- 意大利
Italy – Flat tax for new residents
27 11 月 2018
- 税务
When should an agency agreement be considered “international”?
Pursuant to the international private rules applicable in Italy (Art.1 Reg. 593/08 “Rome I”) an agreement is deemed “international” in the presence of “situations involving a conflict of laws”.
The situations which more often involve a conflict of laws in agency agreements– making them “international” – are (i) the principal’s seat being located in a country different from the agent’s seat country; or (ii) the agreement being performed abroad, even when the principal’s and the agent’s seats are both located in the same country.
When does Italian law apply to an agency agreement?
Under the “Rome I” Regulation, in principle Italian law may apply to an international agency agreement (i) if it is chosen by the parties as the law governing the agreement (either expressly, or as otherwise allowed by Art.3); or (ii) absent any choice of law, when the agent has its residence or seat in Italy (according to the “residence” concept under Article 19).
What are the main regulations of agency agreements in Italy?
The substantial regulations of agency agreements in Italy, with particular regard to the principal-agent relationship, can be found mainly in articles from 1742 to 1753 of the Civil Code. Such rules have been repeatedly modified following the adoption of the Directive 653/86/EC.
What is the role of the collective bargaining agreements?
Since many years, collective bargaining agreements (CBAs) have also been regulating agency agreements. These are agreements made on a regular basis between the associations representing principals and agents in different sectors (manufacture, trade and several others).
From a legal effectiveness perspective, a distinction can be drawn between two types of CBAs, i.e. CBAs having the force of law (effective “erga omnes”) – whose rules are however quite broad and thus have a limited scope of application – and CBAs of a contractual nature (“di diritto comune”) that have been signed from time to time over the years, and are meant to bind only those principals and agents which are members of those associations.
In general, CBAs intend to implement the Civil Code rules and those of the Directive 653/86. However, contractual CBAs often deviate from those rules, and some deviations are substantial. For example, CBAs allow a principal to unilaterally modify the agent’s territory, the contractual products, the range of customers, the commission. CBAs determine in a partially different manner the duration of the notice period when indefinite term agreements are terminated. CBAs have their own calculation of the agent’s remuneration for the post-contractual non-competition covenant. CBAs have peculiar regulations concerning the termination indemnity.
With particular regard to the contract termination indemnity, there have been serious issues of compliance between the CBAs and the Directive 653/86/CE. Indeed, such issues still remain unsolved despite some rulings from the EUCJ, because the Italian courts’ constant jurisprudence keeps the CBAs’ indemnity provisions in force.
According to the majority of scholarly opinions and case law, CBAs’ geographical scope of application is limited to the Italian territory.
Therefore, CBAs automatically apply to agency agreements which are governed by Italian law and are performed by the agent in Italy; but – in case of contractual CBAs – subject to the further condition that both parties are members to associations that entered into such Agreements. According to some scholars, it is sufficient that the principal alone is a member of such an association.
Even in the absence of such cumulative conditions, however, contractual CBAs may nonetheless apply if they are expressly referred to in the agency agreement, or their provisions are constantly complied with by the parties.
What are the other main requirements in agency agreements?
The “Enasarco”
Enasarco is a private law Foundation with which agents in Italy must be registered by law.
The Enasarco Foundation mainly administers a supplementary pension fund for agents, and a termination indemnity fund, called “FIRR” (referring to the termination indemnity as calculated in accordance with the criteria set forth by the CBAs in the different sectors).
Typically, a principal in a “domestic” agency agreement registers the agent with the Enasarco and pays contributions to both the above funds on a regular basis throughout the whole term of the agency agreement.
However, while registration and contribution to the pension fund are always mandatory as they are provided for by the law, contributions to the FIRR are instead mandatory only for those agency agreements which are governed by contractual CBAs.
Which rules apply to international agency agreements?
As far as registration with the Enasarco is concerned, the law and regulatory provisions are not so clear. However, important clarifications were provided by the Ministry of Labor in 2013 answering to a specific question (19.11.13 n.32).
Making reference to the European legislation (EC Regulation n.883/2004 as amended by Regulation n. 987/2009) the Ministry stated that registration with the Enasarco is mandatory in the following cases:
- agents operating in the Italian territory, in the name and on behalf of Italian or foreign principals having a seat or an office in Italy;
- Italian or foreign agents operating in Italy in the name and/or on behalf of Italian or foreign principals with or without a seat or office in Italy;
- agents residing in Italy and performing a substantial part of their activities in Italy;
- agents not residing in Italy, but having their main center of interest in Italy;
- agents habitually operating in Italy, but performing their activity exclusively abroad for a period not exceeding 24 months.
The above-mentioned Regulations obviously do not apply to those agency agreements that are to be performed outside the EU. Therefore, it should be checked case by case whether any international treaties binding the parties’ countries provide for the application of the Italian social security legislation.
Chamber of Commerce and Register of Businesses
Anyone wanting to start a business as a commercial agent in Italy, must file a “SCIA” (Certified Notice of Business Start) with the Chamber of Commerce having local jurisdiction. The Chamber of Commerce then registers the agent with the Register of Businesses if the agent is organized as a business entity, otherwise it registers the agent with a special section of the “REA” (List of Business and Administrative Information) of the same Chamber (see Legislative Decree n.59 dated 26.3.2010, implementing the Directive 2006/123/EC “Services Directive”).
Such formalities have replaced the former registration to the agents’ roll (“ruolo agenti”) which was abolished by said law. The new law also provides for a number of other mandatory requirements for agents wishing to start an activity. Such requirements concern education, experience, clean criminal records, etc.
Although failure to comply with the new registration requirements does not affect the validity of the agency agreement, a principal should nevertheless check that the Italian agent is registered before appointing him, as this is a mandatory requirement anyway.
Venue for disputes (art.409 and following of the Civil Procedure Code)
Pursuant to Article 409 and following of the Civil Procedure Code, if the agent mainly performs its contractual duties as an individual even if independently (so-called “parasubordinato” i.e. “semi-subordinate” agent) – provided the agency agreement is governed by Italian laws and Italian courts have jurisdiction – any disputes arising from the agency agreement shall be submitted to the Labor Court in the district where the agent is domiciled (see article 413 of the CPC) and the court proceedings shall be conducted according to procedural rules similar to those applicable to employment-related disputes.
In principle, said rules shall apply when the agent enters into the agreement as an individual or sole entrepreneur, while according to the majority of scholars and jurisprudence they do not apply when the agent is a company.
Applying the rules above to the most common situations in international agency agreements
Let’s now try to apply the rules described until now to the most frequent situations in international agency agreements, keeping in mind that those below are simple examples, while in the “real world” one should carefully check the circumstances of each specific case.
- Italian principal and foreign agent – agreement to be performed abroad
Italian law: it governs the agreement if chosen by the parties, without prejudice to any public policy (internationally mandatory) rules in the country where the agent has its residence and performs, pursuant to the Rome I Regulation.
CBAs: they do not govern the agreement automatically (because the agent performs abroad) but only when they have been expressly referred to in the agreement, or de facto applied. This could happen more or less intentionally, for example when an Italian principal uses with foreign agents the same contract forms as with Italian agents, which usually include many references to the CBAs.
Enasarco: typically, there are no registration or contribution obligations in favor of a non-Italian agent whose residence is abroad and performing his contractual duties only abroad.
Chamber of Commerce: there is no obligation to register in the above circumstances.
Procedural rules (article 409 and following, CPC): if Italian courts are properly chosen as the jurisdiction for all disputes, a foreign agent even if being an individual or sole entrepreneur may not take advantage of this provision to move the case to the courts of his own country. This is because art.413 cpc is a domestic provision on venue which presupposes the agent’s seat to be in Italy. Further, the jurisdiction rules set forth by the EU legislation should prevail, as was ruled by the Italian Court of Cassation and stated by important scholars.
- Foreign principal and Italian agent – agreement to be performed in Italy
Italian law: it governs the agreement if chosen by the parties or, even in the absence of any choice, as an effect of the agent having his residence or seat in Italy.
CBAs: those having force of law (“erga omnes”) govern the agreement, whereas those having contractual nature are unlikely to apply automatically, as the foreign principal typically would not be a member to any of the Italian associations having signed a CBA. However, they might apply if referred to in the agreement or de facto applied.
Enasarco: a foreign principal shall register the Italian agent to the Enasarco. Failure to do so might imply penalties and/or damages claims from the agent. As a consequence of such registration, the principal will have to contribute to the social security fund, while he should not be obliged to contribute to the FIRR (fund for termination indemnity). However, a principal who makes regular contributions to the FIRR even when not due, might be considered as having impliedly accepted the CBAs as applicable to the agency agreement.
Chamber of Commerce: the Italian agent has to be registered with the Chamber of Commerce and therefore the principal should make sure that the agent has complied with this requirement before entering into the agreement.
Procedural rules (art.409 and following, CPC): if Italian courts have jurisdiction (whether by the parties’ choice or as the place of performance of the services pursuant to Regulation 1215/12) and the agent is an individual or a sole entrepreneur with a seat in Italy, these rules should apply.
- Italian principal and Italian agent– agreement to be performed abroad
Italian law: it governs the agreement if chosen by the parties, or, in the absence of any choice, if the agent has his residence or seat in Italy.
CBAs: they would not apply (as the agent performs abroad) unless expressly referred to in the agreement, or de facto applied.
Enasarco: according to the Ministry of Labor’s opinion, registration is mandatory when the agent, although being engaged to work abroad, has his residence and performs a substantial part of his business in Italy, or has in Italy his center of interest, or performs abroad for a period not exceeding 24 months, provided the EU Regulations apply. In case the agency agreement is to be performed in a non-EU country, it has to assessed from time to time whether registration is mandatory.
Chamber of Commerce: an agent having started his business and established as an entity in Italy is in principle obliged to register with the Chamber of Commerce.
Procedural Rules (articles 409 and following of the CPC): the rules apply if the agent is an Italian based individual or sole entrepreneur and the Italian jurisdiction is agreed upon.
- Foreign principal and foreign agent – agreement to be performed in Italy
Italian law: in principle, it governs the agreement only if chosen by the parties.
CBAs: if the agreement is governed by Italian law, the CBAs having force of law apply, while those having contractual value will not apply unless expressly referred to, or de facto applied.
Enasarco: according to the Ministry of Labor’s opinion, when EU Regulations apply, registration may be required from a foreign principal in favor of an agent residing abroad, if such agent operates in Italy or has his center of interest in Italy. Otherwise, a case by case analysis will be needed under the applicable laws.
Chamber of Commerce: in principle, an agent established as an entity abroad is not obliged to register in Italy. However, the issue could be more complex if the agent has a seat and performs his activity mainly in Italy. Such circumstances may also affect the determination of the law governing the agency agreement.
Procedural Rules (articles 409 and following of the CPC): absent any different choice, Italian courts might have jurisdiction as Italy is the place of performance of the services. However, the above-mentioned rules should not apply if the agent has no seat or residence in Italy.
Conclusive remarks
Hopefully this analysis, though not exhaustive, can help understanding the possible consequences of applying Italian law to an international agency agreement, and to make prudent choices when drafting the agreement. As always, we recommend not to rely on standard contract forms or precedents without having paid due attention to all the circumstances of each case.
多数原则是有限公司的一个关键方面, 当公司的股本平均分配给两个对立的股东(各占50%)时,多数原则就会陷入危机。在这个情况下,只有一致同意才能批准决策,这显然会导致僵局,使公司的管理陷入瘫痪。
股东之间的不可调和的分歧可导致公司解散。为了避免这种情况,公司已经设计了几种策略,其中之一就是所谓的“俄罗斯轮盘条款”。
在僵局情况下,股东可能同意采取俄罗斯轮盘条款,其条款的作用是重新分配股份,从而重新开始经营活动。
该条款规定:在某些触发事件发生时,两个股东之一(或两者,如果同意的话)有权决定其50%的股本价值。因此,他/她将另一位股东置于一个简单的选择之前:以他/她提议的价格购买“发行”股东的股份,或以相同的价格将他/她自己的股份出售给“发行”股东。
内部或外部:激活俄罗斯轮盘赌条款的人来决定价格和涨价是不允许的。价格的单方决定是由失去自己股份的风险来平衡的。其实,最终的选择取决于未确定价格的股东。
The Italian Budget Law for 2017 (Law No. 232 of 11 December 2016), with the specific purpose of attracting high net worth individuals to Italy, introduced the new article 24-bis in the Italian Income Tax Code (“ITC”) which regulates an elective tax regime for individuals who transfer their tax residence to Italy.
The special tax regime provides for the payment of an annual substitutive tax of EUR 100.000,00 and the exemption from:
- any foreign income (except specific capital gains);
- tax on foreign real estate properties (IVIE ) and tax on foreign financial assets (IVAFE);
- the obligation to report foreign assets in the tax return;
- inheritance and gift tax on foreign assets.
