In the last days the Ministry of Economic Development (the “Ministry”) released a new update to the “Frequently Asked Questions” issued on March 30, 2017 (“FAQ”) – and, since then, already amended several times – providing for some Ministry’s guidelines on the interpretation of the provisions of the Presidential Decree of October 26, 2001, no. 430 concerning prize competitions (the “Decree”).
By way of background, the Decree – which is an Italian peculiar piece of law and does not implement any EU Directive – defines “prize contests” as promotional activities where the attribution of the prizes basically depends on the chance or the ability/skills of the entrants, and “prize operations” as promotional activities in which a prize basically is assigned to consumers who either sell or buy a determined product/service or a certain amount of them.
Pursuant to the Decree, several filings and fulfilments need to be carried out in connection with prize contests and prize operations and specific restrictions would apply also with respect to the relevant terms and conditions and advertising materials.
The Decree also provides for some specific exceptions to the application of its provisions, inter alia the one – today concerned – regarding the minimum value of the prize awarded in the context of the promotion. Specifically, pursuant to Section 6, paragraph 1, letter d) of the Decree, promotions awarding prizes consisting in items of “minimal value” shall not be regarded as prize contests and prize operations subject to the provisions of the Decree, provided that the awarding of the item is not connected with the nature or entity of products’ sales (the “Exception”).
No details are provided for by the Decree in connection with the amount of the “minimum value” required in order to apply the Exception and for more than fifteen years the Ministry’s position thereon – formalized in the Ministry’s circular no. 1/AMTC issued on March 28, 2002 first and then flowed into the first version of the FAQ issued in 2013 – was to consider “minimum value” only the very limited value of items such as a pencil, a little flag, a calendar and the like. Such approach was very penalizing for Italian businesses, which de facto were not in the position to enforce the Exception due to the very-limited-value constraint.
In the mid-2017 the Ministry updated the FAQ and brought the amount of the “minimum value” concerned to Euro 25,82 on the basis of an opinion released by the Italian Tax Authority in connection with some tax issues concerning prize contests and prize operations.
The new approach above was of course very welcomed by Italian businesses, but unfortunately it lasted for less than one year. A few days ago the Italian Tax Authority specified to the Ministry that its above-mentioned opinion concerned only prize operations and not also prize contests; accordingly, the Ministry decided to re-assess its overall approach on the point and, in the meantime, released a new update to the FAQ by bringing the amount of the “minimum value”, allowed for applying the Exception, back to the very limited value indicated above (i.e. the value of items such as a pencil).
Hopefully this Ministry’s choice is just temporary but, at this stage, prize competitions awarding prizes being worth just Euro 10 or even less, shall anyway comply with the Decree and all requirements provided for by law.