These measures shall offer to this part of the country more flexibility from an organizational, financial and fiscal point of view.
The Law in particular has established the creation of Special Economic Zones (“SEZs”), special zones connected with port areas, and the Regulation No 12 issued on 27 February 2018 (“Regulation”) provides the details of the new provisions for the Special Economic Zones.
A. Special Economic Zones: Forms and Definitions
Special Economic Zones are geographical areas in which a governmental authority offers incentives for the development of the businesses operating in that specific area in order to attract investments in particular from foreign investors and to be able to operate in different legal forms.
The Organization for Economic Cooperation and Development (OCDE) has identified four different forms of Special Economic Zones:
- Free Trade Zones; at ports and airports, which offer partial or total exemptions on import or export duties for those goods that are re-exported;
- Export Processing Zones; facilitating the re-exportation only of goods that are being reprocessed on the spot, and will assume a significant added value;
- “Real” Special Economic Zones; offering a variety of incentives, concessions and administrative simplifications to the companies that establish their headquarters there;
- Special Industrial Zones; limiting the facilities to a specific sector and in which ad hoc infrastructures will also be built.
According to Article 4, paragraph 2 of the Decree-Law, the Special Economic Zone is a zone:
- a)geographically defined and identified within state boundaries;
- b)composed of territorial areas not directly adjacent as long as they have a functional and economic connection with the port; and
- c)which includes a port area, connected to the trans-European transport network (TEN-T).
The Special Economic Zones are allowed in six regions in the South of Italy: Campania, Basilicata, Puglia, Calabria, Sicily and Sardinia
B. Procedure For the Establishment of a Special Economic Zone
Following the initial consultation amongst the mayors of the territory, the Region submits a proposal based on a special strategic development plan and the government eventually officially establishes the SEZ.
The strategic development plan shall include the following:
- identification and documentation of the areas identified as part of the SEZ, highlighting in particular those falling within the port area;
- list of the already existing infrastructures as well as the infrastructures connecting non-territorially adjacent areas;
- analysis of the social and economic impact expected from the establishment of the SEZ;
- report illustrating the strategic development plan accompanied by data and elements that identify the types of activities that are intended to be promoted within the SEZ, the territorial specialization activities that are intended to be strengthened, and that demonstrate the existence of an economic-functional link with the port area;
- identification of the administrative simplifications of its competence for the realization of the investments that the Region undertakes to adopt for business initiatives located in the SEZ;
- indication of the incentives and incentives that can be granted by the region.
The duration of the section may not be less than seven years and more than fourteen, which may be extended for a maximum of a further seven years at the request of the regions concerned.
C. Advantages of operating in a SEZ
There are basically two major benefits for companies that decide to settle in a SEZ:
First of all there is fiscal advantage for the companies that already are settled in a SEZ or that decide to set up a business in a SEZ: for these companies it will be possible to take advantage of a tax credit with a maximum of 50 million euros for the purchasing of capital goods.
In addition, the Decree-Law envisaged simplified procedures and special procedural regimes, which guarantee acceleration of procedural deadlines and simplified procedures with respect to the regime envisaged by the regulatory legislation ordinarily applicable.
It is also envisaged the access to existing and planned infrastructures in the strategic development area of the SEZ.
The recognition of the types of benefits discussed above is subject to the following conditions: the beneficiary companies must maintain their activity in the SEZ area for at least seven years after the completion of the investment subject to the subsidies and the beneficiary companies must not be in a state of liquidation or dissolution.
These law provisions are mostly aimed to investors operating in the port sector but of course the establishment of SEZs will be a benefit for the whole region as it will be possible to create important connections with the already locally present activities that can in turn provide to the new companies infrastructures, expertise and workforce.
D. Simplified Logistic Zones in the North of Italy
The SEZs, in accordance with the European Union provisions of the State Aid Rules and of the Decree-Law, can be created only in the South of Italy.
However, the Legge di Bilancio n. 302/2017 (“Budget Law”) has provided the possibility of establishment of entities within port areas in which companies can benefit from some simplified procedures typical of SEZs.
The Budget Law states that the ports that cannot benefit from the SEZs can enjoy the simplified procedures but not the tax benefits provided for the SEZ; these special areas are called Simplified Logistic Zones (SLZs).
The SLZ is established following consultation on the proposal of the Region and with the act of the Minister of Territorial Cohesion in concert with the Minister of Transport; it lasts seven years with the possibility of renewal for other seven years.
As highlighted in this article the creation of an SEZ is an important tool for economic acceleration.
Its usefulness is not limited only to fiscal or administrative advantages but also allows companies that establish themselves in the area to exploit synergies with local businesses and with the workers already present in the area as well as having access to existing infrastructures.
Alea iacta est: it will now be up to Italy and to European Union to adequately promote this institution on the one hand and, on the other hand, also for foreign investors to realize its potential.