European countries with permanent business in Italy. The initial rules stipulated that of this 70 per cent, at least 30 per cent must be invested in instruments issued by companies other than those included in the FTSE Mib index of Borsa Italiana or in equivalent indices of other regulated markets, while on the remaining 30% there was no restriction.
With the 2019 Budget law (ma the implementing decree arrived only in May 2019) the former government formed by the League and the 5 Star Movement has introduced changes that have mandated all the out managers and insiders. The rules - still in force - establish that 3,5% of the assets are invested in units or shares of investment funds venture capital and a further 3,5% in financial instruments of small and medium-sized enterprises (SMEs) admitted to trading on AIM Italia.
These changes have brought a real paralysis in the Pir market. Firstly because the asset management companies were unable to contract new PIRs for 5 months in the absence of the implementing decrees - which arrived in May, as mentioned - secondly because, according to insiders, they transformed an investment intended for small savers into a very more risky.
The results are in the numbers: if in 2017 the PIR raised 10,9 billion euros and 2018 billion in 3,95, 2019 tells a completely different story: according to Assogestioni data, in the current year outflows prevailed, with -717 million euros recorded from January to 30 September, against total assets of 18,5 billion.
PIR, HERE'S THE NEWS
In order to jump-start a stagnant market, the amendment to the tax decree eliminates the two constraints of 3,5% on Aim and venture capital, establishing a single obligation: that of reserving 5% of the total value of the instrument (always 70%) in financial instruments of companies other than those included in the Ftse Mib and Ftse Mid indices of Borsa Italiana or in equivalent indices of other regulated markets. So we go back to the origins.
“The asset management industry warmly welcomes the approval of the amendment to the Tax Decree which removes the limitations on individual savings plans introduced by last year's Budget law”, comments Fabio Galli, general manager of Assogestioni.
The amendment also includes another important change: Social security funds and investment funds will be able to hold more than one PIR within the limit of 10% of the assets. "We appreciate that a question raised several times in interpretation by Assogestioni has been resolved in the regulatory framework, namely the inapplicability to pension funds and social security funds of the principle of uniqueness of the PIR" comments Arianna Immacolato, director of the tax sector of Assogestioni.
The new (old) rules have therefore been welcomed by insiders, we'll see how the market will react.
