Investing in San Marino

Types of companies

San Marino law governs companies that have registered offices on the territory of the Republic of San Marino and that, as such, must be constituted by means of a public notarial deed in one of the following forms:
a) partnerships:
- general or unlimited partnership
b) public corporations:
- public limited company
- limited liability companies
Authorisations and terms and conditions for establishment
In order to establish a public corporation it is necessary:
1) For the corporate capital to be fully underwritten.
2) For the authorisation and other conditions requested by special laws for the establishment of companies to exist, in relation to the relevant company purpose.
3) That legal dispositions regarding contributions are complied with.
4) That none of the shareholders is an Unsuitable Subject.

Authorisation for establishing companies whose purpose is particular economic activities or product sectors

Following the coming into force of the new law for San Marino-based companies and to clarify the same, it was necessary to issue a delegated decree to specify the list of economic activities and product sectors for which preventive authorisation by the State Congress is requested.

Chiefly these are:
1. Economic activities that fall under the field of application of the agreement between the Republic of San Marino and the Italian Republic on the Mutual Regulation of International Road Haulage, signed in San Marino on 7th May 1997 and ratified by decree no. 73 dated 21st July 1997 and subsequent modifications.
2. Economic activities in the printing and production of stamps and numismatic and philatelic products sector.
3. Economic construction activities in the construction products sector.
4. Economic activities in the sector of installing and realizing products for pavements, panelling, plasterboard walls, fixtures and fittings.
5. Economic activities in the installation and repair of heating, air-conditioning, water-sanitary ware, water and gas distribution and electrical energy appliances sector.
6. Economic construction activities in the road products sector, including the formation of underground networks for primary urbanization work.
7. All economic activities in the energy products sector.
8. All economic activities in the telecommunication, telephone traffic, telephone cards and telephone appliances sector.
9. All economic activities relating to the disposal and treatment of refuse.
10. All economic activities relating to the purchase, management and sale of real estate.
11. All economic activities relating to hire with or without driver and sale of vehicles, boats and planes.
12. All economic activities in the commissioning agent or broker sector.
13. All economic activities relating to personal hygiene and beauty services.
14. All economic activities in the arms, explosive products and gunpowder sector.
15. All economic activities in the private security, exercised with the technologies and private investigation
16. All economic activities of service, non financial, for the recovery of loan.
17. All economic activities in the ferrous scrap

The decree specifies that "For all activities and sectors mentioned in numbers 3, 4, 5, 6, 10 and 13 […] authorisation is not necessary when:
a) the company is established in the form of a public limited company or a limited liability company and b) all company shares are owned by natural persons resident in the Republic of San Marino and c) the majority of the members of the Board of Directors or the Sole Director are resident in the Republic of San Marino.

Preventive authorisation of the State Congress is necessary for the transfer of shares that should determine lapsing of the requisite mentioned in letter b) of the first paragraph and for the appointment of an administrative organ that does not have the requisites mentioned in letter c) of the first paragraph.
Having received the authorisation referred to in the second paragraph, subsequent transfers of company shares and the appointment of members of the administrative organ are not subject to further authorisation by the State Congress”.

Trust company shareholdings

Trust companies can also take part in the establishment of a company for third parties, but with some precautions. In fact, the law states that “upon accepting the trust mandate, trust companies that on the basis of the trust mandate establish, acquire or hold shareholdings in companies must obligatorily and preventively obtain certification regarding the trusters and also declare, respectively in the Memorandum of Association of the company or upon acquisition of shareholdings, the trust nature of their intervention, referring to the details of the authorisation to exercise this confidential activity”. In fact, trust companies cannot establish, acquire or hold shareholdings in companies on the basis of a trust mandate if certification (see box above) shows that the truster is an Unsuitable Subject. Given that the activity in question is an activity reserved for finance companies, it is subject to the regulatory and supervisory powers of the Central Bank of the Republic of San Marino.

Corporate capital, contributions and payments
The amount of corporate capital cannot be less than:
1) € 25,500.00 (twenty-five thousand five hundred euro) for limited liability companies.
2) € 77,000.00 (seventy-seven thousand euro) for public limited companies.

In public corporations, the overall value of contributions cannot be less than the corporate capital. Generally, unless the Articles of Association indicate otherwise, contributions must be made in cash. The laws of San Marino state that at least half the contributions of the initial corporate capital of the company must be made within sixty free days following the date of registration and if in cash, paid to a San Marino-based institute of credit. In the event of the establishment of a company with a unilateral deed, all contributions must be made in cash and paid within sixty free days following the date of registration.

