Pir, the ultimate guide to individual savings plans
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There is the 1.0 (or traditional) version, the 2.0 (which was short-lived) version, and the 3.0 (or alternative) version. What are we talking about? About individual savings plans, one of the aces up the sleeve for the growth of Italy and its excellence
What are individual savings plans?They are savings programs designed for individual individuals who are tax residents in Italy and who:
A pir also, to be such:
Finally, an individual investment plan is "pir compliant" if the income from the financial instruments that comprise it does not contribute to the formation of the owner individual's total taxable income.
The guide to traditional pirTraditional pir was born in 2017, and it was immediately loved by savers at first sight. In the same debut year, they raised 11 billion euros, rising to nearly 15 billion in 2018. These are the characteristics of the 'classic' individual savings plan:
The guide to alternative pirsAfter the short and not brilliant 2019 parenthesis of pir 2.0, in January 2020, the government constituted alternative pirs, also known as pir "3.0," designed as the perfect investment complement to traditional plans in the world of unlisted companies (which play such a large part in the Italian economic fabric). For this reason, regulations stipulate that those with a traditional pir can put an alternative one alongside it.
These are the characteristics of third-generation individual savings plans:
One can invest in these instruments through administered savings contracts, Fia, Eltif, Sis, life insurance policies, and equity crowdfunding platforms.
The tax advantages of IRPsIn their traditional version, individual savings plans allow individuals resident in Italy to:
- pay no tax on the first 30,000 of earnings, within the limit of 150,000 euros of investments;
- allocate 21 percent of the portfolio to non-FTSE Mib stocks;
- Keep the investments in the portfolio for at least five years.
In contrast, alternative pir enjoy:- Total exemption:
- From income tax on financial income and capital gains for pir portfolio investments held for at least five years;
- from inheritance tax;
Plus, there are added benefits provided for:
- investment in startups and
- Innovative SMEs