What are they
Individual Savings Plans (ISP), introduced by the 2017 Budget Law, were created as a form of medium-term investment to channel savings to Italian companies, in particular SMEs. ISPs are new in our country, but other European and Non-European countries already have similar forms of incentives in place to invest in the real economy through large tax breaks. In essence, it is a “fiscal container” inside of which savers can place any type of financial instrument or cash amount in accordance with some investment constraints.
It is possible to invest in any type of financial instrument (shares, bonds, UCITS, etc.) issued mainly by Italian or European (EU or EEA) companies with a permanent establishment in Italy.
The advantages include a tax break involving the exemption from taxation of income, which may be classified as capital gains or other financial income deriving from investments in ISPs. Other advantages are:
- An exemption from taxation on financial income
- An exemption from inheritance tax
- Contribution to the country’s growth by providing an alternative source of financing to the real Italian economy
Subscription terms and conditions are as follows:
- Minimum holding period of the financial instrument: 5 years
- Annual investment limit: 30,000 euros
- Total investment limit: 150,000 euros
ISPs are intended for individuals who physically reside in Italy, regarding investments made outside the scope of their business activities. Each person can only own one ISP. In order to obtain the tax break, the proposed legislation requires certain criteria to be met:
- On the portfolio characteristics
The investment is restricted: in each calendar year, the Fund must invest at least 70% of its assets in financial instruments, including those not traded on regulated markets or multilateral trading facilities, issued or stipulated with companies that carry out activities other than real estate, residing in the Italian territory or in EU member states or States belonging to the European Economic Area with a permanent establishment in Italy. At least 30% of this quota (i.e. 21%) of the portfolio, must be invested in financial instruments issued by companies not included in the FTSE MIB index of the Italian Stock Exchange or in equivalent indices of other regulated markets (excluding real estate companies). This constraint is aimed at channelling household savings towards productive investments, and in particular, towards companies where the financial requirement is higher, and that have greater difficulty in finding resources through the banking channel to facilitate their growth and development.
There are limits to the concentration: the ISP assets may not be invested for more than 10% of its total value in financial instruments issued or stipulated with the same issuer or other company belonging to the same group. This constraint is to ensure adequate portfolio diversification.
- On the holding period of the financial instruments held by the plan itself
The purpose of the holding constraint of financial instruments (5 years) is to prevent investments of a speculative nature and, at the same time, to guarantee that the recipients of the resources can count on the capital received on a stable basis for a medium/long period of time.
The constraints on the sums that can be invested in ISPs
Each natural person, as described above, cannot invest more than 30,000 euros per year in ISPs and within an overall limit of 150,000 euros.
Our dedicated fund
To take advantage of these opportunities, Finint Investments SGR has created a dedicated fund called Finint Economia Reale Italia. It is a balanced bond fund that invests in financial instruments traded on regulated markets: bonds (including convertible bonds), instruments representing risk capital, parts of UCITS whose investment policy is compatible with that of the Fund and bank deposits and money market instruments.
Indicative Asset Allocation
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