The payment of contributions must be confirmed by a declaration issued by the legal representative, even by means of self-certification (following the methods and time limits provided for by Article 3 of Law no. 105 dated 21st October 1988), to be lodged within thirty days of payment of the same at the Clerk of Courts Office by the directors. In any case, payment of all contributions must be requested by the directors and made within three years following registration of the company on the Register.
The legal aspect of contributions is of fundamental importance as the law expressly establishes that “failure to make payment of the contributions within the terms [..] provided for is cause for winding-up the company and steps must be taken to liquidate it […]”, subject to, if necessary, bringing an action against the defaulting shareholder by the directors. In the event of inaction of the directors, liquidation can be arranged by the courts.
For this reason, the Legal Commissioner preventively assigns the directors a period of not more than sixty days within which to register documentation confirming payment of contributions or proceeds to convene a special Shareholders’Meeting in order to adopt the necessary deliberations.

To set up a company, the services of a San Marino Notary Public are required, who must first of all proceed to make sure all the future shareholders are eligible by means of the presentation of the required certifications.

In case of corporate bodies, these must present:

• a certificate of Good Standing,
• a certificate of compulsory or official liquidation
  
• a licence-revocation certificate (see art. 3 of law decree no. 179 dated 5 November 2010).
  

Private individuals on the other hand must present
- General Penal Certificate
- Criminal Status Certificate
- Certificate of compulsory or official liquidation and licence-revocation certificate.

Such documentation will be checked by the Notary Public at the time of company incorporation, as well as by the Clerk of the Court once the deed of incorporation and the articles of association have been received.
The Certificates of parties not resident or without offices in the Republic of San Marino must be equivalent (in this regard see par. 2 of art. 1 of law no. 47/2006) to that indicated above for resident parties.
The law also specifically indicates the cases in which an individual or corporate body cannot hold company shares; Unsuitable Parties fall within this category (see art. 1 letter 9 of the above law).

Together with the verification of the requisites of promoting parties, special focus is also placed on the examination of the corporate purpose. The law on companies does not lay down any particular restraints as regards the identification of the corporate purpose indicated for the business activity, but does state that “the corporate purpose must be lawful, possible, determined and must consist of business activities that are consistent with one another”. Consequently, it might be useful to formulate this taking into account, besides this provision and shareholder requirements, also the “tables” on annex A of Law no. 129 dated 23 July 2010 on the issuing of licences. Art. 4 of this law lists the Types of purposes of industrial company activities and of services catalogued on the basis of the actions or activities to be performed and sectors of activity. In indicating the corporate purpose, generally speaking one of more Actions or activities to be performed can be identified, or one or more sub-categories of same, with reference to just one business activity.
For certain types of companies envisaged by special laws, and for those companies whose corporate purpose contains economic activities or commodity sectors included in specific delegate Decrees, a prior non-revocable administrative authorisation may be required, expressed by the authorisation of the State Congress.

An example is duty bound and could consist in the provisions of Delegate Decree no. 116 dated 13 December 2007 which is in fact entitled:  "Authorisation for Setting Up Companies having as Purpose Special Economic or Commodity Sector ActivitiesIn public corporations, the overall value of contributions cannot be less than the corporate capital. Generally, unless the Articles of Association indicate otherwise, contributions must be made in cash. The laws of San Marino state that at least half the contributions of the initial corporate capital of the company must be made within sixty free days following the date of registration and if in cash, paid to a San Marino-based institute of credit. In the event of the establishment of a company with a unilateral deed, all contributions must be made in cash and paid within sixty free days following the date of registration. The payment of contributions must be confirmed by a declaration issued by the legal representative, even by means of self-certification (following the methods and time limits provided for by Article 3 of Law no. 105 dated 21st October 1988), to be lodged within thirty days of payment of the same at the Clerk of Courts Office by the directors. In any case, payment of all contributions must be requested by the directors and made within three years following registration of the company on the Register.
The legal aspect of contributions is of fundamental importance as the law expressly establishes that “failure to make payment of the contributions within the terms [..] provided for is cause for winding-up the company and steps must be taken to liquidate it […]”, subject to, if necessary, bringing an action against the defaulting shareholder by the directors. In the event of inaction of the directors, liquidation can be arranged by the courts.

