1. general rules for a new business

2. 1 online procedure: “ComUnica” www.registroimprese.it Disposal of a minimum amount of capital deposit (it depends on the type of company) Notary deed through which the company is set up Registration to the Register of CommerceRegistration to tax authorities in order to obtain a VAT code Opening a specific social security position (INPS company position) for personnel Opening a specific insurance position (INAIL company position) for personnel Corporate and accounting books SCIA and other administrative fulfillments (depending on the activity of the company) The necessary time is very short thanks to "ComUnica”, a single communication procedure by application online, that includes registration to the Register of Businesses at the local Chamber of Commerce, issuance of the VAT number, tax identification number and registration with Social Security Administration (INPS) and Accident Insurance Office (INAIL). According to the Italian law, Steico must choose among the following types: General rules for a new business Types of companies Foreign Parent Company Foreign Holding company SUBSIDIARY BRANC H INDEPENDENT COMPANY 25

3. The BRANCH is not a legal entity itself but every act or contract made by the branch is considered as made by its parent company. The minimum capital is not required. However, it is necessary to provide an initial capital called Fondo di dotazione. However, the branch has its own autonomy from an accounting, tax and social security point of view. In fact:  it has its own Balance Sheet showing asset/liabilities, and Financial Statement showing profit/loss.  it is required to respect all tax law requirement (tax payments, tax return and so on);  It can hire personnel and consequently, it has all labor and social security obligations in respect to personnel. Foreign Holding company SUBSIDIARY The SUBSIDIARY is an independent legal entity and is completely separate from the foreign holding company. So, in this case every act or contract made by it does not affect the holding company business. The subsidiary is subject to all accounting, tax and social security requirements according to the Italian Law. In particular, to deposit the Financial Statement and the Notes to the Accounts to the Chamber of Commerce within 30 days after its approval by the shareholders. Furthermore, a Board of Director is usually required and, if some conditions are met, it is necessary to appoint also an Auditor. Foreign Parent Company BRANC H INDEPENDENT COMPANY INDIPENDENT COMPANY - Italian law provides various legal forms of companies, in particular:   Individual companies, i.e. those that consist of a single individual who has unlimited responsibility of all personal assets and obligations of the company.   Collective undertakings, i.e. those consisting of two or more persons, which in turn are divided depending on whether the shareholders or the capital contributed prevail, in: Partnership Companies Corporate Companies General rules for a new business Types of companies 3

4. General rules for a new business Types of personal & corporate companies (2013) 4 Source: KPMG

5. Costs/type of companyS.r.l./S.u.r.l.S.r.l.sS.p.aS.a.p.a. Costs/type of company Notary fees € 1,500 - € 2,000.00 Exempt € 2,500 - € 3,000.00 Registration fee€ 168,00 Chamber fees Registration at Registry of Businesses Stamp Duty€ 65,00Exempt€ 65,00 Administrative fees€ 90,00Exempt€ 90,00 Economic administrative index Administrative fees€ 30,00 Registration at Registry of Businesses€ 200,00 Management costs Authentification Accounting records Licence taxes € 309.87 per year (capital less than € 516,456.87) € 516.46 per year if capital is more than € 516,456.87 n.a. € 516.46 a year if capital is more than € 516,456.87 Stamp Duty € 14.62 every 100 pag. Administrative fees€ 25,00 Annual budget and list of members Administrative fees€ 63,00 Stamp Duty€ 65,00 Total From € 2,530 to € 3,237,08 Approx. € 875.49 From € 3,530.49 to € 4,237.08 General rules for a new business Costs for personal & corporate companies (2013) 5 Source: KPMG

6. Resident taxpayers are subject to CIT on their world-wide income, while non-resident companies are subject to CIT only on income derived from Italy. All income derived by companies subject to CIT is considered business income. The taxable base is the worldwide income shown in the profit and loss account prepared for the financial year according to company law rules, and adjusted according to tax law provisions. Exempt income and income subject to a final withholding tax are not considered in determining taxable income. Taxable base is generally determined on the accrual basis with certain exceptions (e.g. for dividends and directors' fees). As a general rule, costs and expenses may be deducted only if they are incurred for the production of income. General rules for a new business Corporate income tax (2013) Italian taxation System 27.5% (IRES) 3.9% (IRAP) 22%, 10%, 4% progressive: top rate 43% over €75,000 CIT rate VAT rates PIT rates Anti-avoidance CFC rules - TP rules – Earn stripping rule The “Corporate income tax” (called IRES) is levied on resident and non resident companies in Italy and its rate is 27.5%. A company is considered as resident in Italy if its legal office, place of effective management or main business purpose is in Italy for the greater part of the financial year (at least 183 days). 6 Source: KPMG

7. The tax year for CIT purposes is the financial year of the company, as determined by law or articles of incorporation. If the financial year is not so determined the tax year is the calendar year. The system is based on self-assessment. Companies must file their IRES and IRAP return electronically within 9 months of the end of the financial year. VAT return is also required, and it can be file directly in the IRES tax return or in a separate form. IRES and IRAP are normally paid as two advance payments for the current tax year, based on the tax paid for the previous tax year. The balance is paid within 6 months from the end of the financial year. If the balance is a credit, it may either be carried forward or refunded. If there is uncertainty regarding the correct interpretation of tax provisions, a taxpayer may obtain a private ruling by filing a written request with the Tax Authorities. The tax authorities must issue a written and reasoned reply within 120 days. A reply is only binding on the tax authorities for the case presented and in respect of the requesting taxpayer. If no reply is given within 120 days, it is assumed that the tax authorities agree with the interpretation of, or the tax treatment proposed by, the requesting taxpayer and no penalties can be applied. General rules for a new business Administration 7