Eligibility
Persons entitled to opt for the special tax regime are individuals transferring their tax residence to Italy pursuant to the Italian law and who have not been resident in Italy for tax purposes for at least nine out of the ten years preceding the year in which the regime becomes effective.
According to art. 2 of the ITC, residents of Italy for income tax purposes are those persons who, for the greater part of the year, are registered within the Civil Registry of the Resident Population or have the residence or the domicile in Italy under the Italian Civil Code. About this, it is worth noting that persons who have moved to a black listed jurisdiction are considered to have their tax residence in Italy unless proof to the contrary is provided.
According to the Italian Civil Code, the residence is the place where a person has his/her habitual abode, whilst the domicile is the place where the person has the principal center of his businesses and interests.
Exemptions
The special tax regime exempts any foreign income from the Italian individual income tax (IRPEF).
In particular the exemption applies to:
- income from self-employment generated from activities carried out abroad;
- income from business activities carried out abroad through a permanent establishment;
- income from employment carried out abroad;
- income from a property owned abroad;
- interests from foreign bank accounts;
- capital gains from the sale of shares in foreign companies;
However, according to an anti-avoidance provision, the exemption does not apply to capital gains deriving from the sale of “substantial” participations that occur within the first five tax years of the validity of the special tax regime. “Substantial” participations are, in particular, those representing more than 2% of the voting rights or 5% of the capital of listed companies or 20% of the voting rights or 25% of the capital of non-listed companies.
Any Italian source income shall be subject to regular income taxation.
It must be underlined that, under the special tax regime no foreign tax credit will be granted for taxes paid abroad. However, the taxpayer is allowed to exclude income arising in one or more foreign jurisdictions from the application of the special regime. This income will then be subject to the ordinary tax rule and the foreign tax credit will be granted.
The special tax regime exempts the taxpayer also from the obligation to report foreign assets in the annual tax return and from the payment of the IVIE and the IVAFE.
Finally, the special tax regime provides for the exemption from the inheritance and gift tax with regard to transfers by inheritance or donations made during the period of validity of the regime. The exemption is limited to assets and rights existing in the Italian territory at the time of the donation or the inheritance.
Substitutive Tax and Family Members
The taxpayer must pay an annual substitutive tax of EUR 100,000 regardless of the amount of foreign income realised.
The special tax regime can be extended to family members by paying an additional EUR 25,000 substitutive tax for each person included in the regime, provided that the same conditions, applicable to the qualifying taxpayer, are met.
In particular, the extension is applicable to
- spouses;
- children and, in their absence, the direct relative in the descending line;
- parents and, in their absence, the direct relative in the ascending line;
- adopters;
- sons–in-law and daughters-in-law;
- fathers-in-law and mothers-in-law;
- brothers and sisters.
How to apply
The option shall be made either in the tax return regarding the year in which the taxpayer becomes resident in Italy, or in the tax return of the following year.
Qualifying taxpayer may also submit a non-binding ruling request to the Italian Revenue Agency, in order to prove that all requirements to access the special regime are met. The ruling can be filed before the transfer of the tax residence to Italy.
The Revenue Agency shall respond within 120 days as from the receipt of the request. The reply is not binding for the taxpayer, but it is binding for the Revenue Agency.
If no ruling request is filed, the same information provided in the request must be provided together with the tax return where the election is made.
Termination
The option for the special tax regime is automatically renewed each year and it ends, in any case, after fifteen years from the first tax year of validity. However, the option can be revoked by the taxpayer at any time.
In case of termination or revocation, family members included in the election are also automatically excluded from the regime.
After the ordinary termination or revocation, it is no longer possible to apply for the special tax regime.
The author of this post is Valerio Cirimbilla.
On 25 May 2018, the EU Regulation 2016/679 came into force, concerning the “protection” of personal data (hereinafter the “Regulation” or “GDPR”). It is a Community legislative instrument aimed at strengthening the right of natural persons to have their personal data protected, which has been elevated to “fundamental right” in the Charter of Fundamental Rights of the European Union (Article 8 paragraph 1) and in the Treaty on the Functioning of the European Union (Article 16 paragraph 1).
The Regulation has a direct application in Italian law and does not require any implementation by the national legislator. These provisions prevail over national laws. From a practical standpoint, this means that, in the event of a conflict between a provision contained in the Regulations and one provided for in the “old” Legislative Decree 196/2003, the earlier would prevail over the latter.
The GDPR consists of 99 articles, of which only some constitute an in comparison with the preceding regime and bear specific relevance for the owners/managers of accommodation facilities.
Indeed, the first novelty concerns the “explicit consent” for the processing of “sensitive” data and the decisions based on automated processing (including profiling -Article 22- ). It is, in fact, necessary for the client to express his consent in relation to the processing of these data independently of that relating to other data. The consent obtained before 25 May 2018 remains valid only if it meets the requirements below.
It is required, for example, that the data owners modify their websites or promotional newsletters addressed to the customers. The latter need to be aware of the purposes for which the data is collected and of rights to which they are entitled. In order to subscribe to the newsletter, only the email address should be necessary, and if the owners request for more data, the purposes of such request ought to be specified. Before sending the subscription request, the customer must give his consent and accept the privacy policy. The privacy statement must be clearly accessible from the home page of the website. In particular, as to the newsletter, the privacy policy must also be indicated and linked in the relevant registration box.
Substantial changes were also introduced in relation to the duties of the Data Controller and the Data Processor. Both profiles are important in the hotel industry.
Now the Data Controller must (i) be able to prove that the data subject has consented to a specific processing, (ii) provide the contact details of the Data Protection Officer, (iii) declare the eventual transfer of the personal data towards third countries and, if so, through which means the transfer takes place, (iv) specify the retention period of the data or the criteria employed to establish the retention period, as well as the right to file a complaint with the supervisory authority; (v) indicate whether the processing involves automated decision-making processes (including profiling), and the expected consequences for the data subject concerned.
The Data Protection Officer (“DPO”), on the other hand, is a professional (who can be internal or external to the structure) who guarantees the observance of the rules of the GPDR and the management and processing of the data.
According to the new Regulation, the duties of this professional concern: (i) the keeping of the data processing reports (pursuant to Article 30, paragraph 2, of the Regulation), and (ii) the adoption of suitable technical and organisational measures to get the safety of the procedures (pursuant to Article 32 of the Regulation).
The name of the DPO must be indicated in the privacy policy to be delivered to the customer. The relationship between the data protection officer and the data controller is governed by a contract that must strictly regulate the subjects set forth in paragraph 3 of the article 28 in order to demonstrate that the manager provides “sufficient guarantees” for the correct management and processing of data. The Officer can appoint a “sub-manager” but only for limited processing activities, in compliance with the provisions of the contract, and responds to the non-compliance of the sub-manager.
In light of these provisions, the hotels will then have to make a more careful assessment of the risk deriving from data processing, prepare a detailed procedure as to enable the constant monitoring on, amongst others, the suitability of the treatment, and promptly notify a breach of the security procedure which involves the accidental disclosure of data, adapt its information to be delivered to the customer.
Finally, it is worth noting that the penalties for violations of the GDPR can be very significant and reach up to 4% of the company’s turnover. As such, they are far more severe than those previously specified. It is, therefore, necessary to pay close attention to compliance with the GDPR since an incorrect or defective application can cause severe prejudices to the company.
The author of this post is Giovanni Izzo.
Over the last year, the escalation of cryptocurrencies has aroused a number of issues and controversial debates for the lack of regulation in most jurisdictions, including Italy where the only regulation of the cryptocurrency phenomenon is set by the AML legislation. According to the Italian law, cryptocurrencies do not have legal tender status, the regulators have qualified cryptocurrencies as means of exchange different from e-money, which, however, can be converted into Euro for purchasing virtual currency as for selling such currency; moreover, they can be used to buy both virtual and real goods and services. As a matter of fact, the lack of regulation concerning cryptocurrencies as a form of currency and a financial instrument does not prevent the trade and use of cryptocurrencies not only as means of payment but also as contribution to fund the share capital of limited liability companies.
On July, 18th, the Court of Brescia has denied the validity of a resolution increasing the share capital of a limited liability company subscribed for by certain utility tokens because the relevant contribution (equal to Euro 714,000) didn’t comply with Article 2464 of the Civil Code. The Court has not banned the contribution of cryptocurrencies but based on that case it has remarked the criteria governing contributions in kind which were not met for the subscription of the increase of share capital as resolved by the company; giving that, and starting from this assumption, it is possible to highlight criteria requested by the Italian law to contribute cryptocurrencies into share capital.
Any (tangible and intangible) asset can be contributed into the share capital of joint-stock companies (S.p.A.) and limited liability companies (S.r.l.) to the extent that they have an indisputable economic value (as proved by a sworn appraisal from an expert who issues the relevant report) and a potential market where they can be exchanged and/or converted into cash. The report must be focused on the description of the contributed assets, the reference of the adopted criteria of evaluation, and the certification that their value is, at least, equal to the one assigned at the moment of the subscription of the capital and of the premium, if any. As a matter of fact, the function of the share capital is to guarantee the creditors in relation to the company liabilities, as a consequence it is mandatory that the economic value of the share capital must be indisputable and in compliance with the law, especially when including cryptocurrencies or digital assets.
Moving on the case, the cryptocurrencies contributed were issued by a company based in Bulgaria, they were utility tokens used as mean of payment for buying goods and services on a web platform, owned by the issuers of these digital assets. Hence these tokens were not traded in any exchange platform where it is possible to fix an indisputable exchange rate and then the relevant economic value. Indeed, the Court has reasoned the direct proportion between the value of the contribution into the equity and the existence of exchanges where the value of the cryptocurrency would have been set. Moreover, the Court has stated the lack of enforceability of the tokens contributed. Under the practical side, the contribution of cryptocurrencies has to be made by reporting the private key from the contributor to the company, giving that the enforceability of cryptocurrencies by a pledge can be done subject to the collaboration and the consent of the contributor who has to disclose the private key; should the contributor refuse to disclose the private key, the enforceability of the pledge on the tokens would be undermined.
To sum up, in theory the contribution of cryptocurrencies into equity is not forbidden under the Italian law, however giving its questionable nature, it is still controversial how to guarantee the compliance with the mandatory requirements for the contribution in kind.
This case history and the order of the Court of Brescia give us the opportunity to provide the Italian picture on cryptocurrencies.
The Italian crypto-scenario is quite effervescent since the beginning of 2017; indeed, Italy was the first European country to define the virtual currency and the exchanger according to the new AML legislation. This is not strange considering that the anonymity surrounding cryptocurrencies, which varies from complete anonymity to pseudo-anonymity, prevents cryptocurrency transactions from being adequately monitored, allowing shady transactions to occur outside of the regulatory perimeter and criminal organisations to use cryptocurrencies to obtain easy access to “clean cash”. Anonymity is also the major issue when it comes to tax evasion.
The AML Law
Legislative Decree no. 90 of May 25th 2017, which reformed legislative decree no. 231/2007, introduced definitions of exchanges and virtual currencies and provided a set of rules for the exchanges to comply with the anti-money laundering rules.
Virtual currency means “a digital representation of value that is neither issued by a central bank or a public authority, nor attached to a legally established fiat currency, which can be used as a means of exchange for the purchase of goods and services and transferred, stored and traded electronically.” Virtual currencies within the scope of AMLD5 and of the Italian AML Law are those that can be transferred, stored and traded electronically. Until now, other virtual currency schemes are not in scope, including virtual currencies used to attain goods and services without requiring exchange into legal tender or similar instruments, or the use of a custodian wallet provider.
Exchanges are defined as virtual service providers: “any natural or legal person providing professional services to third parties for the use, the exchange, the related storage of virtual currencies and for the conversion from or in currencies having legal tender [.]” Given this scope, they are subject to anti-money laundering regulations and, therefore, they have to obtain a sort of licence and be listed in a special register to operate in Italy. Considering this definition, it seems that a material number of key players are not included in AML law, for example miners and pure cryptocurrency exchanges that are not custodian wallet providers, hardware and software wallet providers, trading platforms and coin offerors. This choice of the legislator leaves blind spots in the fight against money laundering, terrorist financing and tax evasion. However, a decree of the Ministry of Economy and Finance (MEF) is under discussion, which seeks to extend the monitoring not only to exchanges but also to those subjects that accept cryptocurrencies for the sale of services and goods.
As said, apart from the AML Law, there is a lack of regulation which undermines the grade of protection of users and investors.
The protection of users/investors
One of the issues which prevents or undermines the grade of the protection is that crypto markets and crypto players can be located in jurisdictions that do not have effective money laundering and terrorist financing controls in place or do not have any regulation for their offering to the investors. Moreover, against the risk of default of the platform or the exchanges there is very little to do to protect investors especially at a cross-border level.