For this reason, the Legal Commissioner preventively assigns the directors a period of not more than sixty days within which to register documentation confirming payment of contributions or proceeds to convene a special Shareholders’Meeting in order to adopt the necessary deliberations.

To set up a company, the services of a San Marino Notary Public are required, who must first of all proceed to make sure all the future shareholders are eligible by means of the presentation of the required certifications.
In case of corporate bodies, these must present:
- a certificate of Good Standing,
- a certificate of compulsory or official liquidation
- a licence-revocation certificate (see art. 3 of law decree no. 179 dated 5 November 2010).

Private individuals on the other hand must present
- General Penal Certificate
- Criminal Status Certificate
- Certificate of compulsory or official liquidation and licence-revocation certificate.

Such documentation will be checked by the Notary Public at the time of company incorporation, as well as by the Clerk of the Court once the deed of incorporation and the articles of association have been received.
The Certificates of parties not resident or without offices in the Republic of San Marino must be equivalent (in this regard see par. 2 of art. 1 of law no. 47/2006) to that indicated above for resident parties.

The law also specifically indicates the cases in which an individual or corporate body cannot hold company shares; Unsuitable Parties fall within this category (see art. 1 letter 9 of the above law).
Together with the verification of the requisites of promoting parties, special focus is also placed on the examination of the corporate purpose. The law on companies does not lay down any particular restraints as regards the identification of the corporate purpose indicated for the business activity, but does state that “the corporate purpose must be lawful, possible, determined and must consist of business activities that are consistent with one another”. Consequently, it might be useful to formulate this taking into account, besides this provision and shareholder requirements, also the “tables” on annex A of Law no. 129 dated 23 July 2010 on the issuing of licences. Art. 4 of this law lists the Types of purposes of industrial company activities and of services catalogued on the basis of the actions or activities to be performed and sectors of activity. In indicating the corporate purpose, generally speaking one of more Actions or activities to be performed can be identified, or one or more sub-categories of same, with reference to just one business activity.

For certain types of companies envisaged by special laws, and for those companies whose corporate purpose contains economic activities or commodity sectors included in specific delegate Decrees, a prior non-revocable administrative authorisation may be required, expressed by the authorisation of the State Congress. An example is duty bound and could consist in the provisions of Delegate Decree no. 116 dated 13 December 2007 which is in fact entitled:  "Authorisation for Setting Up Companies having as Purpose Special Economic or Commodity Sector Activities.

Law no. 130 dated 26 July 2010 was recently passed to regulate trade in the country. Article 4 states that trade can be plied in the form of: retail, wholesale, e-commerce, or in the form of commercial brokerage and auxiliary activities.

Retail.

This can be performed in one of the following forms:
a) business open to the public;
b) by means of automatic machines;
c) by means of communication systems such as computers, correspondence and television;
d) in the form of street vending In public areas;
e) directly in the homes of consumers or other places other than public areas.

The following may be licence holders for retail in businesses open to the public:
1 Individuals who live in the Republic of San Marino or corporate bodies duly recognised pursuant to San Marino laws.
2. In the case of corporate bodies, holders of trading licences, as referred to above, share capital or shares representing the majority of the share capital must be in the hands of individuals who live in the Republic of San Marino.
3. By way of exception to the above provisions, the share capital or shares representing the majority of the share capital can be held by:
a) commercial corporate bodies whose shares are held by individuals who live in the Republic of San Marino;
b) following the authorisation of the State Congress, by consortiums legally established in the Republic of San Marino pursuant to specific San Marino law.
4 By way of further exception, the law states that the establishment is allowed of limited-liability companies or joint-stock companies in which the following can hold majority shares, up to the entire share capital:
a) individuals who do not live in the Republic of San Marino;
b) corporate bodies established under San Marino law of a type different to that indicated in para, 3 letter a) above;
c) corporate bodies not established under San Marino law.
Such corporate shares cannot be represented by means of trust appointment either in the companies themselves or the holding companies.
The issuing of trading licences for the business activities referred to at para. 4 above is subject to the authorisation of the Examination Committee.

Wholesale.
Wholesale licences can be held by individuals living in the Republic of San Marino or San Marino corporate bodies.

Commercial brokerage and auxiliary activity licences can be held by individuals living in the Republic of San Marino or San Marino corporate bodies.

