Italy has implemented a new competition law tying tax breaks on investment returns for first and second pillar pension funds to specific allocations in venture capital funds. The law, which came into effect on December 19, 2024, aims to encourage investments in the real economy while balancing the protection of pension schemes' financial strength.
Key points:
1. Tax exemptions apply if venture capital fund allocations reach 5% of qualified investments in 2025 and 10% from 2026 onwards.
2. Pension schemes can invest up to 10% of assets in equities through various vehicles, including venture capital funds in Italy, the EU, and the EEA.
3. The law covers both qualified investments and long-term savings plans (PIR).
4. Tax exemptions require holding qualified investments for at least five years.
5. Adepp, the Italian association of pension funds for professionals, welcomed the changes as a balanced approach.
6. A safeguard clause allows retroactive tax benefits for investments in innovative start-ups made before the law's enactment.
This new legislation represents a compromise between encouraging investment in start-ups and maintaining the financial stability of pension schemes, while also addressing concerns about the developing nature of Italy's venture capital market.
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