AGN World Congress – Venice 22-24 September 2013 Prof. Andrea Ballancin: “Italy – Its place in Europe and the World”

Economic analysis

Average annual growth in real GDP per capita, 2000 - 11 (OECD source)

General governament gross debt (as % of GDP)

Economic analysis Italy's debt exceeded 130% of gross domestic product (GDP) in the first quarter of 2013 Government debt: State financing by issuing bills, securities and government bonds

Italian budget deficit % of GDP Economic analysis Italian budget deficit % of GDP

Economic analysis Spread BTP (4,555%) / BUND (1,882%) Sep.16th, 2013

Economic analysis Financial Times Stock Exchange Milano Indice di Borsa

Economic analysis Stock index: ENI 2008-2013 Market capitalisation € 63 billion - Sep. 2013

Economic analysis Stock index: ENEL 2008-2013 Market capitalisation € 26 billion - Sep. 2013

Economic analysis Stock index: FIAT 2008-2013 Market capitalisation € 7,6 billion - Sep. 2013

Economic analysis Stock index: TELECOM 2008-2013 Market capitalisation € 8 billion - Sep. 2013

Economic analysis Stock index: GENERALI 2008-2013 Market capitalisation € 23 billion - Sep. 2013

Economic analysis Stock index: UNICREDIT 2008-2013 Market capitalisation € 26,8 billion - Sep. 2013

Economic analysis Stock index: SNAM 2008-2013 Market capitalisation € 12 billion - Sep. 2013

Economic analysis Stock index: INTESA SANPAOLO 2008-2013 Market capitalisation € 24,8 billion - Sep. 2013

OECD Economic outlook 2013-2014 According to OECD estimates, Italian economy is projected to remain weak in the coming years Government debt is projected to increase to 131.7 % of GDP in 2013 and 134.3 % of GDP in 2014 Low growth and weakness of banking system High unemployment rate (11,5% in early 2013)

OECD Economic outlook 2013-2014 Falling employment may have long-term effects Budget deficit continues to decline: budget deficit is projected to be approx. 2,2 / 2,3 % in 2014 Government's plan to pay off part of public arrears (positive impact of this long overdue measure is uncertain): projected cumulative impact on GDP in 2013-2014 approx. 0.5% Weak internal spending Positive impact of market growth on exports

Economic reforms Balanced budget amendment imposed by the EU Provisions mainly consisting of fiscal consolidation measures, including a new round of pension reforms, growth-enhancing actions (mostly focused on business environment and liberalization)

Economic reforms Pension system: Extension of the contribution-based regime passed in 2012 Statutory retirement age increased As from 2012, employees may retire earlier, regardless of their age (with approx. 40 years of contributions) Age and number of contribution years, will be indexed to changes in life expectancy

Economic reforms Labour Market: Incentives to increase permanent hiring Re-shaping of the incentives to increase fixed-term contracts Changes to the apprenticeship system Rationalization and expansion of the unemployment benefit system

Economic reforms Public administration: Spending review Increase privatizations Solution / management of payment arrears by the public administration

Economic reforms Tax system: Introduction of a municipal service tax Increased taxation of “luxury” (e.g. cars, yachts, helicopters, and aircrafts) Reduced taxation of employment (IRES / IRAP) Projected further increase of VAT: 22% from October 1, 2013 Introduction of an allowance for corporate capitalisation Fight against tax evasion (estimated tax evasion / avoidance approx. € 120/180 billion a year)

Anti-avoidance rules Italian tax law provides for: a general anti-avoidance rule specific anti-avoidance provisions intended to counter specific tax avoidance practices moreover, the Italian Supreme Court ruled in favor of the existence of a general anti-abuse rule

Increased attention to cross border transactions Specific anti-avoidance rules concerning: Shifting of profits and income into tax haven countries (cf. also 2013 OCED BEPS project) Residence of individuals (transferred in ”tax heavens”) Residence of foreign entities (“esterovestizione”) Deductibility of costs incurred with ”tax heavens” entities CFC rules Transfer pricing