The protection of users/investors depends on several factors, the first one being the nature of the cryptocurrencies in question and the crypto-platforms (i.e. what they are, where they are based and whether they are compliant with the Italian law).
The nature of the cryptocurrencies has to be identified on a case-by-case basis. If qualified as securities (standard financial products which are transferable and generate profits), the prospectus rules should apply, this meaning that a prospectus is required under the Consolidated Financial Law (“Testo Unico Finanza” or “TUF”) to disclose significant financial risks to investors. If they are a hybrid made up of a means of payment and an investment component, the application of the TUF provisions is controversial.
From a criminal perspective, users/investors can be protected in case of fraud irrespective of the above factors. The general remedies under the criminal law apply.
The landmarks for investors’ protection are:
- The AML Law defining the subjects obliged to declare their activities in the cryptocurrencies world (e. the custodian wallet providers and the virtual currency exchanges);
- The TUF rules, inter alia, the prospectus regulation; and
- The Consumers’ Code rules the mandatory provisions on the “form and pre-contractual information”.
The common ground of civil actions is the disclosure of pre-contractual information to investors and the compliance of crypto-platforms and exchanges with the Italian law.
Civil actions might be brought against platforms:
- Pursuant to Articles 50 and 67 of the Consumers’ Code, according to which any contract must provide consumers with mandatory “pre-contractual information”.
- Pursuant to Article 23 of the TUF, according to which any contract providing investment services must be in writing and “failure to comply with the prescribed form shall render the contract null and void”.
In 2017, the Court of Verona declared a contract null and void because of its breach of the mandatory provisions on the “form and pre-contractual information” and ordered the refund of the money to the consumer. From the consumers’ perspective, all the information about the nature, the risks and the features of any cryptocurrency must be provided in advance to individuals in a transparent manner. As a matter of fact, the Court of Verona has reasoned that any online agreement between parties, implying the exchange of real money for virtual money, represents a financial service or rather “a paid service.” The Court judged that the contract between the exchange and the Italian consumer was null and void, as the IT service firm breached the obligations set forth by Articles 50 on “distance contracts” and 67 of the Consumers’ Code, which provide as mandatory the “form and pre-contractual information” to be provided to consumers. Lastly, the Court ordered to return to the Italian plaintiff the amount invested in cryptocurrencies.
For the sake of completeness, the consumers’ protection has been achieved also by the Italian Antitrust Authority (i.e. the non-governmental organization focused on consumer protection), which stopped the operations of several affiliates of OneCoin, the digital currency investment scheme widely accused of fraud.
In 2017, Consob (National Authority for the Stock Exchange) banned the advertisement and then the offer of investment portfolios containing cryptocurrencies, made in breach of the prospectus regulation.
Pursuant to Article 101, Par. 4, Part c) of the TUF, Consob has prohibited the advertising – via the website www.coinspace1.com – of the public offer for ‘cryptocurrency extraction packages’ launched by Coinspace Ltd (Resolution no. 19968 of April 20th 2017). The offer had already been the subject of a precautionary 90-day suspension. Moreover, on December 6th, 2017, pursuant to resolution no. 20207, under Article 99, paragraph 1, letter d) of the TUF, Consob banned the offer to the Italian public of “investment portfolios” carried out without the required authorizations by Cryp Trade Capital through the website https://cryp.trade. A few months later, in March 2018, the website https://cryp.trade was subjected to precautionary seizure by the Criminal Court of Rome pursuant to Article 166 of the TUF (a criminal provision which punishes those who carry out financial services and activities without Consob’s authorization). The common ground of these resolutions issued by Consob is the absolute lack of the mandatory information and prospectus set forth by the TUF for entities providing financial services to Italian investors trading in cryptocurrencies and cryptocurrency-related products. Given the application of the TUF, pursuant to Article 23, any contracts for the provision of investment services must be in writing and “failure to comply with the prescribed form shall render the contract null and void”.
Both resolutions have remarked how the Italian versions of the websites were the evidence that those offers were targeted to the Italian market, therefore Consob has set the criteria to identify the territoriality of the crypto-platforms subject to the Italian law which is: “where the cryptocurrencies are intended to be offered to the public”.
To complete this overview, some highlights follow on ICOs and the tax regime of cryptocurrencies in Italy.
ICOs
Initial Coin Offerings (ICOs) are not regulated by the Italian law. In ICOs the funding collected by a start-up could also be exchanged for an equity token (very similar to securities and then embodying an interest in the issuing start-up) or a utility token, which entitles the holder to exchange it for goods or services provided by the same start-up.
ICOs are very controversial (even if not yet officially banned by Consob), as they issue equity tokens that, due to their similarity to securities, can be offered to the public of investors only by entities duly authorized by the regulators, according to the TUF. As far as utility tokens, in theory their issuance might be allowed subject to a strict set of contractual rules, in order to protect investors as much as possible. However, the ICOs market has not taken off, yet.
The tax regime
For Italian tax purposes, the taxation of cryptocurrencies is not regulated by Law. Nonetheless, the Italian Revenue Agency issued a Ruling in May 2018 providing that gains on virtual currency for individuals trading outside a business activity are treated as gains arising from the disposal of traditional foreign currency. Consequently, gains relating to forward sale are always taxable, rather gains relating to forward sale are taxable only to the extent that, during the tax period, the average amount of the overall virtual currency maintained by the taxpayer exceeds the equivalent of EUR 51,645.69 for seven days in a row (the exchange rate to use is the one given by the website where the individual carried out the transaction). Any gain is therefore subject to 26% withholding tax. Additionally, the taxpayer must comply with the tax monitoring duties in the Individual Tax Return though he is not exempted from wealth tax (IVAFE), to the extent that virtual currency is not held through institutions or other authorized intermediaries by the Bank of Italy.
The same regulatory uncertainty put on the taxation of corporations trading in virtual currency. In a Ruling issued in September 2018, the authorities submitted that exchanges of bitcoins for legal currency constitute, for income tax purposes, a taxable event subject to Ires (24%) and Irap (3.9%).
For indirect tax purposes, the authorities confirmed that trading in bitcoins and other virtual currencies is similar to the activity of an intermediary negotiating in financial instruments, and, as a consequence, it is exempt from VAT under the Italian provision implementing article 135(1)(e) of the VAT Directive (2006/112). Therefore, when bitcoins are exchanged for real currencies, no VAT is due on the value of the bitcoins themselves.
The author of this post is Milena Prisco.
It is often the case – in practice – that an ongoing commercial relationship builds slowly over time through a series of sales agreements, without the parties ever signing an actual distribution agreement to set down their respective rights and responsibilities.
At first blush this might appear to be a good thing: one can sidestep being bound, especially long-term, to the other party. But on closer scrutiny the solution becomes problematic, especially for anyone operating internationally.
One of the key issues that arises when an international contractual arrangement is not in writing, is identifying the court with jurisdiction over any dispute arising therefrom. In the European Union, the issue is resolved by the provisions of Regulation 1215/2012 (“Brussels I recast”). Pursuant to Article 7 of the Regulation, as an alternative to the defendant’s courts, jurisdiction in a contractual dispute may lie with the court in the place of performance of the obligation in question. Next to this general rule are two criteria to identify the “place of performance”, differentiated according to the type of contract at issue. For a contract for goods, it is the place of delivery for the goods; in a contract for services, it is the place where the services are provided.
Thus, to identify the court with jurisdiction, it is crucial that a contract fall under one of these categories: goods or services.
No doubt this distinction is quite simple in many circumstances. In the case of a distribution agreement, or of a commercial concession agreement, the issue may become thorny.
The European Court of Justice has analysed this issue on a number of occasions, most recently in their judgement of 8 March 2018 (Case no. C-64/17) following the request for a preliminary ruling from a Portuguese Court of Appeal. The parties to the action were a Portuguese distributor, a company called Lusavouga, and a Belgian company called Saey Home & Garden, that produced articles for the home and garden, including a line of products branded “Barbecook”.
Following Saey’s decision to break off the commercial relationship – notice of which was sent in an email dated 17 July 2014 – Lusavouga brought action in Portugal seeking compensation for the unexpected termination of the agreement, and goodwill indemnity. Saey raised a plea of lack of jurisdiction of the Portuguese court, citing their general conditions of sale (mentioned in their invoices) which required that a Court in Belgium be competent for dispute resolution.
The facts thus presented two issues to be resolved in light of the Brussels I recast Regulation: deciding whether a jurisdiction clause in a vendor’s general terms and conditions pursuant to Art. 25 of the Regulation shall apply, and, if not, choosing the court with jurisdiction under Art. 7 of the Regulation.
Shall a jurisdiction clause contained within a vendor’s general terms and conditions apply to a distribution relationship?
The supplier company apparently considered their course of dealing with the Portuguese retailer nothing more than a concatenation of individual sales of goods, governed by their general terms and conditions. Consequently, they argued that any dispute arising from the relationship should be subject to the jurisdiction clause identifying Belgium as the court with jurisdiction under those terms and conditions.
Thus, a determination was needed on whether, under these facts, there was a valid prorogation of jurisdiction under Article 25, paragraph 1 of Regulation 1215/2012.
The Court of Justice has long opined that if the jurisdiction clause is included in the general contract conditions drafted by one of the parties, the contract signed by the other party must contain an express reference to those general conditions in order to ensure the real consent thereto by the parties (judgement of 14 December 1976, Estasis Salotti di Colzani, case no. 24/76; judgement of 16 March 1999, Castelletti, case no. C-159/97; judgement of 7 July 2016, Höszig, case no. C-225/15). Moreover, to be valid, the clause must involve a particular legal relationship (judgement of 20 April 2016, Profit Investment SIM, case no. C-366/13).
In the instant case, the referring court found it self-evident that the legal relationship at bar was a commercial concession agreement entered into for the purpose of distributing Saey products in Spain, a contract that was not evidenced in writing.
From this perspective, it is clear that the general conditions contained in the Saey invoices could have no bearing on the commercial concession agreement: assuming Lusavouga’s consent had been proven, the selection of Belgium as the forum would have applied if anything to the individual sales agreements, but not to those duties arising from the separate distribution agreement.
What, then, would be the court with jurisdiction for the duties arising from the commercial concession agreement?
Absent any jurisdiction clause, the issue would be decided under Art. 7, point 1 of Regulation 1215/2012, under which it becomes imperative to establish whether a contract is for goods or for services.
The “provision of services” has been defined by the Court of Justice as an activity, not mere omissions, undertaken in return for remuneration (judgement of 23 April 2009, Falco, case no. C-533/07).
With the judgements in Corman Collins of 19 December 2013 (case no. C-9/12), and Granarolo of 14 July 2016 (case no. C-196/15), the Court held that in a typical distribution agreement, the dealer renders a service, in that they are involved in increasing the distribution of supplier’s product, and receives in consideration therefor a competitive advantage, access to advertising platforms, know-how, or payment facilities. In light of such elements, the contract relationship should be deemed one for services. If on the other hand the commercial relationship is limited to a concatenation of agreements, each for the purpose of a delivery and pickup of merchandise, then what we have is not a typical distribution agreement, and the contractual relationship shall be construed as one for the sale of goods.
Once the contract has been categorised as one for services, one must then determine “the place where, under the contract, the services are provided”. The Court specifies that such location shall be understood as the member state of the place of the main provision of services, as it follows from the provisions of the contract or – as in the case at issue – the actual performance of the same. Only where it is impossible to identify such location shall the domicile of the party rendering the service be used.
From the referring court’s description of the contractual relationship, and from the Court of Justice’s understanding of the distributor’s performance of services, it would be logical to find that the principal location for performance of services was Spain, where Lusavouga “was involved in increasing the distribution of products” of Saey.
It is clear that neither the manufacturer nor the distributor would ever have intended such a result, and they might have avoided it being chosen for them by reducing their agreement in writing, including a jurisdiction clause therein.
By the same token, viewed from the outside, the Portuguese judges’ apparent conviction that the situation was one of an actual dealership contract would leave ample room for debate. After all, a number of elements would lead to the opposite conclusion. However, even in terms of that aspect, the absence of a written contract left room for interpretation that might lead to unforeseen – and perhaps rather risky – consequences.
In conclusion, the wisdom of setting down the terms and conditions of a sales distribution agreement in writing appears clear. This is not only because one can avoid those ambiguities we have described above, but also because it specifies other important clauses stipulated by the parties that should not be left to chance: exclusivity of area, if any, or with respect to specific sales channels, the contract period and termination notice, any duties to promote the product, control over end-user personal data, and the possibility of, and methods for, any online sales of products.
The relationship between influencers and advertising is one of the most interesting topic of the recent years, and one to which many operators in the sector are devoting energy and money.
In this article we will return to talk about the legal problems that influencer marketing makes it necessary to analyze.
There are many problematic profiles that can arise from the activity of influencers, pursuant to a fundamental principle of advertising discipline: any form of commercial communication and/or advertising must clearly be recognizable as such.