8. General rules for a new business International aspects Domestic rates DTT Italy - France Dividend20%15% Interest20%15% Royalties22.5-30%0-10% Italy is a member of OECD and European Union. Further, Italy has concluded lots of Treaty relief from double taxation with more than 100 Countries in the world. The double taxation treaties concluded by Italy normally provide for the avoidance of double taxation in accordance with the OECD Model. The general method for avoiding double taxation is the credit method. For payments of dividends, interests and royalties to non resident companies, Italy applies a withholding tax. However, if the domestic tax rate is higher than DTT rates, the last one is applicable. In the following table it is summarized the treatment of WHT according domestic rules and DTT with France. 8 Source: KPMG

9. As member of EU, Italy has agreed to the European Directive regarding:  Parent-Subsidiary Directive,  Interest + Royalties Directive  Merger and acquisition Directive. According to the Parent-Subsidiary Directive, dividend distributed by a company to its holding resident in EU are exempt from withholding tax (WHT) if some conditions are met. Otherwise, a reduction is still applicable (1,375%). According to the Interest and Royalties Directive, interest and royalties paid by a company to its holding resident in EU are exempt from WHT if some conditions are met. Otherwise, standard rates are applicable. According to the Merger and acquisition Directive, merger and acquisition involving EU companies are neutral from a tax point of view. The option for Worldwide Consolidation may be exercised by a resident controlling company if some conditions are met. General rules for a new business EU Directives 9

10. The European and Italian legislation provides that the intra-group transactions have to be carried out at their market value. Tax Authorities can verify that this rule is respected: this is an anti-avoidance legislation that contrast the elusive transfers of income in Countries with favorable tax regime than Italy (so called Tax Heaven). If taxpayers have specific documents required by law, there is a premium regime that consists in to a “non-application of penalties” in case of tax assessment. The documents required are:  Master-file, which contains information about the group;  National documentation (or Country file) that shows information about the resident enterprise, and provides all the information required by law to demonstrate the correct application of prices charged in transactions within the Group. The possession of this documentation must be indicated in the tax return of the Company. General rules for a new business Transfer pricing regime 10

11. International Ruling  The International Ruling can be applied to ensure legal certainty and transparency in the relationship between Tax Authorities and companies by reducing the risk of international double taxation.  It is applicable for matter regarding WHT on dividends, interest, royalties and Transfer Pricing assessments. MAP procedure  Mutual Agreement Procedures (or MAP), represents a solution for the international disputes. The MAP is based on the cooperation between the Tax authorities of two or more States.  This procedure is applicable only on topics related to transfer pricing regulations and guarantee the definition of the assessment in all Countries involved. General rules for a new business Other rules 11

12. business friendly environment

13. Companies that operate in Tuscany can obtain incentives at local & national level, as well at European level. EU established strict rules in relation to incentives provided by the States to companies, in order to guarantee the fair competition in the Union. However, micro, small and medium companies can benefit of the “De minimis regime”, through which incentives and aids up to € 200.000 (in a period of three years) are not subject to the mentioned specific rules. Business friendly environment General Rules 13 Source: KPMG

14. For start-up companies all the share capital is considered as an increase. The deduction is calculated as a percentage applied on equity invested during the financial year. The rate applied during 2012 and 2013 was equal to 3%, while for 2014 the rate is equal to 4%. The rate is annually established by the Italian law and may change from 2015. The deduction is applicable to the total net income of the company. However, the company can not have a loss due to this deduction. If the deduction is higher than the taxable income, the surplus can be carry forward for the next years. Business friendly environment Aid to the Economic Growth (A.C.E.) Start-up company incorporated in the FY 2012 €126.000 (€ 4.200.000*3%) will be considered as deduction by the total taxable income. The fiscal benefit will be equal to €34.650 (€126.000 x 27,5%) Net Equity Dec. 31 st 2012 Ammount (€) Share Capital€ 3.000.000 Cash Increases € 1.200.000 Kind Increases € 1.800.000 The Aid to Economic Growth (A.C.E.) is a fiscal benefit. It is a deduction for the taxable income in relation to the equity invested in the company. The beneficiaries are all the companies that increase the net equity with cash capital or with profit retaining (i.e. no dividends are distribute to the shareholders. It’s provided for all kind of companies including the permanent establishment of non resident entity. Calculation - Example 14 Source: KPMG

15. To contain salary expenses, a company could benefit of a TAX CREDIT provided for all companies hiring highly qualified personnel in possession of the following academic requirements titles achieved in scientific and technical sphere:  PhD degree obtained at an Italian or foreign faculty (if equivalent);  Master’s degree. The staff must be hired by a “permanent contract” and must be involved in one of the following activities:  experimental or theoretical work aimed for the acquisition of new knowledge;  planned research or critical investigation aimed to acquire new knowledge for new products, processes or services or to improve the existing;  acquisition, combination, structuring and use of existing knowledge and capacity of scientific, technological and commercial;  realization of commercial prototypes and pilot projects. The credit is 35% of the costs incurred for employees including social security contributions and tax burdens, up to € 200.000 for each company. Business friendly environment Tax credit for high qualified personnel 15

16. PREMIUM AND INCENTIVES FOR PATENTS: Premium for the registration of Patents applying up to € 30,000. Incentives for improvement the economic valorization of the patents, up to 80% of the related costs for a maximum of € 70,000. PREMIUM AND INCENTIVES FOR INDUSTRIAL MODELS: Premium for the registration industrial models applying up to € 4,000. Incentives for improvement the economic valorization of the industrial models, up to 80% of the related costs for a maximum of € 60,000. Business friendly environment Incentives for patents and industrial models Steico could also benefit of special funding for new patents and industrial models. In particolar of: 16