RIPs should be a new form of medium-term investment, created with the aim of channelling household savings to Italian SMEs. Attention, however, only listed SMEs!, through investment in financial instruments such as bonds, shares and shares of funds of SMEs with a stable organization in Italy.
The RIPs, according to the promoters of this umpteenth investment instrument, would therefore represent a stimulus to the real economy of the country. In return they offer a tax relief in the form of tax relief on capital gains, i.e. earnings, provided that the investment lasts at least 5 years.
The RIPs were introduced with the 2017 Budget Act and follow a scheme, obviously already in use primarily in the United Kingdom where most of the ideas in the financial field are born and where the Individual Savings Accounts (ISAS) have been active for some time and in France where the Plan d’Epargne en Actions (PEA) exists.
WHAT INDIVIDUAL SAVINGS PLANS ARE AND HOW THEY WORK
RIPs are boxes in which there is a bit of everything: stocks, bonds, fund units, derivatives and liquidity. They are aimed at individuals, they are individual and not repeatable. They cannot be underwritten by companies, they are not co-indexable and only one can be underwritten each in life. They have a minimum and maximum duration. The law provides a minimum time constraint of 5 years to offer tax benefits.
They offer tax advantages on profits. No tax is paid on capital gains and returns (12.5% on government bonds and 26% on shares and bonds). If after 5 years there are no profits but losses, the rules of the funds on the tax credit apply. They are exempt from inheritance tax; they provide for a minimum investment of 500 euros and a maximum of 30 thousand euros per year. The limit in 5 years is set at 150 thousand euros. Payments can be made in instalments.
PIR: WHERE THEY INVEST
The RIPs have strict investment constraints designed to be useful to small and medium-sized enterprises. They leave the possibility to use at least 30% of the portfolio in other instruments (deposits and current accounts). Therefore, at least 70% of the total value of the RIPs must be invested in financial instruments issued or entered into by Italian companies or with stable activity in Italy.
Of this 70% at least 30% must be invested in companies other than those in the equivalent FTSE Mib index of other regulated markets. Liquidity may reach a maximum of 30% for at least two thirds of each calendar year and the weight of a single issuer may not exceed 10% of the portfolio, including current account liquidity.
In short, it seems to us to be another financial instrument designed to make it difficult for those who buy it to realise whether it produces profits or losses; at least until our manager informs us. These RIPs seem more like the poor version of derivatives rather than safe or profitable investments.