It is known that influencers, thanks to the reputation they have on social network, Instagram among all, are often paid to post pictures that portray them along with products given for free companies that have sponsored the post itself. The situation described can well be considered as a real advertising activity, considering that there is an individual that receive remuneration for promoting a product to the community. However, in the sponsored post there is no mention of the fact that the activity carried out by influencers is a genuine and effective advertising activity: the influencers simply post the picture and describe the product , obviously in a positive way, as if it were “a private story in the style of Instagram” (injunction of the Italian Advertising Self-Regulatory Institute (IAP) Control Committee no. 57/2018).
It is certainly on the basis of these considerations that, in the last two months, we have assisted to a real crackdown in the IAP, the Italian Advertising Self-Regulatory Institute (“Istituto di Auto-disciplina Pubblicitaria). The IAP Control Committee notified many influencers, as well as the companies producing the good displayed in the sponsored posts, injunctions aimed at inhibiting the publication of certain posts released by the influencers themselves.
The common element of all these injunctions is the criticism of a behavior that showed a purely advertising activity as if it were a spontaneous choice of the influencer. This circumstance leads to a situation in which, using the words of the IAP injunction No 61/2018 of 14 June 2018, there are “communication conveying eminently promotional content of the product and the brand in question, that is however not sufficiently explicit and therefore not immediately recognisable to the public”.
In fact, what is being contested in the above-mentioned injunctions, but also in others, such as in the injunction no. 51/2018, is the violation of art. 7 of the Italian Marketing Communication Self-Regulation Code (“Codice di auto-disciplina pubblicitaria). The code is the source of the above-mentioned principle that states that any form of commercial communication must always be recognisable as such. Furthermore, the Code says that “in the means and forms of commercial communication in which contents and information of other kinds are disseminated, commercial communication must be clearly distinguished by means of appropriate measures“.
The measures taken by the Control Committee involve not only influencers, but also companies, as the latter actually benefit from an activity that can be considered a form of surreptitious advertising.
Please, allow me a note.
Take for example the injunction no. 50/2018, regarding two Instagram’s posts of the influencer Chiara Nasti, that portrayed her with products marked with the trademark “Sunsilk”: having noted that the two posts of Nasti’s Instagram profile violated the above-mentioned art. 7 of the Italian Marketing Communication Self-Regulation Code, the injunction states the essential need for “transparency of communications“, that allows an effective distinction, and not a merely formal one, of promotional communications from any other type of communication.
Analyzing the guidelines elaborated on this matter by the IAP, the so-called “Digital Chart”, it results that it is considered compliant for the purpose of the recognition of an advertising communication as such, that a post on Instagram or on another social network presents the hashtag #advertising, or even simply the hashtag #ad.
In this respect, the IAP’s guidelines may leave a little baffled. In fact, while recognizing that the choice in question is an attempt to mediate between the need to protect the consumer and the activity of influencer, it is legitimate to doubt about the effectiveness of the hashtag #ad. As a matter of fact, it is reasonable to doubt that the hashtag #ad, written under a picture on a social network, is in itself suitable to make it clear to the user and to the average consumer that the post ha an advertising message. In fact, it can be assumed that many users do not know that the term “ad” is the abbreviation for “advertising”, especially considering that the average user of influencers is represented by young people aged between 14 and 18 years. In a nutshell, the hashtag #ad would be able to “disguise” the advertising activity.
On the other hand, the Italian Competition Authority (AGCM – Autorità Garante della Concorrenza e del Mercato) and some German judges (and the German legal system is known to be particularly attentive to new technologies law) also reached these conclusions. In this respects, it is worth reading the Case 13 U 53/17 of the Celle Higher Regional Court, that concerns to precisely the hashtag #ad and reaches conclusions similar to those mentioned above.
It should also be noted that, so far, it has been mentioned the Italian Marketing Communication Self-Regulation Code, a regulatory text issued by the IAP, whose injunctions or decisions bind exclusively the companies adhering to its system of self-regulation.
However, it is clear that, in cases such as those described above, is applicable a specific Italian legislation, the so-called Consumer Code (Legislative Decree no. 206/2005 – Codice del Consumo), Furthermore, surreptitious advertising violates the prohibition of misleading and unfair commercial practices, as stated in various articles of the Consumer Code.
The consequences are relevant, because the Consumer Code and its Implementing Regulations implicate the intervention of the Italian Competition Authority (AGCM) or the Italian Regulatory Authority for Communications (Agcom – Autorità Garante per le Comunicazioni), both having sanctioning powers toward any person (with particular reference to financial sanctions).
What arises from this brief examination is that this phenomenon is particularly interesting and widespread throughout the world.
The author of this post is Elena Carpani.
Last 7 June, legislative decree no.63 of 11 May 2018 implementing EU Directive no.2016/943 of 8 June 2016 on “on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure”, was published in the Official Journal of the Republic of Italy, pursuant to article 15 of Delegated Law no. 163 of 25 October 2017.
The purpose of this act was twofold: on the one hand, it assisted in matching the already existing Italian legislation – in particular, articles 98 and 99 of the Italian Code of Industrial Property – with the new EU legislation; whilst, on the other hand, it implemented new and more effective provisions of law on the protection of trade secrets.
The European Union introduced Directive no. 943/2016 in order to harmonize and ensure consistent protection of know-how and trade secrets on European level: in fact, irrespective of article 39 of the TRIPs Agreement, Italy was the only EU member having a domestic definition and a specific protection of trade secrets and no EU law has been passed governing their unlawful acquisition, use or disclosure. This factor weakened the ability of several countries to protect one of the most prominent intangible assets for industry 4.0 and next-generation innovative businesses.
Amid this European scenario, Italy maintained a privileged position vis-à-vis most of the other Member States, since provisions for specific protection of business know-how and confidential information had already been laid down under articles 98 and 99 of the Italian Code of Industrial Property. This is why Italian lawmakers intervened in articles 98 and 99 of the Italian Code of Industrial Property to merely replace the former language “business information and expertise” with the notion of “trade secrets”, while basically leaving the protections envisaged in article 98 of the Italian Code of Industrial Property unchanged to its earlier version, which was already in line with the EU rules.
Apart from this, the legislative decree supplemented the applicable rules and improved the standards of protection of trade secrets, pursuant to EU Directive no. 2016/943, to enable judicial decisions in protection of trade secrets to be weighed against, inter alia, the significance of such information, its importance for the claimant, and the precautionary measures implemented by the owner thereof.
In the first instance, paragraph 1-bis of article 99 of the Italian Code of Industrial Property has been introduced to take negligent behaviours into consideration on the matters of infringement of trade secrets, so that the acquisition, use, or disclosure of trade secrets may be held unlawful even when, at the time of the challenged circumstances, the individual was, or should have been, aware, as the case may be, that the trade secrets had been directly or indirectly obtained by the party that unlawfully used or disclosed them.
Quite the reverse, article 9, paragraph I, of the Directive has been fully implemented in article 121-ter on the preservation of confidentiality of trade secrets in the course of legal proceedings, irrespective of these being for precautionary measures or on the merits of the unlawful acquisition, use or disclosure of such trade secrets. According to such new provision of law, any (ordinary, civil or criminal, administrative or accounting) court of law will be entitled to prevent the counterparties, their representatives and advisors, legal counsels, clerical staff, witnesses, any court-appointed or delegated experts, and any other persons having access to the decisions, briefs and documents included in the court file, from using or disclosing the trade secrets discussed in the proceedings that the court may classify as confidential. In addition, it is expressly provided that such a prohibition shall maintain full force and effect after the conclusion of the proceedings in which scope it was imposed, while vice versa its effectiveness will be forfeited (i) in the event that the lack of the requirements set out in article 98 of the Italian Code of Industrial Property in order to have a valid trade secret is assessed by ruling, or (ii) where the trade secrets fall in the public domain or become easily accessible to industry players and experts.
Furthermore, in the same article specific measures were laid down for the preservation of confidentiality of trade secrets in the course of legal proceedings: hence, subject to compliance with the principles of fair trial, the judge will be entitled to adopt the most appropriate measures to preserve the confidentiality of the trade secrets discussed in the trial. Besides, the article explicitly sets forth two of the measures available to the judge: i.e., restricting access to hearings, briefs and documents included in the court file; and ordering the clerks to conceal the specific parts containing the trade secrets from the documents filed in the proceeding. However, because policymakers did not deem it appropriate to enable the judicial authorities to impose such prohibitions and measures by operation of law, they preferred leaving any request in this respect to the parties’ initiative, owed to the apparent high technical expertise required to appraise the confidential nature of such trade secrets.
With a view to ensuring a more accurate and effective preservation of trade secrets, criteria have been laid down (in article 124, paragraph 6-bis, of the Italian Code of Industrial Property), which the Judge will be bound to uphold when establishing the remedies and civil sanctions – and assessing whether these are suitable – in the proceedings on the matters of unlawful acquisition, use or disclosure of trade secrets under article 98. For this purpose, the Court is required to take into consideration the material circumstances of the case at issue, among which:
- the value and other specific features of the trade secrets;
- the measures implemented by the legal holder to protect the trade secrets;
- the actions carried out by the infringer to acquire, use or disclose the trade secrets;
- the impact of the unlawful use or disclosure of the trade secrets;
- the parties’ legitimate interest, and how this may be affected by the endorsement or rejection of the judge’s measures;
- the legitimate interest of third parties;
- the interests of the general public; and
- the need to ensure protection of the fundamental rights.
Not only will the Judge be bound to take these circumstances into consideration in the course of the proceedings on the merits, but also upon issuance of the precautionary measures sought by the trade secrets holder, and upon appraisal of their suitability, based on the explicit warning contained in new paragraph 5-ter of article 132 of the Italian Code of Industrial Property. Consequently, the Judge will issue a preliminary injunction or another interim measure only if the requesting company proved having adopted all the necessary measures and internal protocols to keep a given trade secret confidential.
According to new paragraph 5-bis of article 132 of the Italian Code of Industrial Property all proceedings aimed at seeking protective measures for trade secrets, as an alternative to the application of the precautionary measures, the judge may authorise the defendant to continue to use the trade secrets, subject to providing an appropriate security for compensation of any damages suffered by their legitimate holder, in any event, without prejudice to the prohibition to disclose the trade secrets authorised for use.
The precautionary measures adopted in protection of the trade secrets may be forfeited either for failure to commence the proceedings on the merits within the mandatory deadline (set out in article 132, paragraph 2, of the Italian Code of Industrial Property), or as a result of the claimant’s actions or omissions. Where the unlawful acquisition, use or disclosure of the trade secrets are subsequently found to be groundless, the claimant will be sentenced to repay the damages caused by the adopted measures.
As a further novelty, Legislative Decree no. 63/2018 introduced a compensation, payable as an alternative to the application of the measures under article 124 of the Italian Code of Industrial Property, which may be granted upon the interested party’s application, provided that all of the following requirements laid down by new paragraph 6-ter of article 124 of the Italian Code of Industrial Property are met: at the time of the use or disclosure, the claimant was not, nor should have been, aware that the trade secrets had been obtained by the third party unlawfully using or disclosing them; the execution of these measures would be unduly burdensome for the claimant; the compensation is commensurate to the damages suffered by the party seeking the application of relieving measures and, in any event, it does not exceed the amount that would have been paid on account of royalties for the use of the trade secrets throughout the challenged period of time.
A statute of limitations has been established in 5 (five) years for rights and actions connected with such misconducts.
As a final provision, in line with the availability of progressive measures and enhanced accuracy and effectiveness of trade secrets protections, which are the EU Directive basic principles, a list of the items is provided which the judge ought to appraise to order the publication of his ruling, and to weigh the suitability of the claimed measures: the value of the trade secrets; the actions carried out by the infringer to acquire, use or disclose the trade secrets; the consequences of the use or disclosure of the trade secrets; the risk of the infringer carrying on with the unlawful use or disclosure of the trade secrets.
Furthermore, to make the above appraisal the Judge shall also consider whether, based on the available information, a natural person may be identified as the actual infringer and, in the affirmative, whether the publication of such information is justified in the light of any potential damages that may be caused to the infringer’s private life and reputation.
In conclusion, articles 388 (wilful failure to enforce a court decision) and 623 of the Italian Criminal Code (disclosure of trade or science secrets) have been amended to improve the criminal reliefs granted under the Italian legal system, so as to include breach of trade secrets, and the measures connected therewith, among the misconducts sanctioned under the above provisions.
All that considered, a new approach in adopting internal rules and compliance’s procedures is required to companies and trade secrets owners in order to protect their confidential information and to safeguard their judicial protection and new language shall be adopted in drafting non-disclosure agreements: as a matter of fact NDAs were in the past very often merely copied and/or downloaded from the web without any juridical care and the due attention.
