Italian regulations on prize promotions can now rely on a broader exemption for light value campaigns that shall be definitely exploited.
The complex Italian regime on prize promotions
I have already discussed in the past about the complex regime in place in Italy for prize promotions both if they are based on chance or skills (the so called “concorsi a premi“) and when they just award prizes in kind upon a purchase (the so called “operazioni a premi“), while prize promotions awarding prizes in cash are banned.
The main activities to be done in case of prize promotions based on skills or chance are the following:
- appoint a VAT representative in Italy if the organizer of the promotion is not an Italian company;
- draft the Ts&Cs of the prize promotions in accordance with the instructions provide by the regulations;
- post a performance or an insurance bond whose value needs to be equal to the overall value of the prizes offered;
- send to the Ministry of the Economic Development the Ts&Cs and the performance/ insurance bond at least 15 days before the beginning of the contest;
- require the presence of a public notary on the selection of the winners (i.e. in case of drawing of the prizes, he will need to be present at the drawing) and on the closure of the prize promotions (i.e. after the delivery of the prizes to the winners, he shall draft the minutes of closure of the contest);
- send to the Ministry of the Economic Development the minutes of closure of the prize promotions drafted by the public notary; and
- perform the required tax payments.
Sanctions for breach of the above requirements have been recently lowered, but the risk is that an unlawful prize promotion is deemed to be misleading advertising leading to fines that were recently issued in the range of € 3 million.
The broader exemption of low value prize promotions
This though regime is a considerable disincentive for marketing managers from running prize promotions. However, the Italian Ministry of the Economic Development recently broadened the exemption for low value prize promotions which now includes initiatives awarding prizes whose value is up to € 25.82, while this threshold was of just € 2 in the past.
The value shall be considered as total value of prizes that can awarded to a participant i.e. if a participant can win 20 prizes of € 25 each, the exemption would not apply. However, this is still a relevant change for instance in the gambling sector for bonuses that are awarded based on players’ skills or following a drawing.
In that case, since under Italian law bonuses are not withdrawable and need to be wagered at least once, it is necessary to assess the actual value of awarded bonuses i.e. if I award € 100 bonuses to be wagered 10 times in order to be turned into withdrawable real money and based on the data in my system that amount on average equals to € 10 withdrawable money, I can argue that the exemption applies!
Likewise, in case of promotions run on social media structured as a quiz or an application awarding random prizes, this exemption seems to be the perfect solution.
Interested on prize promotion regulations of the world?
Prize promotion regulations are very inconsistent and this is why my law firm launched a portal where we summarized legal requirements applicable to them in 35 countries. This is available for free here.