As regards procedures and authorisations for the issuing of trading licences, please refer to the provisions of title II of law no. 130 dated 26 July 2010.
The Law makes a distinction as regards procedures for issuing licences modulated on the basis of the various types of licences themselves (i.e. retail or wholesale) as well as on the basis of the single ways of performing the activity, e.g., according to how the retail activity is to be performed (whether in the form of "neighbouring business" rather than "medium-sized organisation business" or "large business") the procedures can vary for the issuing of licences, and this also includes the bodies from which to request authorisations (i.e. to ask for a retail business licence to ply business in the old-city centre of the Capital, an application must be made to the Industry, Crafts and Trade Department, which in turn sends the application to the Township Council of the City of San Marino).
To outline a sort of common procedure for all applications, we could say that generally speaking, applications are filed with the Industry, Crafts and Trade Department.

Trading with european union countries

Imports
Goods purchased by San Marino traders in European Community Member States, other than Italy, and destined for the Republic of San Marino (in compliance with Decree no 50 of 24.03.1993) must arrive in San Marino accompanied by European Community T2 or T2L transit documents, or declarations.
A T2 declaration is an electronic document issued by a Customs Authority, called an “Office of Departure”, and addressed through the electronic NCTS (New Community Transit System) to another Customs Authority, called an “Office of Destination”. Every T2 declaration is assigned an MRN (Movement reference Number). This MRN number will be the same throughout the European Union and is recognized in all Member States.
On arrival of the goods, the trader must present these transit declarations to the authorized carrier or forwarder in order to expedite the customs clearance formalities regarding imports. On being contacted by the trader, the authorized carrier will ascertain the conformity of the transit declaration, and check the NCTS for all information flows regarding the consignment issued by the Office of Departure.

The NCTS directly attributes a channel or gate to any transit declaration released into the system. This will determine whether the goods in question will be required to submit to document and/or physical inspection. Should physical inspection be required, this shall be conducted by the Fiscal Office or by the San Marino Guardie di Rocca Authorities in the presence of the authorized carrier. Following all necessary inspections and checks, the carrier will then complete the procedure allowing official entry of the goods, and sign off or discharge the declaration on the NCTS. The goods may then be made available to the trader.

Exports
Goods destined for export to European Community Member States, other than Italy, must be presented at the authorized carrier or forwarder in order to expedite the customs clearance formalities regarding exports. The authorized carrier will issue a (NCTS) T2 transit declaration along with any other certificates required by the country of destination. These are sent via the NCTS system to the Customs Authority, or Office of Destination, of the Member State in question.
The NCTS directly attributes a channel or gate to the transit declaration generated. This will determine whether the goods in question will be required to undergo just document or also physical inspection. In the event of physical inspection being required, this shall be conducted by the Fiscal Office or by the San Marino Guardie di Rocca authorities in the presence of the authorized carrier. Following all necessary inspections and checks, the carrier will then complete the export procedure, after which the trader may expedite dispatch. Once the goods exported from San Marino have reached their destination, the recipient or consignee shall make them available for inspection by the competent Customs Authorities in order to complete Customs import formalities.

The export procedure originated by San Marino is completed only once the Destination country has issued an Import Manifest, or Bill of Entry, and officially signed off or discharged the procedure initiated by the San Marino Customs Authority on the NCTS.

Customs formalities in the Republic of San Marino EU imports

Goods purchased by San Marino traders in European Community Member States, other than Italy, and destined for the Republic of San Marino (in compliance with Decree no 50 of 24.03.1993) must arrive in San Marino accompanied by European Community T2 or T2L transit documents, or declarations. A T2 declaration is an electronic document issued by a Customs Authority, called an “Office of Departure”, and addressed through the electronic NCTS (New Community Transit System) to another Customs Authority, called an “Office of Destination”. Every T2 declaration is assigned an MRN (Movement reference Number). This MRN number will be the same throughout the European Union and is recognized in all Member States. On arrival of the goods, the trader must present these transit declarations to the authorized carrier or forwarder in order to expedite the customs clearance formalities regarding imports. On being contacted by the trader, the authorized carrier will ascertain the conformity of the transit declaration, and check the NCTS for all information flows regarding the consignment issued by the Office of Departure. The NCTS directly attributes a channel or gate to any transit declaration released into the system. This will determine whether the goods in question will be required to submit to document and/or physical inspection. Should physical inspection be required, this shall be conducted by the Fiscal Office or by the San Marino Guardie di Rocca Authorities in the presence of the authorized carrier. Following all necessary inspections and checks, the carrier will then complete the procedure allowing official entry of the goods, and sign off or discharge the declaration on the NCTS. The goods may then be made available to the trader.