Application of GDPR to hotel businesses
3 11 月 2018
- 意大利
- 隐私与数据保护
- 赛车
When should an agency agreement be considered “international”?
Pursuant to the international private rules applicable in Italy (Art.1 Reg. 593/08 “Rome I”) an agreement is deemed “international” in the presence of “situations involving a conflict of laws”.
The situations which more often involve a conflict of laws in agency agreements– making them “international” – are (i) the principal’s seat being located in a country different from the agent’s seat country; or (ii) the agreement being performed abroad, even when the principal’s and the agent’s seats are both located in the same country.
When does Italian law apply to an agency agreement?
Under the “Rome I” Regulation, in principle Italian law may apply to an international agency agreement (i) if it is chosen by the parties as the law governing the agreement (either expressly, or as otherwise allowed by Art.3); or (ii) absent any choice of law, when the agent has its residence or seat in Italy (according to the “residence” concept under Article 19).
What are the main regulations of agency agreements in Italy?
The substantial regulations of agency agreements in Italy, with particular regard to the principal-agent relationship, can be found mainly in articles from 1742 to 1753 of the Civil Code. Such rules have been repeatedly modified following the adoption of the Directive 653/86/EC.
What is the role of the collective bargaining agreements?
Since many years, collective bargaining agreements (CBAs) have also been regulating agency agreements. These are agreements made on a regular basis between the associations representing principals and agents in different sectors (manufacture, trade and several others).
From a legal effectiveness perspective, a distinction can be drawn between two types of CBAs, i.e. CBAs having the force of law (effective “erga omnes”) – whose rules are however quite broad and thus have a limited scope of application – and CBAs of a contractual nature (“di diritto comune”) that have been signed from time to time over the years, and are meant to bind only those principals and agents which are members of those associations.
In general, CBAs intend to implement the Civil Code rules and those of the Directive 653/86. However, contractual CBAs often deviate from those rules, and some deviations are substantial. For example, CBAs allow a principal to unilaterally modify the agent’s territory, the contractual products, the range of customers, the commission. CBAs determine in a partially different manner the duration of the notice period when indefinite term agreements are terminated. CBAs have their own calculation of the agent’s remuneration for the post-contractual non-competition covenant. CBAs have peculiar regulations concerning the termination indemnity.
With particular regard to the contract termination indemnity, there have been serious issues of compliance between the CBAs and the Directive 653/86/CE. Indeed, such issues still remain unsolved despite some rulings from the EUCJ, because the Italian courts’ constant jurisprudence keeps the CBAs’ indemnity provisions in force.
According to the majority of scholarly opinions and case law, CBAs’ geographical scope of application is limited to the Italian territory.
Therefore, CBAs automatically apply to agency agreements which are governed by Italian law and are performed by the agent in Italy; but – in case of contractual CBAs – subject to the further condition that both parties are members to associations that entered into such Agreements. According to some scholars, it is sufficient that the principal alone is a member of such an association.
Even in the absence of such cumulative conditions, however, contractual CBAs may nonetheless apply if they are expressly referred to in the agency agreement, or their provisions are constantly complied with by the parties.
What are the other main requirements in agency agreements?
The “Enasarco”
Enasarco is a private law Foundation with which agents in Italy must be registered by law.
The Enasarco Foundation mainly administers a supplementary pension fund for agents, and a termination indemnity fund, called “FIRR” (referring to the termination indemnity as calculated in accordance with the criteria set forth by the CBAs in the different sectors).
Typically, a principal in a “domestic” agency agreement registers the agent with the Enasarco and pays contributions to both the above funds on a regular basis throughout the whole term of the agency agreement.
However, while registration and contribution to the pension fund are always mandatory as they are provided for by the law, contributions to the FIRR are instead mandatory only for those agency agreements which are governed by contractual CBAs.
Which rules apply to international agency agreements?
As far as registration with the Enasarco is concerned, the law and regulatory provisions are not so clear. However, important clarifications were provided by the Ministry of Labor in 2013 answering to a specific question (19.11.13 n.32).
Making reference to the European legislation (EC Regulation n.883/2004 as amended by Regulation n. 987/2009) the Ministry stated that registration with the Enasarco is mandatory in the following cases:
- agents operating in the Italian territory, in the name and on behalf of Italian or foreign principals having a seat or an office in Italy;
- Italian or foreign agents operating in Italy in the name and/or on behalf of Italian or foreign principals with or without a seat or office in Italy;
- agents residing in Italy and performing a substantial part of their activities in Italy;
- agents not residing in Italy, but having their main center of interest in Italy;
- agents habitually operating in Italy, but performing their activity exclusively abroad for a period not exceeding 24 months.
The above-mentioned Regulations obviously do not apply to those agency agreements that are to be performed outside the EU. Therefore, it should be checked case by case whether any international treaties binding the parties’ countries provide for the application of the Italian social security legislation.
Chamber of Commerce and Register of Businesses
Anyone wanting to start a business as a commercial agent in Italy, must file a “SCIA” (Certified Notice of Business Start) with the Chamber of Commerce having local jurisdiction. The Chamber of Commerce then registers the agent with the Register of Businesses if the agent is organized as a business entity, otherwise it registers the agent with a special section of the “REA” (List of Business and Administrative Information) of the same Chamber (see Legislative Decree n.59 dated 26.3.2010, implementing the Directive 2006/123/EC “Services Directive”).
Such formalities have replaced the former registration to the agents’ roll (“ruolo agenti”) which was abolished by said law. The new law also provides for a number of other mandatory requirements for agents wishing to start an activity. Such requirements concern education, experience, clean criminal records, etc.
Although failure to comply with the new registration requirements does not affect the validity of the agency agreement, a principal should nevertheless check that the Italian agent is registered before appointing him, as this is a mandatory requirement anyway.
Venue for disputes (art.409 and following of the Civil Procedure Code)
Pursuant to Article 409 and following of the Civil Procedure Code, if the agent mainly performs its contractual duties as an individual even if independently (so-called “parasubordinato” i.e. “semi-subordinate” agent) – provided the agency agreement is governed by Italian laws and Italian courts have jurisdiction – any disputes arising from the agency agreement shall be submitted to the Labor Court in the district where the agent is domiciled (see article 413 of the CPC) and the court proceedings shall be conducted according to procedural rules similar to those applicable to employment-related disputes.
In principle, said rules shall apply when the agent enters into the agreement as an individual or sole entrepreneur, while according to the majority of scholars and jurisprudence they do not apply when the agent is a company.
Applying the rules above to the most common situations in international agency agreements
Let’s now try to apply the rules described until now to the most frequent situations in international agency agreements, keeping in mind that those below are simple examples, while in the “real world” one should carefully check the circumstances of each specific case.
- Italian principal and foreign agent – agreement to be performed abroad
Italian law: it governs the agreement if chosen by the parties, without prejudice to any public policy (internationally mandatory) rules in the country where the agent has its residence and performs, pursuant to the Rome I Regulation.
CBAs: they do not govern the agreement automatically (because the agent performs abroad) but only when they have been expressly referred to in the agreement, or de facto applied. This could happen more or less intentionally, for example when an Italian principal uses with foreign agents the same contract forms as with Italian agents, which usually include many references to the CBAs.
Enasarco: typically, there are no registration or contribution obligations in favor of a non-Italian agent whose residence is abroad and performing his contractual duties only abroad.
Chamber of Commerce: there is no obligation to register in the above circumstances.
Procedural rules (article 409 and following, CPC): if Italian courts are properly chosen as the jurisdiction for all disputes, a foreign agent even if being an individual or sole entrepreneur may not take advantage of this provision to move the case to the courts of his own country. This is because art.413 cpc is a domestic provision on venue which presupposes the agent’s seat to be in Italy. Further, the jurisdiction rules set forth by the EU legislation should prevail, as was ruled by the Italian Court of Cassation and stated by important scholars.
- Foreign principal and Italian agent – agreement to be performed in Italy
Italian law: it governs the agreement if chosen by the parties or, even in the absence of any choice, as an effect of the agent having his residence or seat in Italy.
CBAs: those having force of law (“erga omnes”) govern the agreement, whereas those having contractual nature are unlikely to apply automatically, as the foreign principal typically would not be a member to any of the Italian associations having signed a CBA. However, they might apply if referred to in the agreement or de facto applied.
Enasarco: a foreign principal shall register the Italian agent to the Enasarco. Failure to do so might imply penalties and/or damages claims from the agent. As a consequence of such registration, the principal will have to contribute to the social security fund, while he should not be obliged to contribute to the FIRR (fund for termination indemnity). However, a principal who makes regular contributions to the FIRR even when not due, might be considered as having impliedly accepted the CBAs as applicable to the agency agreement.
Chamber of Commerce: the Italian agent has to be registered with the Chamber of Commerce and therefore the principal should make sure that the agent has complied with this requirement before entering into the agreement.
Procedural rules (art.409 and following, CPC): if Italian courts have jurisdiction (whether by the parties’ choice or as the place of performance of the services pursuant to Regulation 1215/12) and the agent is an individual or a sole entrepreneur with a seat in Italy, these rules should apply.
- Italian principal and Italian agent– agreement to be performed abroad
Italian law: it governs the agreement if chosen by the parties, or, in the absence of any choice, if the agent has his residence or seat in Italy.
CBAs: they would not apply (as the agent performs abroad) unless expressly referred to in the agreement, or de facto applied.
Enasarco: according to the Ministry of Labor’s opinion, registration is mandatory when the agent, although being engaged to work abroad, has his residence and performs a substantial part of his business in Italy, or has in Italy his center of interest, or performs abroad for a period not exceeding 24 months, provided the EU Regulations apply. In case the agency agreement is to be performed in a non-EU country, it has to assessed from time to time whether registration is mandatory.
Chamber of Commerce: an agent having started his business and established as an entity in Italy is in principle obliged to register with the Chamber of Commerce.
Procedural Rules (articles 409 and following of the CPC): the rules apply if the agent is an Italian based individual or sole entrepreneur and the Italian jurisdiction is agreed upon.
- Foreign principal and foreign agent – agreement to be performed in Italy
Italian law: in principle, it governs the agreement only if chosen by the parties.
CBAs: if the agreement is governed by Italian law, the CBAs having force of law apply, while those having contractual value will not apply unless expressly referred to, or de facto applied.
Enasarco: according to the Ministry of Labor’s opinion, when EU Regulations apply, registration may be required from a foreign principal in favor of an agent residing abroad, if such agent operates in Italy or has his center of interest in Italy. Otherwise, a case by case analysis will be needed under the applicable laws.
Chamber of Commerce: in principle, an agent established as an entity abroad is not obliged to register in Italy. However, the issue could be more complex if the agent has a seat and performs his activity mainly in Italy. Such circumstances may also affect the determination of the law governing the agency agreement.
Procedural Rules (articles 409 and following of the CPC): absent any different choice, Italian courts might have jurisdiction as Italy is the place of performance of the services. However, the above-mentioned rules should not apply if the agent has no seat or residence in Italy.
Conclusive remarks
Hopefully this analysis, though not exhaustive, can help understanding the possible consequences of applying Italian law to an international agency agreement, and to make prudent choices when drafting the agreement. As always, we recommend not to rely on standard contract forms or precedents without having paid due attention to all the circumstances of each case.
多数原则是有限公司的一个关键方面, 当公司的股本平均分配给两个对立的股东(各占50%)时,多数原则就会陷入危机。在这个情况下,只有一致同意才能批准决策,这显然会导致僵局,使公司的管理陷入瘫痪。
股东之间的不可调和的分歧可导致公司解散。为了避免这种情况,公司已经设计了几种策略,其中之一就是所谓的“俄罗斯轮盘条款”。
在僵局情况下,股东可能同意采取俄罗斯轮盘条款,其条款的作用是重新分配股份,从而重新开始经营活动。
该条款规定:在某些触发事件发生时,两个股东之一(或两者,如果同意的话)有权决定其50%的股本价值。因此,他/她将另一位股东置于一个简单的选择之前:以他/她提议的价格购买“发行”股东的股份,或以相同的价格将他/她自己的股份出售给“发行”股东。
内部或外部:激活俄罗斯轮盘赌条款的人来决定价格和涨价是不允许的。价格的单方决定是由失去自己股份的风险来平衡的。其实,最终的选择取决于未确定价格的股东。
The Italian Budget Law for 2017 (Law No. 232 of 11 December 2016), with the specific purpose of attracting high net worth individuals to Italy, introduced the new article 24-bis in the Italian Income Tax Code (“ITC”) which regulates an elective tax regime for individuals who transfer their tax residence to Italy.
The special tax regime provides for the payment of an annual substitutive tax of EUR 100.000,00 and the exemption from:
- any foreign income (except specific capital gains);
- tax on foreign real estate properties (IVIE ) and tax on foreign financial assets (IVAFE);
- the obligation to report foreign assets in the tax return;
- inheritance and gift tax on foreign assets.
