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Upon the passing of act No. 232 on 11 December 2016 and its entry into force on 1 January 2017, the text of Budget Act 2017 was approved.

The provisions included in sections 148-159 of Budget Act 2017 have the purpose of providing for conductive conditions to attract foreign capital to the Italian market and putting an end to the growing migration of young, educated Italians abroad, making it easier for academics living abroad to go back.

This short article focuses only on the former of the issues – the regulations aiming to encourage foreign capital investments on the Italian market.

Pursuant to the provisions of section 148 of Budget Act 2017, a new subsection 26-bis is added to the consolidated text of the regulations regarding immigration. The subsection is titled “Ingresso e soggiorno per investitori” (“Arrival and residence for investors”) and it simplifies the procedure of issuing visas and residence permits for foreigners who intend to make significant investments in Italy.

In order to obtain this special visa for a term of two years (renewable in certain cases for another 3 years), which visa not without a reason is called an “investor visa” and which allows for entry and residence in Italy for a term of more than 3 months, the applying foreigner should file a set of documents in line with the procedure to be determined under an inter-ministerial regulation. Applications in this procedure will not be subject to restrictions determined in the “regulation on migration” (the purpose of which is to stop the growing immigration of foreigners).

The investor visa will be issued to those foreigners who intend to:
• make an investment of at least EUR 2,000,000 into security papers issued by the Italian government provided that they are not disposed of within 2 years from subscribing for them;
• make an investment of at least EUR 1,000,000 into the equity of a company established and operating in Italy provided that the shares subscribed for will not be disposed of within 2 years from subscribing for them or an investment of at least EUR 500,000 in the case of innovative start-ups entered in a special Italian business register;
• make a donation of at least EUR 1,000,000 for the purpose of supporting a public project in the field of culture, science, management of immigration processes, scientific research, rescuing cultural goods and landscapes.

In accordance with the procedure described in detail by the regulation of the Minister for Economic Development, upon the approval of the Minister of Internal Affairs and the Minister of Foreign Affairs and in accordance with the rules of international cooperation, in order to meet the requirements stipulated in the regulations, a foreigner applying for a visa should submit the documents listed below, issued within 90 days from the entry into force of Budget Act 2017:

 a copy of travel document the validity of which is longer than the validity of the requested visa by at least three months;
 documentation certifying: (i) the availability of the minimum value of investment or donation specified above and ii) the circumstances allowing for the transfer of such sum to Italy;
 a certificate showing that the funds come from a legal source;
 a written statement containing a detailed description of features and recipients of investment or donation.

Apart from the so-called investor visa, another novelty was introduced under section 152 of Budget Act 2017 – a new subsection 24-bis added to the consolidated text of the Income Tax Act (TUIR), The subjection is titled: “Opzione per l’imposta sostitutiva sui redditi prodotti all’estero realizzati da persone fisiche che trasferiscono la propria residenza in Italia” (“Option of an alternative tax on income earned abroad by natural persons who move their place of residence to Italy”).

Those tools are meant to encourage Italian entities and/or foreign non-residents to move their place of residence to Italy.
Should such entities decide to move their tax residence to Italy they may choose to tax their income earned abroad with a flat rate tax of EUR 100,000 per each fiscal period; using this option is possible on the condition that within 10 years before moving the place of residence to Italy the applicant had lived abroad for at least 9 years (meaning he or she were not paying taxes in Italy).
The main features of this option include:
• validity of up to 15 years and may be revoked;
• may be put on hold in the case of neglecting to pay the alternative tax or paying it partially;
• may be extended to one or more family members of the applicant on the condition that they move their place of residence to Italy and within the last 10 years they had not been paying taxes in Italy for at least 9 years (each next family member is required to pay EUR 2,500 annually as the alternative tax);
• the flat-rate alternative tax also concerns income generated as a result of sale of share blocks, starting from the sixth year when this option is available;
• may be used only after obtaining a positive response to the application filed with Agenzia delle entrate (tax office).
Alternative tax should be paid once within the deadline specified with respect to the payment of income tax and is not deductible for the purpose of any other tax or contribution. The methods of application, change or revocation of the option and paying alternative tax should be determined by Agenzia delle entrate under a regulation of the director which should be issued within 90 days from the act’s entry into force.
The effort of the Italian law makers put into attracting the capital and entities to Italy is significant.

It is, however, essential to analyse the texts of the inter-ministerial regulations, which are extremely important for the outlined procedure and which should be passed by the end of March.

On 8 February 2017, Marek Wojnar, attorney-at-law, and Marta Kosiedowska, attorney-at-law, will run a session during the 7th Corporate Legal Counsel Forum titled:
“Corporate requirements versus start-up innovation – contractual conditions related to corporation’s investment in start-up companies”.

The following topics will be discussed during the session:
– investor’s control and supervision mechanisms in a start-up company – why start-ups don’t want to have their hands tied;
– risk versus return on investment – mechanisms for securing an investor in a start-up company;
– know-how, start-up during a due diligence process – legal aspects of investor’s due diligence of a start-up company.

We hope you will enjoy the meeting!

Data validation, organisational structure and changes in the law.

Nowadays, a business success is largely determined by data quality and their efficient management. Financial sector companies are governed by special regulations in respect of collected and processed data. The Polish Financial Supervision Authority (KNF) currently audits banks, while insurance companies, universal pension funds, brokerage houses and investment fund associations had time till 2016 to implement guidelines regarding the management of IT and ICT security issues on the capital market. It is likely that this year first companies belonging to these groups will be inspected in terms of directive implementation.
Join Piotr Ćwiertniewski and Patrycja Leszczuk during their presentation at a series of workshops organised by the Rzeczpospolita newspaper.