Sales to the EU
Goods destined for export to European Community Member States, other than Italy, must be presented at the authorized carrier or forwarder in order to expedite the customs clearance formalities regarding exports. The authorized carrier will issue a (NCTS) T2 transit declaration along with any other certificates required by the country of destination. These are sent via the NCTS system to the Customs Authority, or Office of Destination, of the Member State in question. The NCTS directly attributes a channel or gate to the transit declaration generated. This will determine whether the goods in question will be required to undergo just document or also physical inspection. In the event of physical inspection being required, this shall be conducted by the Fiscal Office or by the San Marino Guardie di Rocca authorities in the presence of the authorized carrier. Following all necessary inspections and checks, the carrier will then complete the export procedure, after which the trader may expedite dispatch. Once the goods exported from San Marino have reached their destination, the recipient or consignee shall make them available for inspection by the competent Customs Authorities in order to complete Customs import formalities. The export procedure originated by San Marino is completed only once the Destination country has issued an Import Manifest, or Bill of Entry and officially signed off or discharged the procedure initiated by the San Marino Customs Authority on the NCTS.

Imports from non-EU countries
Goods purchased by San Marino traders in non-European Union Member State and destined for the Republic of San Marino are subject to Customs clearance formalities regarding imports (pursuant to Decree n o 50 of 24.03.1993). Customs clearance shall be conducted at the Italian Customs premises authorized to act on behalf of the Republic of San Marino, and namely, the Customs authorities of

GENOA: central office, land and sea arrival section, old port, old port of Voltri, Passo Nuovo port section, the Rivarolo general warehouse section and Genoa airport;

LIVORNO (LEGHORN): central office and industrial port section;

TRIESTE: central office, Punto Franco Nuovo sections, Punto Franco Vecchio section, industrial port section and postal packages section;

MILAN II: main Customs office at Somma Lombardo, Malpensa airport;

ORIO AL SERIO: airport;

ROME II: central office, postal packages section, Alitalia airport cargo section and Rome airport sections;

BOLOGNA: Guglielmo Marconi airport Customs, Borgo Panigale, postal packages section;

RAVENNA: San Vitale central office and the Sestramar section;

FORLÌ: central office, Ridolfi airport section, and the CESENA section;

RIMINI: central office and Miramare airport section. Once these Customs Authorities have completed the admission procedures for the goods on behalf of the Republic of San Marino, they will then issue a (NCTS) T2 Community transit declaration that shall accompany the goods on their transit to the Republic of San Marino.

On arrival of the goods in San Marino, the San Marino trader must immediately contact the Guardie di Rocca Customs Authorities with responsibility for checking and inspection of goods. On completion of the checks and inspection necessary to clear incoming goods, the Guardie di Rocca Authorities then sign off the declaration on the NCTS system. The trader will be entitled to dispose freely of the incoming consignment only once the goods have been granted an import authorization by the Guardie di Rocca authorities.

Exports to non-EU countries
Goods destined for export to non-European Community Member States must be presented to the authorized carrier or forwarder in order to expedite the customs clearance formalities regarding exports. The authorized carrier will issue an (NCTS) T2 transit declaration along with any other certificates required by the country of destination. These are entered into the NCTS system and addressed exclusively to an Italian Customs Authority (pursuant to Decree n o 50 of 24.03.1993).
The NCTS directly attributes a channel or gate to any transit declaration generated. This will determine whether the goods in question will be required to submit to document and/or physical inspection.

Should physical inspection be required, this shall be conducted by the Fiscal Office or by the San Marino Guardie di Rocca authorities in the presence of the authorized carrier. Following all necessary inspections and checks, the carrier will then complete the export procedure after which the trader may expedite dispatch. Once the goods exported from San Marino have reached the designated Italian Customs Authority of Destination, they must be made available for inspection by the competent Customs Authorities in order to complete all export formalities.
The export procedure will be complete only once the Customs Office of Destination signs off the declaration issued by the San Marino Customs Authorities, thereby confirming the exit of the goods from the European Union.

Customs duties
Union customs treaty
Following agreements drawn up with EU countries, the abolition of customs duties on transactions within the European Community also applies to San Marino. With regards to imports from non-EU countries, customs duties are the same established by EU countries.