Eligibility
Persons entitled to opt for the special tax regime are individuals transferring their tax residence to Italy pursuant to the Italian law and who have not been resident in Italy for tax purposes for at least nine out of the ten years preceding the year in which the regime becomes effective.
According to art. 2 of the ITC, residents of Italy for income tax purposes are those persons who, for the greater part of the year, are registered within the Civil Registry of the Resident Population or have the residence or the domicile in Italy under the Italian Civil Code. About this, it is worth noting that persons who have moved to a black listed jurisdiction are considered to have their tax residence in Italy unless proof to the contrary is provided.
According to the Italian Civil Code, the residence is the place where a person has his/her habitual abode, whilst the domicile is the place where the person has the principal center of his businesses and interests.
Exemptions
The special tax regime exempts any foreign income from the Italian individual income tax (IRPEF).
In particular the exemption applies to:
- income from self-employment generated from activities carried out abroad;
- income from business activities carried out abroad through a permanent establishment;
- income from employment carried out abroad;
- income from a property owned abroad;
- interests from foreign bank accounts;
- capital gains from the sale of shares in foreign companies;
However, according to an anti-avoidance provision, the exemption does not apply to capital gains deriving from the sale of “substantial” participations that occur within the first five tax years of the validity of the special tax regime. “Substantial” participations are, in particular, those representing more than 2% of the voting rights or 5% of the capital of listed companies or 20% of the voting rights or 25% of the capital of non-listed companies.
Any Italian source income shall be subject to regular income taxation.
It must be underlined that, under the special tax regime no foreign tax credit will be granted for taxes paid abroad. However, the taxpayer is allowed to exclude income arising in one or more foreign jurisdictions from the application of the special regime. This income will then be subject to the ordinary tax rule and the foreign tax credit will be granted.
The special tax regime exempts the taxpayer also from the obligation to report foreign assets in the annual tax return and from the payment of the IVIE and the IVAFE.
Finally, the special tax regime provides for the exemption from the inheritance and gift tax with regard to transfers by inheritance or donations made during the period of validity of the regime. The exemption is limited to assets and rights existing in the Italian territory at the time of the donation or the inheritance.
Substitutive Tax and Family Members
The taxpayer must pay an annual substitutive tax of EUR 100,000 regardless of the amount of foreign income realised.
The special tax regime can be extended to family members by paying an additional EUR 25,000 substitutive tax for each person included in the regime, provided that the same conditions, applicable to the qualifying taxpayer, are met.
In particular, the extension is applicable to
- spouses;
- children and, in their absence, the direct relative in the descending line;
- parents and, in their absence, the direct relative in the ascending line;
- adopters;
- sons–in-law and daughters-in-law;
- fathers-in-law and mothers-in-law;
- brothers and sisters.
How to apply
The option shall be made either in the tax return regarding the year in which the taxpayer becomes resident in Italy, or in the tax return of the following year.
Qualifying taxpayer may also submit a non-binding ruling request to the Italian Revenue Agency, in order to prove that all requirements to access the special regime are met. The ruling can be filed before the transfer of the tax residence to Italy.
The Revenue Agency shall respond within 120 days as from the receipt of the request. The reply is not binding for the taxpayer, but it is binding for the Revenue Agency.
If no ruling request is filed, the same information provided in the request must be provided together with the tax return where the election is made.
Termination
The option for the special tax regime is automatically renewed each year and it ends, in any case, after fifteen years from the first tax year of validity. However, the option can be revoked by the taxpayer at any time.
In case of termination or revocation, family members included in the election are also automatically excluded from the regime.
After the ordinary termination or revocation, it is no longer possible to apply for the special tax regime.
The author of this post is Valerio Cirimbilla.
On 25 May 2018, the EU Regulation 2016/679 came into force, concerning the “protection” of personal data (hereinafter the “Regulation” or “GDPR”). It is a Community legislative instrument aimed at strengthening the right of natural persons to have their personal data protected, which has been elevated to “fundamental right” in the Charter of Fundamental Rights of the European Union (Article 8 paragraph 1) and in the Treaty on the Functioning of the European Union (Article 16 paragraph 1).
The Regulation has a direct application in Italian law and does not require any implementation by the national legislator. These provisions prevail over national laws. From a practical standpoint, this means that, in the event of a conflict between a provision contained in the Regulations and one provided for in the “old” Legislative Decree 196/2003, the earlier would prevail over the latter.
The GDPR consists of 99 articles, of which only some constitute an in comparison with the preceding regime and bear specific relevance for the owners/managers of accommodation facilities.
Indeed, the first novelty concerns the “explicit consent” for the processing of “sensitive” data and the decisions based on automated processing (including profiling -Article 22- ). It is, in fact, necessary for the client to express his consent in relation to the processing of these data independently of that relating to other data. The consent obtained before 25 May 2018 remains valid only if it meets the requirements below.
It is required, for example, that the data owners modify their websites or promotional newsletters addressed to the customers. The latter need to be aware of the purposes for which the data is collected and of rights to which they are entitled. In order to subscribe to the newsletter, only the email address should be necessary, and if the owners request for more data, the purposes of such request ought to be specified. Before sending the subscription request, the customer must give his consent and accept the privacy policy. The privacy statement must be clearly accessible from the home page of the website. In particular, as to the newsletter, the privacy policy must also be indicated and linked in the relevant registration box.
Substantial changes were also introduced in relation to the duties of the Data Controller and the Data Processor. Both profiles are important in the hotel industry.
Now the Data Controller must (i) be able to prove that the data subject has consented to a specific processing, (ii) provide the contact details of the Data Protection Officer, (iii) declare the eventual transfer of the personal data towards third countries and, if so, through which means the transfer takes place, (iv) specify the retention period of the data or the criteria employed to establish the retention period, as well as the right to file a complaint with the supervisory authority; (v) indicate whether the processing involves automated decision-making processes (including profiling), and the expected consequences for the data subject concerned.
The Data Protection Officer (“DPO”), on the other hand, is a professional (who can be internal or external to the structure) who guarantees the observance of the rules of the GPDR and the management and processing of the data.
According to the new Regulation, the duties of this professional concern: (i) the keeping of the data processing reports (pursuant to Article 30, paragraph 2, of the Regulation), and (ii) the adoption of suitable technical and organisational measures to get the safety of the procedures (pursuant to Article 32 of the Regulation).
The name of the DPO must be indicated in the privacy policy to be delivered to the customer. The relationship between the data protection officer and the data controller is governed by a contract that must strictly regulate the subjects set forth in paragraph 3 of the article 28 in order to demonstrate that the manager provides “sufficient guarantees” for the correct management and processing of data. The Officer can appoint a “sub-manager” but only for limited processing activities, in compliance with the provisions of the contract, and responds to the non-compliance of the sub-manager.
In light of these provisions, the hotels will then have to make a more careful assessment of the risk deriving from data processing, prepare a detailed procedure as to enable the constant monitoring on, amongst others, the suitability of the treatment, and promptly notify a breach of the security procedure which involves the accidental disclosure of data, adapt its information to be delivered to the customer.
Finally, it is worth noting that the penalties for violations of the GDPR can be very significant and reach up to 4% of the company’s turnover. As such, they are far more severe than those previously specified. It is, therefore, necessary to pay close attention to compliance with the GDPR since an incorrect or defective application can cause severe prejudices to the company.
The author of this post is Giovanni Izzo.
Over the last year, the escalation of cryptocurrencies has aroused a number of issues and controversial debates for the lack of regulation in most jurisdictions, including Italy where the only regulation of the cryptocurrency phenomenon is set by the AML legislation. According to the Italian law, cryptocurrencies do not have legal tender status, the regulators have qualified cryptocurrencies as means of exchange different from e-money, which, however, can be converted into Euro for purchasing virtual currency as for selling such currency; moreover, they can be used to buy both virtual and real goods and services. As a matter of fact, the lack of regulation concerning cryptocurrencies as a form of currency and a financial instrument does not prevent the trade and use of cryptocurrencies not only as means of payment but also as contribution to fund the share capital of limited liability companies.
On July, 18th, the Court of Brescia has denied the validity of a resolution increasing the share capital of a limited liability company subscribed for by certain utility tokens because the relevant contribution (equal to Euro 714,000) didn’t comply with Article 2464 of the Civil Code. The Court has not banned the contribution of cryptocurrencies but based on that case it has remarked the criteria governing contributions in kind which were not met for the subscription of the increase of share capital as resolved by the company; giving that, and starting from this assumption, it is possible to highlight criteria requested by the Italian law to contribute cryptocurrencies into share capital.
Any (tangible and intangible) asset can be contributed into the share capital of joint-stock companies (S.p.A.) and limited liability companies (S.r.l.) to the extent that they have an indisputable economic value (as proved by a sworn appraisal from an expert who issues the relevant report) and a potential market where they can be exchanged and/or converted into cash. The report must be focused on the description of the contributed assets, the reference of the adopted criteria of evaluation, and the certification that their value is, at least, equal to the one assigned at the moment of the subscription of the capital and of the premium, if any. As a matter of fact, the function of the share capital is to guarantee the creditors in relation to the company liabilities, as a consequence it is mandatory that the economic value of the share capital must be indisputable and in compliance with the law, especially when including cryptocurrencies or digital assets.
Moving on the case, the cryptocurrencies contributed were issued by a company based in Bulgaria, they were utility tokens used as mean of payment for buying goods and services on a web platform, owned by the issuers of these digital assets. Hence these tokens were not traded in any exchange platform where it is possible to fix an indisputable exchange rate and then the relevant economic value. Indeed, the Court has reasoned the direct proportion between the value of the contribution into the equity and the existence of exchanges where the value of the cryptocurrency would have been set. Moreover, the Court has stated the lack of enforceability of the tokens contributed. Under the practical side, the contribution of cryptocurrencies has to be made by reporting the private key from the contributor to the company, giving that the enforceability of cryptocurrencies by a pledge can be done subject to the collaboration and the consent of the contributor who has to disclose the private key; should the contributor refuse to disclose the private key, the enforceability of the pledge on the tokens would be undermined.
To sum up, in theory the contribution of cryptocurrencies into equity is not forbidden under the Italian law, however giving its questionable nature, it is still controversial how to guarantee the compliance with the mandatory requirements for the contribution in kind.
This case history and the order of the Court of Brescia give us the opportunity to provide the Italian picture on cryptocurrencies.
The Italian crypto-scenario is quite effervescent since the beginning of 2017; indeed, Italy was the first European country to define the virtual currency and the exchanger according to the new AML legislation. This is not strange considering that the anonymity surrounding cryptocurrencies, which varies from complete anonymity to pseudo-anonymity, prevents cryptocurrency transactions from being adequately monitored, allowing shady transactions to occur outside of the regulatory perimeter and criminal organisations to use cryptocurrencies to obtain easy access to “clean cash”. Anonymity is also the major issue when it comes to tax evasion.
The AML Law
Legislative Decree no. 90 of May 25th 2017, which reformed legislative decree no. 231/2007, introduced definitions of exchanges and virtual currencies and provided a set of rules for the exchanges to comply with the anti-money laundering rules.
Virtual currency means “a digital representation of value that is neither issued by a central bank or a public authority, nor attached to a legally established fiat currency, which can be used as a means of exchange for the purchase of goods and services and transferred, stored and traded electronically.” Virtual currencies within the scope of AMLD5 and of the Italian AML Law are those that can be transferred, stored and traded electronically. Until now, other virtual currency schemes are not in scope, including virtual currencies used to attain goods and services without requiring exchange into legal tender or similar instruments, or the use of a custodian wallet provider.
Exchanges are defined as virtual service providers: “any natural or legal person providing professional services to third parties for the use, the exchange, the related storage of virtual currencies and for the conversion from or in currencies having legal tender [.]” Given this scope, they are subject to anti-money laundering regulations and, therefore, they have to obtain a sort of licence and be listed in a special register to operate in Italy. Considering this definition, it seems that a material number of key players are not included in AML law, for example miners and pure cryptocurrency exchanges that are not custodian wallet providers, hardware and software wallet providers, trading platforms and coin offerors. This choice of the legislator leaves blind spots in the fight against money laundering, terrorist financing and tax evasion. However, a decree of the Ministry of Economy and Finance (MEF) is under discussion, which seeks to extend the monitoring not only to exchanges but also to those subjects that accept cryptocurrencies for the sale of services and goods.
As said, apart from the AML Law, there is a lack of regulation which undermines the grade of protection of users and investors.
The protection of users/investors
One of the issues which prevents or undermines the grade of the protection is that crypto markets and crypto players can be located in jurisdictions that do not have effective money laundering and terrorist financing controls in place or do not have any regulation for their offering to the investors. Moreover, against the risk of default of the platform or the exchanges there is very little to do to protect investors especially at a cross-border level.
