Foreign investment issues

Investment restrictions

What restrictions, fees and taxes exist on foreign investment in or ownership of a project and related companies? Do the restrictions also apply to foreign investors or creditors in the event of foreclosure on the project and related companies? Are there any bilateral investment treaties with key nation states or other international treaties that may afford relief from such restrictions? Would such activities require registration with any government authority?

As a general rule, there are no restrictions on foreign investment in or ownership of a project and related companies. However, under Law Decree No. 21/2012 (the Golden Power Decree), the Italian government – if there is a threat of serious prejudice to the national interest – is entitled to exercise special powers (eg, to veto or impose prescriptions or conditions) in relation to certain transactions involving both public and private companies operating in strategic sectors for the country (such as defence and national security, 5G networks, cybersecurity and cloud, transport, energy, communication and high-tech).

Those transactions include the acquisition of participations higher than certain thresholds from extra-EU legal entities, mergers, demergers, transfers of business, relevant changes to the corporate purposes, etc. Therefore, should the transactions involve companies carrying out strategic activities or holding assets in those sectors, those transactions shall be communicated to the Italian government to allow the exercise of those special powers. A failure to communicate those transactions will result in the application of material fines against the legal entities involved in the transaction.

Owing to the covid-19 pandemic, to protect the national strategic assets from a hostile takeover of foreign entities, the Italian government enacted, under Law Decree No. 23/2020, a provisional regime (applicable until 31 December 2022), including EU legal entities and extending the relevant scope to additional sectors such as credit and insurance sectors, media pluralism, food safety and access to sensitive information.

This temporary regime has been established in the ordinary Golden Power Decree regime by Law Decree No. 21/2022 and will be applicable from 1 January 2023 even to transactions involving Italian companies. Moreover, Law Decree No. 21/2022 has further broadened the scope of Golden Power Decree regulation, including the awarding of concession contracts and the incorporation of companies carrying out strategic activities or holding strategic assets.

For the purposes of pursuing such aims, no bilateral investment treaties aimed at affording relief from restrictions have been executed.

Insurance restrictions

What restrictions, fees and taxes exist on insurance policies over project assets provided or guaranteed by foreign insurance companies? May such policies be payable to foreign secured creditors?

There are no restrictions on insurance over projects provided by foreign companies as long as the relevant insurance company is authorised to operate in Italy. Proceeds are usually paid to the project company, which is the insured entity, but lenders often require the borrower to execute loss payee clauses, otherwise, the insurance proceeds are included among the receivables assigned by way of security. Notwithstanding such loss payee clauses and assignment of receivables, it is market practice – and in part, it may be a right of the project company by law – to allow the project company to use insurance proceeds below certain thresholds to restore potential damages of the trigger event. Finally, there are no restrictions on the payment of the insurance proceeds to Italian or foreign companies.

Worker restrictions

What restrictions exist on bringing in foreign workers, technicians or executives to work on a project?

Restrictions depend on the nationality of the foreign workers, technicians or executives. In accordance with the principle of free movement of persons, goods, services and capital, no immigration procedures apply to EU and EEA nationals. However, should such workers, technicians and executives work in Italy for more than three months, a simple notification to the local authority (generally the local police station) should be transmitted. Non-EEA nationals shall comply with a specific procedure based on quotas for new entries on a yearly basis. Exemptions apply for highly skilled individuals who may work in Italy even in excess of such thresholds.

Equipment restrictions

What restrictions exist on the importation of project equipment?

No specific restrictions apply on project equipment importations. Project equipment may be freely imported and exported in accordance with the right of free movement in the EU, EEA and Turkish area. Imports from outside the European Union are regulated by trade treaties with the relevant exporting country. Once entered into the European Union, products may be freely traded throughout the entire European Union.

Nationalisation laws

What laws exist regarding the nationalisation or expropriation of project companies and assets? Are any forms of investment specially protected (from nationalisation or expropriation)?

The Italian constitution envisages the expropriation of private assets for public purposes, provided that fair compensation is paid to the expropriated owner. Under Italian law, for the purposes of the public interest, the public administration may revoke a concession subject to payment in favour of the concessionaire.

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27 May 2022