Tax concessions
Delegated decree no. 65 dated 29th May 2007, called “Tax dispositions providing incentives for investment and consolidating enterprises”, established tax reductions on profits reinvested for subjects that carry out activities that produce corporate income, providing that during the year such subjects present a project for investment in their company. More specifically, for such subjects, in ordinary accounting the annual financial year profits earned and used for investment in instrumental goods for the same company do not represent taxable income for direct taxation. It should be pointed out that the dispositions of the present delegated decree apply to companies that on the date of project presentation had at least five employees and if during the period of duration of the project the number of employees should fall below five the benefits would be forfeited.

What type of investments are incentives provided for?
For the purposes of the decree, all corporate projects are considered investment interventions if they provide for:

a) The acquisition of tangible and intangible property, the introduction of technology designed to improve existing products or production processes or the acquisition of systems or technologies aimed at realizing new products or new production processes; in this case, 60% of the annual balance sheet profits for the above mentioned interventions will not represent taxable income.

b) The acquisition of systems, machinery or technological processes aimed at obtaining notable energy savings or significant reductions in polluting agents based on parameters, coefficients and methods that can represent considerable and consistent energy saving and/or the lowest possible polluting load as established by special sector legislation and certified by the subjects to whom the function of control is transferred to by law; in this case, 90% of the annual balance sheet profits for the above mentioned interventions will not represent taxable income.

c) The construction, acquisition, restoration or extension of real estate aimed at improving existing production processes or introducing new production processes; in this case, 30% of annual balance sheet profits for the above mentioned interventions will not represent taxable income.
Save the maximum coefficients indicated above, in the event of an accumulation of the above mentioned interventions, the maximum percentage of non-taxable income will be 70%. Profits that do not constitute taxable income must be allocated to a special balance sheet fund that is bound for five years.

Investment methods

Investment can be made either by direct purchase or through financial leasing contracts (that cannot however be alienated unless ten years have passed since authorisation); in this case, the value of the instrumental good is given by the price paid by the grantor company to purchase the good and connected services. The value of the corporate investment project must be the object of a sworn report by an auditor or an auditing firm registered on the Register of Statutory Auditors or a professional registered with an order or professional body in San Marino.

The amount invested must not be lower than:
€ 100,000.00 = for the investments mentioned in letter a)
€ 20,000.00 = for the investments mentioned in letter b)
€ 500,000.00 = for the investments mentioned in letter c)

Removal of individual taxation
Art. 79 of Law no. 165/2003 also provided for the revocation of individual exemption to pay tax establishing that “income deriving from the exercising of a new industrial or commercial enterprise, constituted in individual form, and cooperatives, as well as those deriving from the execution of professional activities and similar are exempt from general income tax for the first two years of activity from 1st January 2004, providing that the volume of revenue is not more than € 30,000 and remuneration is not over € 20,000. The entrepreneur that owns the industrial or commercial enterprise that benefits or has benefited from exemption from payment of tax, as mentioned in the previous paragraph, cannot obtain the same benefit in favour of a new company or other activity not even if operating in different sectors”.
Facilitatory measures regarding taxation aimed at introducING optional regimes for activities regarding intangible goods, shareholdings and groups of enterprises Law no. 102 dated 20th July 2004
The present law is divided into 4 paragraphs of which 3 provide for specific optional regimes for specific cases in point and the fourth dictates common dispositions regarding the said optional regimes.
Tax exemption on capital gains for adjustment to the current economic value of intangible goods registered as assets
The first paragraph disciplines the optional fiscal regime inherent to intangible goods giving the operator the possibility to alienate the fiscally-recognised cost of intangible goods to their current economic value. Capital gains are 95% exempt of taxation, providing that for a sum equal to the operating profits or retained profit reserves or other reserves available they are allocated to a special suspended tax reserve. A sine qua non condition for the application of this regime is that the operator alone executes the activity of management and/or the legal ownership of usufruct property rights and any other right regarding intellectual works, patents, trademarks, designs, projects, formulas and any other information of an industrial, commercial or scientific nature including the right to exploitation of image.