The protection of users/investors depends on several factors, the first one being the nature of the cryptocurrencies in question and the crypto-platforms (i.e. what they are, where they are based and whether they are compliant with the Italian law).
The nature of the cryptocurrencies has to be identified on a case-by-case basis. If qualified as securities (standard financial products which are transferable and generate profits), the prospectus rules should apply, this meaning that a prospectus is required under the Consolidated Financial Law (“Testo Unico Finanza” or “TUF”) to disclose significant financial risks to investors. If they are a hybrid made up of a means of payment and an investment component, the application of the TUF provisions is controversial.
From a criminal perspective, users/investors can be protected in case of fraud irrespective of the above factors. The general remedies under the criminal law apply.
The landmarks for investors’ protection are:
- The AML Law defining the subjects obliged to declare their activities in the cryptocurrencies world (e. the custodian wallet providers and the virtual currency exchanges);
- The TUF rules, inter alia, the prospectus regulation; and
- The Consumers’ Code rules the mandatory provisions on the “form and pre-contractual information”.
The common ground of civil actions is the disclosure of pre-contractual information to investors and the compliance of crypto-platforms and exchanges with the Italian law.
Civil actions might be brought against platforms:
- Pursuant to Articles 50 and 67 of the Consumers’ Code, according to which any contract must provide consumers with mandatory “pre-contractual information”.
- Pursuant to Article 23 of the TUF, according to which any contract providing investment services must be in writing and “failure to comply with the prescribed form shall render the contract null and void”.
In 2017, the Court of Verona declared a contract null and void because of its breach of the mandatory provisions on the “form and pre-contractual information” and ordered the refund of the money to the consumer. From the consumers’ perspective, all the information about the nature, the risks and the features of any cryptocurrency must be provided in advance to individuals in a transparent manner. As a matter of fact, the Court of Verona has reasoned that any online agreement between parties, implying the exchange of real money for virtual money, represents a financial service or rather “a paid service.” The Court judged that the contract between the exchange and the Italian consumer was null and void, as the IT service firm breached the obligations set forth by Articles 50 on “distance contracts” and 67 of the Consumers’ Code, which provide as mandatory the “form and pre-contractual information” to be provided to consumers. Lastly, the Court ordered to return to the Italian plaintiff the amount invested in cryptocurrencies.
For the sake of completeness, the consumers’ protection has been achieved also by the Italian Antitrust Authority (i.e. the non-governmental organization focused on consumer protection), which stopped the operations of several affiliates of OneCoin, the digital currency investment scheme widely accused of fraud.
In 2017, Consob (National Authority for the Stock Exchange) banned the advertisement and then the offer of investment portfolios containing cryptocurrencies, made in breach of the prospectus regulation.
Pursuant to Article 101, Par. 4, Part c) of the TUF, Consob has prohibited the advertising – via the website www.coinspace1.com – of the public offer for ‘cryptocurrency extraction packages’ launched by Coinspace Ltd (Resolution no. 19968 of April 20th 2017). The offer had already been the subject of a precautionary 90-day suspension. Moreover, on December 6th, 2017, pursuant to resolution no. 20207, under Article 99, paragraph 1, letter d) of the TUF, Consob banned the offer to the Italian public of “investment portfolios” carried out without the required authorizations by Cryp Trade Capital through the website https://cryp.trade. A few months later, in March 2018, the website https://cryp.trade was subjected to precautionary seizure by the Criminal Court of Rome pursuant to Article 166 of the TUF (a criminal provision which punishes those who carry out financial services and activities without Consob’s authorization). The common ground of these resolutions issued by Consob is the absolute lack of the mandatory information and prospectus set forth by the TUF for entities providing financial services to Italian investors trading in cryptocurrencies and cryptocurrency-related products. Given the application of the TUF, pursuant to Article 23, any contracts for the provision of investment services must be in writing and “failure to comply with the prescribed form shall render the contract null and void”.
Both resolutions have remarked how the Italian versions of the websites were the evidence that those offers were targeted to the Italian market, therefore Consob has set the criteria to identify the territoriality of the crypto-platforms subject to the Italian law which is: “where the cryptocurrencies are intended to be offered to the public”.
To complete this overview, some highlights follow on ICOs and the tax regime of cryptocurrencies in Italy.
ICOs
Initial Coin Offerings (ICOs) are not regulated by the Italian law. In ICOs the funding collected by a start-up could also be exchanged for an equity token (very similar to securities and then embodying an interest in the issuing start-up) or a utility token, which entitles the holder to exchange it for goods or services provided by the same start-up.
ICOs are very controversial (even if not yet officially banned by Consob), as they issue equity tokens that, due to their similarity to securities, can be offered to the public of investors only by entities duly authorized by the regulators, according to the TUF. As far as utility tokens, in theory their issuance might be allowed subject to a strict set of contractual rules, in order to protect investors as much as possible. However, the ICOs market has not taken off, yet.
The tax regime
For Italian tax purposes, the taxation of cryptocurrencies is not regulated by Law. Nonetheless, the Italian Revenue Agency issued a Ruling in May 2018 providing that gains on virtual currency for individuals trading outside a business activity are treated as gains arising from the disposal of traditional foreign currency. Consequently, gains relating to forward sale are always taxable, rather gains relating to forward sale are taxable only to the extent that, during the tax period, the average amount of the overall virtual currency maintained by the taxpayer exceeds the equivalent of EUR 51,645.69 for seven days in a row (the exchange rate to use is the one given by the website where the individual carried out the transaction). Any gain is therefore subject to 26% withholding tax. Additionally, the taxpayer must comply with the tax monitoring duties in the Individual Tax Return though he is not exempted from wealth tax (IVAFE), to the extent that virtual currency is not held through institutions or other authorized intermediaries by the Bank of Italy.
The same regulatory uncertainty put on the taxation of corporations trading in virtual currency. In a Ruling issued in September 2018, the authorities submitted that exchanges of bitcoins for legal currency constitute, for income tax purposes, a taxable event subject to Ires (24%) and Irap (3.9%).
For indirect tax purposes, the authorities confirmed that trading in bitcoins and other virtual currencies is similar to the activity of an intermediary negotiating in financial instruments, and, as a consequence, it is exempt from VAT under the Italian provision implementing article 135(1)(e) of the VAT Directive (2006/112). Therefore, when bitcoins are exchanged for real currencies, no VAT is due on the value of the bitcoins themselves.
The author of this post is Milena Prisco.
It is often the case – in practice – that an ongoing commercial relationship builds slowly over time through a series of sales agreements, without the parties ever signing an actual distribution agreement to set down their respective rights and responsibilities.
At first blush this might appear to be a good thing: one can sidestep being bound, especially long-term, to the other party. But on closer scrutiny the solution becomes problematic, especially for anyone operating internationally.
One of the key issues that arises when an international contractual arrangement is not in writing, is identifying the court with jurisdiction over any dispute arising therefrom. In the European Union, the issue is resolved by the provisions of Regulation 1215/2012 (“Brussels I recast”). Pursuant to Article 7 of the Regulation, as an alternative to the defendant’s courts, jurisdiction in a contractual dispute may lie with the court in the place of performance of the obligation in question. Next to this general rule are two criteria to identify the “place of performance”, differentiated according to the type of contract at issue. For a contract for goods, it is the place of delivery for the goods; in a contract for services, it is the place where the services are provided.
Thus, to identify the court with jurisdiction, it is crucial that a contract fall under one of these categories: goods or services.
No doubt this distinction is quite simple in many circumstances. In the case of a distribution agreement, or of a commercial concession agreement, the issue may become thorny.
The European Court of Justice has analysed this issue on a number of occasions, most recently in their judgement of 8 March 2018 (Case no. C-64/17) following the request for a preliminary ruling from a Portuguese Court of Appeal. The parties to the action were a Portuguese distributor, a company called Lusavouga, and a Belgian company called Saey Home & Garden, that produced articles for the home and garden, including a line of products branded “Barbecook”.
Following Saey’s decision to break off the commercial relationship – notice of which was sent in an email dated 17 July 2014 – Lusavouga brought action in Portugal seeking compensation for the unexpected termination of the agreement, and goodwill indemnity. Saey raised a plea of lack of jurisdiction of the Portuguese court, citing their general conditions of sale (mentioned in their invoices) which required that a Court in Belgium be competent for dispute resolution.
The facts thus presented two issues to be resolved in light of the Brussels I recast Regulation: deciding whether a jurisdiction clause in a vendor’s general terms and conditions pursuant to Art. 25 of the Regulation shall apply, and, if not, choosing the court with jurisdiction under Art. 7 of the Regulation.
Shall a jurisdiction clause contained within a vendor’s general terms and conditions apply to a distribution relationship?
The supplier company apparently considered their course of dealing with the Portuguese retailer nothing more than a concatenation of individual sales of goods, governed by their general terms and conditions. Consequently, they argued that any dispute arising from the relationship should be subject to the jurisdiction clause identifying Belgium as the court with jurisdiction under those terms and conditions.
Thus, a determination was needed on whether, under these facts, there was a valid prorogation of jurisdiction under Article 25, paragraph 1 of Regulation 1215/2012.
The Court of Justice has long opined that if the jurisdiction clause is included in the general contract conditions drafted by one of the parties, the contract signed by the other party must contain an express reference to those general conditions in order to ensure the real consent thereto by the parties (judgement of 14 December 1976, Estasis Salotti di Colzani, case no. 24/76; judgement of 16 March 1999, Castelletti, case no. C-159/97; judgement of 7 July 2016, Höszig, case no. C-225/15). Moreover, to be valid, the clause must involve a particular legal relationship (judgement of 20 April 2016, Profit Investment SIM, case no. C-366/13).
In the instant case, the referring court found it self-evident that the legal relationship at bar was a commercial concession agreement entered into for the purpose of distributing Saey products in Spain, a contract that was not evidenced in writing.
From this perspective, it is clear that the general conditions contained in the Saey invoices could have no bearing on the commercial concession agreement: assuming Lusavouga’s consent had been proven, the selection of Belgium as the forum would have applied if anything to the individual sales agreements, but not to those duties arising from the separate distribution agreement.
What, then, would be the court with jurisdiction for the duties arising from the commercial concession agreement?
Absent any jurisdiction clause, the issue would be decided under Art. 7, point 1 of Regulation 1215/2012, under which it becomes imperative to establish whether a contract is for goods or for services.
The “provision of services” has been defined by the Court of Justice as an activity, not mere omissions, undertaken in return for remuneration (judgement of 23 April 2009, Falco, case no. C-533/07).
With the judgements in Corman Collins of 19 December 2013 (case no. C-9/12), and Granarolo of 14 July 2016 (case no. C-196/15), the Court held that in a typical distribution agreement, the dealer renders a service, in that they are involved in increasing the distribution of supplier’s product, and receives in consideration therefor a competitive advantage, access to advertising platforms, know-how, or payment facilities. In light of such elements, the contract relationship should be deemed one for services. If on the other hand the commercial relationship is limited to a concatenation of agreements, each for the purpose of a delivery and pickup of merchandise, then what we have is not a typical distribution agreement, and the contractual relationship shall be construed as one for the sale of goods.
Once the contract has been categorised as one for services, one must then determine “the place where, under the contract, the services are provided”. The Court specifies that such location shall be understood as the member state of the place of the main provision of services, as it follows from the provisions of the contract or – as in the case at issue – the actual performance of the same. Only where it is impossible to identify such location shall the domicile of the party rendering the service be used.
From the referring court’s description of the contractual relationship, and from the Court of Justice’s understanding of the distributor’s performance of services, it would be logical to find that the principal location for performance of services was Spain, where Lusavouga “was involved in increasing the distribution of products” of Saey.
It is clear that neither the manufacturer nor the distributor would ever have intended such a result, and they might have avoided it being chosen for them by reducing their agreement in writing, including a jurisdiction clause therein.
By the same token, viewed from the outside, the Portuguese judges’ apparent conviction that the situation was one of an actual dealership contract would leave ample room for debate. After all, a number of elements would lead to the opposite conclusion. However, even in terms of that aspect, the absence of a written contract left room for interpretation that might lead to unforeseen – and perhaps rather risky – consequences.
In conclusion, the wisdom of setting down the terms and conditions of a sales distribution agreement in writing appears clear. This is not only because one can avoid those ambiguities we have described above, but also because it specifies other important clauses stipulated by the parties that should not be left to chance: exclusivity of area, if any, or with respect to specific sales channels, the contract period and termination notice, any duties to promote the product, control over end-user personal data, and the possibility of, and methods for, any online sales of products.
The relationship between influencers and advertising is one of the most interesting topic of the recent years, and one to which many operators in the sector are devoting energy and money.
In this article we will return to talk about the legal problems that influencer marketing makes it necessary to analyze.