Our experts will discuss the changes that will be introduced under the General Data Protection Regulation

1. CURRENT LEGAL FRAMEWORK

On 1 January 2017 the Act of 16 December 2016 on Amending the Act on Nature Conservation and the Act on Forests entered into force. What changes most are the provisions regulating the issue of removal of trees and shrubs. Under new legal framework, pursuant to Article 83f of the Act on Nature Conservation, the requirement to obtain a permit for tree or shrub removal does not apply to:
1.1. trees with a circumference at a height of 130 cm of no more than 100 cm in the case of poplars, willows, chestnuts, boxelder maples, silver maples, black locusts and London planetrees, and no more than 50 cm in the case of other tree species;
1.2. trees and shrubs growing on land belonging to individuals and are removed for a purpose unrelated to business activity;
1.3. trees and shrubs removed for the purpose of turning fallow land into arable land.

2. CONSEQUENCES OF CHANGING THE ACT ON NATURE PRESERVATION
Following the initiative to cut down on red tape in respect of removing trees and shrubs, the number of removed trees grew rapidly. Cutting down trees in particular in popular sites of big cities, for instance, in front of the Warsaw City Hall, outraged many citizens and received wide media coverage. In consequence, according to press articles, another amendment of the Act on Nature Conservation is planned which will concern in particular the removal of trees and shrubs as outlined in clause 1.2 above.
For the time being, the bill has not been published yet and the scope of potential changes has not been specified, however, it is very likely that restrictions on tree removal will be introduced and enacted quickly. It should be noted that the bill introducing the above outlined changes was submitted to the Sejm on 7 December 2016, and the amended statute entered into force on 1 January 2017.
If you are planning to use the opportunity and remove trees or shrubs under the Act on Nature Conservation in its current form, you should remember that it may not be long until it is no longer binding.

Read an article by Marcelina Daszkiewicz in the 3rd issue of the In-procurement magazine in Poland.

On 1 January 2017, new provisions of the Act on Taxes and Local Charges will enter into force. Under the new provisions, a high real property tax will be imposed on wind farms. The change follows the shift in focus of the energy policy of the Council of Ministers in favour of hard coal, which in the near future may lead to gradual restriction of renewable energy supply.

At present, the taxable amount of the real property tax is equal to the value of all elements of a wind farm (all non-building structures) and not only buildings (masts and foundations).

The changes, which will hurt the pockets of taxpayers, are confirmed by the recent judgement of the Provincial Administrative Court in Bydgoszcz dated 21 February 2017 (case file No. I SA/Bd 866/16) which states that the taxpayer is obligated to report all elements of a wind farm. In the heard case, the panel of judges relied on the Act on Investments to the extent concerning wind farms, which clearly defines wind farms as non-building structures within the meaning of the Construction Law.

In light of the above developments, we recommend reporting for tax purposes all elements of a wind farm, meaning the building parts (masts and foundations) and technical parts (with rotors and rotor blades).

The lawyers of BSWW Legal & Tax have advised financial investors in the course of a mezzanine financing project involving the refinancing of the entire debt of Malborskie Zakłady Chemiczne Organika S.A. The refinancing took the form of a bond issue and a capital investment carried out by taking over a block of minority shares in the company’s share capital.

The total value of the project reached PLN 73 m, including PLN 62 m in bonds and PLN 11 m in capital investments.

Our office handled the entire transaction. Among others, we carried out a limited due diligence, developed transaction and security structure, prepared investment documentation (investment contract, security-related documents, corporate documents) and bond documents (conditions of issue, security-related documents, corporate documents).

On 1 June 2017, the Act of 7 April 2017 Amending Certain Other Statutes entered into force. The purpose of this act is to facilitate claiming debts. Under the act, among other provisions of law, Article 647(1) of the Polish Civil Code was amended. The article concerns the issue of the joint and several liability of the investor and the contractor (general contractor) for the payment of a subcontractor’s fee in exchange for construction works carried out thereby.

The motivation behind the amendment is to facilitate the procedure whereby the contractor notifies the investor about a subcontractor – the requirement to provide the investor with the agreement concluded with the subcontractor was waived, as well as the regulation whereunder the investor’s failure to raise objections or express reservations within 14 days from receiving the agreement concluded with the subcontractor or a draft thereof (with relevant documentation) was taken to mean that the investor had expressed consent for such agreement to be concluded and, as a result, was jointly and severally liable for the payment of the fee for construction works carried out by given subcontractor.

Today, in order to extend to the investor the liability for the payment of the fee due to a subcontractor on account of construction works carried out thereby, one should only provide the investor with a detailed description of what the construction works of given subcontractor are to concern, which should be taken care of before the start of said works. The investor will be jointly and severally liable with the contractor (general contractor) for the payment of the fee due to such subcontractor unless, within 30 days from notifying the investor about the subcontractor, the investor notifies the subcontractor and the contractor that it objects to such works being carried out by the subcontractor.

Nevertheless, in the case where construction works to be carried out by given subcontractor are described in detail in the agreement concluded between the contactor and the investor, the investor and the contractor (general contractor) will be jointly and severally liable without the need to notify the investor as specified above.

The investor’s liability for the payment of the fee to the subcontractor is expressly limited under the discussed provision of law to the value of the fee determined in the agreement between the subcontractor and the contractor, unless the amount of the fee of the subcontractor is higher than that of the contractor. Should this be the case, the investor’s liability for the payment of the subcontractor’s fee is limited to the fee due to the contractor.

All contractual provisions excluding the application of the regulation in question are invalid.

On 7 June, in Warsaw a conference was held which focused on “Improving business processes and data analysis in a company”. Our experts, Piotr Ćwiertniewski and Patrycja Leszczuk delivered a presentation about new conditions and restrictions regarding the use of data in the context of the GDPR.