Tax exemption on dividends and capital gains from shareholdings in non-resident companies
The second paragraph defines the optional tax regime regarding shareholdings, providing for total exemption of general income tax with regards to dividends and capital gains deriving from shareholdings in resident and non-resident companies with the explicit exclusion of companies that are resident or in any case domiciled in countries or territories with special tax regimes.
A fundamental condition for using this regime is that shareholdings must have been held uninterruptedly for at least a year (holding period), a condition that with sole reference to dividends can also be realized following collection. Unlike many other European countries, San Marino legislation does not provide for the detention of a minimum percentage of shareholding (in Italy dividends are taxed when paid with a 27% deduction).
Companies that opt for the present regime have another advantage; in derogation of general legislation any interest payable paid is in any case deductible. However, there is a regulation to combat undercapitalization on the basis of which financial costs paid to a shareholder that has a share that is at least superior to 20% of the corporate capital are not deductible when the debts of the company towards the same shareholder amount to more than 8 times the net accounted assets of the shareholder. The non-deductibility of financial costs is limited to the part of debt that exceeds the above-mentioned limit being considered, for tax purposes, an allocation of profits.
Tax exemption on profits deriving from activities carried out for group companies
The third paragraph disciplines the optional tax regime for companies belonging to a group - meaning all the resident and non-resident companies for which at least 20% of capital is held. Based on this regime, any profit earned by the San Marino-based company in exercising certain activities against non-resident group companies will be 95% exempt of taxation providing that for a sum equal to operating profits or profit reserves or other reserves available it is allocated to a special suspended tax reserve.

So-called group activities that can benefit from this regime include those of a financial nature for managing intangible property and services activities identified by a special decree. The operator must use a mathematical criteria and one that is in any case, constant over time on the basis of which to determine group profits to be exempted, communicating the chosen criteria to the Treasury.
As well as procedural criteria for the exercising/waiving of the option, the fourth paragraph, which contains dispositions common to all three of the above-mentioned paragraphs, also defines dispositions for redeeming the suspended tax reserves provided for by the first and third paragraphs, establishing that such reserves can be redeemed, either totally or in part, from the state of tax suspension providing that:
a) by the date of the close of the financial year in question, investment in tangible and intangible instrumental goods is realized for a sum at least equal to 70% of the reserve share that is being redeemed.
b) a sum equal to the remaining 30% is used to form the income regarding the tax period of the financial year in question.
c) in the two financial years following the one in question the above-mentioned goods or rights in which reinvestment was made remain in the company’s asset sphere.

Subsidized credit
Law no. 13 dated 28th January 1993 provides for the concession of subsidized credit to companies in relation to a special allocation in the provisional State budget.
Since 2005, industrial, artisan, commercial, accommodation and services enterprises in San Marino have been able to enjoy benefits from this law, exercised in individual form in the forms and methods indicated in the paragraphs below.
titoli. By means of Law no. 194 dated 22 December 2010, the allotment of € 5,000,000.00 was renewed for the "Promotion of Industrial Research Activities, pre-competitive development, innovation and technological transfer" in accordance with law no. 19 dated 27 January, 2006 and subsequent applicatory decrees. This law contemplates the paying of an interest-rate subsidy by the State, as well as the sustainment of tax relief.
Law supporting new, young and female entrepreneurs
The promulgation of Law no. 134 dated 24th November 1997 provides for a series of concessions for those who wish to set up a new business activity. Art. 36 of Law no. 179 dated 13th December 2005 (law on State or public body budgets for the 2006 financial year and the long-term budget 2006/2008) extends the benefits provided for by Law no. 134 dated 24th November 1997 (law supporting new, young and female entrepreneurs) to commercial activities too.

- Who does it address?:
The beneficiaries of the concessions are companies governed by San Marino law that are organised in an individual form, in the form of limited partnerships, in the form of joint-stock companies and in the form of cooperatives, set up for the majority by young people aged 18 to 35 (42 for women) and resident in San Marino or entirely by young people aged 18 to 35 (42 for women) and resident in San Marino.

- Which sectors are involved?:
The companies admitted for the concessions, provided for on the basis of innovative projects, must operate in the sector of production of goods, the provision of services or in trade sectors.

- Investment permitted:
€ 103,291.37 (services), € 206,582.75 (production activities).

- Financial incentives
· a contribution without security of up to 20% of admissible costs: subsidized credit up to a maximum of 80% of admissible costs with an interest burden against the State of 60%.

- Fiscal incentives
· financial year profits (up to € 15,493.70) are exempt of general income tax for the first five years of activity.

- Contributory incentives:
· an allowance of 50% of social security contributions due is applied to employed workers for the first five years.

- Bill of exchange duty
· whatever their expiry or amount, any bills of exchange issued are subject to a duty of 0.10 per thousand.