There are many problematic profiles that can arise from the activity of influencers, pursuant to a fundamental principle of advertising discipline: any form of commercial communication and/or advertising must clearly be recognizable as such.
It is known that influencers, thanks to the reputation they have on social network, Instagram among all, are often paid to post pictures that portray them along with products given for free companies that have sponsored the post itself. The situation described can well be considered as a real advertising activity, considering that there is an individual that receive remuneration for promoting a product to the community. However, in the sponsored post there is no mention of the fact that the activity carried out by influencers is a genuine and effective advertising activity: the influencers simply post the picture and describe the product , obviously in a positive way, as if it were “a private story in the style of Instagram” (injunction of the Italian Advertising Self-Regulatory Institute (IAP) Control Committee no. 57/2018).
It is certainly on the basis of these considerations that, in the last two months, we have assisted to a real crackdown in the IAP, the Italian Advertising Self-Regulatory Institute (“Istituto di Auto-disciplina Pubblicitaria). The IAP Control Committee notified many influencers, as well as the companies producing the good displayed in the sponsored posts, injunctions aimed at inhibiting the publication of certain posts released by the influencers themselves.
The common element of all these injunctions is the criticism of a behavior that showed a purely advertising activity as if it were a spontaneous choice of the influencer. This circumstance leads to a situation in which, using the words of the IAP injunction No 61/2018 of 14 June 2018, there are “communication conveying eminently promotional content of the product and the brand in question, that is however not sufficiently explicit and therefore not immediately recognisable to the public”.
In fact, what is being contested in the above-mentioned injunctions, but also in others, such as in the injunction no. 51/2018, is the violation of art. 7 of the Italian Marketing Communication Self-Regulation Code (“Codice di auto-disciplina pubblicitaria). The code is the source of the above-mentioned principle that states that any form of commercial communication must always be recognisable as such. Furthermore, the Code says that “in the means and forms of commercial communication in which contents and information of other kinds are disseminated, commercial communication must be clearly distinguished by means of appropriate measures“.
The measures taken by the Control Committee involve not only influencers, but also companies, as the latter actually benefit from an activity that can be considered a form of surreptitious advertising.
Please, allow me a note.
Take for example the injunction no. 50/2018, regarding two Instagram’s posts of the influencer Chiara Nasti, that portrayed her with products marked with the trademark “Sunsilk”: having noted that the two posts of Nasti’s Instagram profile violated the above-mentioned art. 7 of the Italian Marketing Communication Self-Regulation Code, the injunction states the essential need for “transparency of communications“, that allows an effective distinction, and not a merely formal one, of promotional communications from any other type of communication.
Analyzing the guidelines elaborated on this matter by the IAP, the so-called “Digital Chart”, it results that it is considered compliant for the purpose of the recognition of an advertising communication as such, that a post on Instagram or on another social network presents the hashtag #advertising, or even simply the hashtag #ad.
In this respect, the IAP’s guidelines may leave a little baffled. In fact, while recognizing that the choice in question is an attempt to mediate between the need to protect the consumer and the activity of influencer, it is legitimate to doubt about the effectiveness of the hashtag #ad. As a matter of fact, it is reasonable to doubt that the hashtag #ad, written under a picture on a social network, is in itself suitable to make it clear to the user and to the average consumer that the post ha an advertising message. In fact, it can be assumed that many users do not know that the term “ad” is the abbreviation for “advertising”, especially considering that the average user of influencers is represented by young people aged between 14 and 18 years. In a nutshell, the hashtag #ad would be able to “disguise” the advertising activity.
On the other hand, the Italian Competition Authority (AGCM – Autorità Garante della Concorrenza e del Mercato) and some German judges (and the German legal system is known to be particularly attentive to new technologies law) also reached these conclusions. In this respects, it is worth reading the Case 13 U 53/17 of the Celle Higher Regional Court, that concerns to precisely the hashtag #ad and reaches conclusions similar to those mentioned above.
It should also be noted that, so far, it has been mentioned the Italian Marketing Communication Self-Regulation Code, a regulatory text issued by the IAP, whose injunctions or decisions bind exclusively the companies adhering to its system of self-regulation.
However, it is clear that, in cases such as those described above, is applicable a specific Italian legislation, the so-called Consumer Code (Legislative Decree no. 206/2005 – Codice del Consumo), Furthermore, surreptitious advertising violates the prohibition of misleading and unfair commercial practices, as stated in various articles of the Consumer Code.
The consequences are relevant, because the Consumer Code and its Implementing Regulations implicate the intervention of the Italian Competition Authority (AGCM) or the Italian Regulatory Authority for Communications (Agcom – Autorità Garante per le Comunicazioni), both having sanctioning powers toward any person (with particular reference to financial sanctions).
What arises from this brief examination is that this phenomenon is particularly interesting and widespread throughout the world.
The author of this post is Elena Carpani.
Last 7 June, legislative decree no.63 of 11 May 2018 implementing EU Directive no.2016/943 of 8 June 2016 on “on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure”, was published in the Official Journal of the Republic of Italy, pursuant to article 15 of Delegated Law no. 163 of 25 October 2017.
The purpose of this act was twofold: on the one hand, it assisted in matching the already existing Italian legislation – in particular, articles 98 and 99 of the Italian Code of Industrial Property – with the new EU legislation; whilst, on the other hand, it implemented new and more effective provisions of law on the protection of trade secrets.
The European Union introduced Directive no. 943/2016 in order to harmonize and ensure consistent protection of know-how and trade secrets on European level: in fact, irrespective of article 39 of the TRIPs Agreement, Italy was the only EU member having a domestic definition and a specific protection of trade secrets and no EU law has been passed governing their unlawful acquisition, use or disclosure. This factor weakened the ability of several countries to protect one of the most prominent intangible assets for industry 4.0 and next-generation innovative businesses.
Amid this European scenario, Italy maintained a privileged position vis-à-vis most of the other Member States, since provisions for specific protection of business know-how and confidential information had already been laid down under articles 98 and 99 of the Italian Code of Industrial Property. This is why Italian lawmakers intervened in articles 98 and 99 of the Italian Code of Industrial Property to merely replace the former language “business information and expertise” with the notion of “trade secrets”, while basically leaving the protections envisaged in article 98 of the Italian Code of Industrial Property unchanged to its earlier version, which was already in line with the EU rules.
Apart from this, the legislative decree supplemented the applicable rules and improved the standards of protection of trade secrets, pursuant to EU Directive no. 2016/943, to enable judicial decisions in protection of trade secrets to be weighed against, inter alia, the significance of such information, its importance for the claimant, and the precautionary measures implemented by the owner thereof.
In the first instance, paragraph 1-bis of article 99 of the Italian Code of Industrial Property has been introduced to take negligent behaviours into consideration on the matters of infringement of trade secrets, so that the acquisition, use, or disclosure of trade secrets may be held unlawful even when, at the time of the challenged circumstances, the individual was, or should have been, aware, as the case may be, that the trade secrets had been directly or indirectly obtained by the party that unlawfully used or disclosed them.
Quite the reverse, article 9, paragraph I, of the Directive has been fully implemented in article 121-ter on the preservation of confidentiality of trade secrets in the course of legal proceedings, irrespective of these being for precautionary measures or on the merits of the unlawful acquisition, use or disclosure of such trade secrets. According to such new provision of law, any (ordinary, civil or criminal, administrative or accounting) court of law will be entitled to prevent the counterparties, their representatives and advisors, legal counsels, clerical staff, witnesses, any court-appointed or delegated experts, and any other persons having access to the decisions, briefs and documents included in the court file, from using or disclosing the trade secrets discussed in the proceedings that the court may classify as confidential. In addition, it is expressly provided that such a prohibition shall maintain full force and effect after the conclusion of the proceedings in which scope it was imposed, while vice versa its effectiveness will be forfeited (i) in the event that the lack of the requirements set out in article 98 of the Italian Code of Industrial Property in order to have a valid trade secret is assessed by ruling, or (ii) where the trade secrets fall in the public domain or become easily accessible to industry players and experts.
Furthermore, in the same article specific measures were laid down for the preservation of confidentiality of trade secrets in the course of legal proceedings: hence, subject to compliance with the principles of fair trial, the judge will be entitled to adopt the most appropriate measures to preserve the confidentiality of the trade secrets discussed in the trial. Besides, the article explicitly sets forth two of the measures available to the judge: i.e., restricting access to hearings, briefs and documents included in the court file; and ordering the clerks to conceal the specific parts containing the trade secrets from the documents filed in the proceeding. However, because policymakers did not deem it appropriate to enable the judicial authorities to impose such prohibitions and measures by operation of law, they preferred leaving any request in this respect to the parties’ initiative, owed to the apparent high technical expertise required to appraise the confidential nature of such trade secrets.
With a view to ensuring a more accurate and effective preservation of trade secrets, criteria have been laid down (in article 124, paragraph 6-bis, of the Italian Code of Industrial Property), which the Judge will be bound to uphold when establishing the remedies and civil sanctions – and assessing whether these are suitable – in the proceedings on the matters of unlawful acquisition, use or disclosure of trade secrets under article 98. For this purpose, the Court is required to take into consideration the material circumstances of the case at issue, among which:
- the value and other specific features of the trade secrets;
- the measures implemented by the legal holder to protect the trade secrets;
- the actions carried out by the infringer to acquire, use or disclose the trade secrets;
- the impact of the unlawful use or disclosure of the trade secrets;
- the parties’ legitimate interest, and how this may be affected by the endorsement or rejection of the judge’s measures;
- the legitimate interest of third parties;
- the interests of the general public; and
- the need to ensure protection of the fundamental rights.
Not only will the Judge be bound to take these circumstances into consideration in the course of the proceedings on the merits, but also upon issuance of the precautionary measures sought by the trade secrets holder, and upon appraisal of their suitability, based on the explicit warning contained in new paragraph 5-ter of article 132 of the Italian Code of Industrial Property. Consequently, the Judge will issue a preliminary injunction or another interim measure only if the requesting company proved having adopted all the necessary measures and internal protocols to keep a given trade secret confidential.
According to new paragraph 5-bis of article 132 of the Italian Code of Industrial Property all proceedings aimed at seeking protective measures for trade secrets, as an alternative to the application of the precautionary measures, the judge may authorise the defendant to continue to use the trade secrets, subject to providing an appropriate security for compensation of any damages suffered by their legitimate holder, in any event, without prejudice to the prohibition to disclose the trade secrets authorised for use.
The precautionary measures adopted in protection of the trade secrets may be forfeited either for failure to commence the proceedings on the merits within the mandatory deadline (set out in article 132, paragraph 2, of the Italian Code of Industrial Property), or as a result of the claimant’s actions or omissions. Where the unlawful acquisition, use or disclosure of the trade secrets are subsequently found to be groundless, the claimant will be sentenced to repay the damages caused by the adopted measures.
As a further novelty, Legislative Decree no. 63/2018 introduced a compensation, payable as an alternative to the application of the measures under article 124 of the Italian Code of Industrial Property, which may be granted upon the interested party’s application, provided that all of the following requirements laid down by new paragraph 6-ter of article 124 of the Italian Code of Industrial Property are met: at the time of the use or disclosure, the claimant was not, nor should have been, aware that the trade secrets had been obtained by the third party unlawfully using or disclosing them; the execution of these measures would be unduly burdensome for the claimant; the compensation is commensurate to the damages suffered by the party seeking the application of relieving measures and, in any event, it does not exceed the amount that would have been paid on account of royalties for the use of the trade secrets throughout the challenged period of time.
A statute of limitations has been established in 5 (five) years for rights and actions connected with such misconducts.
As a final provision, in line with the availability of progressive measures and enhanced accuracy and effectiveness of trade secrets protections, which are the EU Directive basic principles, a list of the items is provided which the judge ought to appraise to order the publication of his ruling, and to weigh the suitability of the claimed measures: the value of the trade secrets; the actions carried out by the infringer to acquire, use or disclose the trade secrets; the consequences of the use or disclosure of the trade secrets; the risk of the infringer carrying on with the unlawful use or disclosure of the trade secrets.
Furthermore, to make the above appraisal the Judge shall also consider whether, based on the available information, a natural person may be identified as the actual infringer and, in the affirmative, whether the publication of such information is justified in the light of any potential damages that may be caused to the infringer’s private life and reputation.
In conclusion, articles 388 (wilful failure to enforce a court decision) and 623 of the Italian Criminal Code (disclosure of trade or science secrets) have been amended to improve the criminal reliefs granted under the Italian legal system, so as to include breach of trade secrets, and the measures connected therewith, among the misconducts sanctioned under the above provisions.
All that considered, a new approach in adopting internal rules and compliance’s procedures is required to companies and trade secrets owners in order to protect their confidential information and to safeguard their judicial protection and new language shall be adopted in drafting non-disclosure agreements: as a matter of fact NDAs were in the past very often merely copied and/or downloaded from the web without any juridical care and the due attention.