This week our “Promosfera responds” section takes us back to Italy. Sabrina Gallotti, Italian Senior Project Manager of Promosfera, explains:
- how much time is needed to activate a draw or competition
- what are the tax obligations for the promoter
- what procedures are envisaged for the delivery of prizes and the closure of a draw or competition.
How long does it take to activate a draw or competition?
The timescales for the activation of a draw or competition depend on the complexity of each project.
However, in planning a prize-draw or -competition in Italy, the promoter must send, 15 days in advance, notice of the start of the draw or competition to the Ministry of Economic Development through the Prema online service.
Such notice must include a copy of the regulations and a copy of the guarantee for the entire prize pool.
What are the tax obligations for the promoter of a draw or competition?
Prizes awarded by prize-draws or -competitions have tax implications and, if the competitions are aimed at consumers, are subject to a withholding tax, such tax being subject to a right of recovery of the deduction at source.
The value of the prizes is subject to withholding tax of 25% of the normal value of the asset.
The promoter is entitled to a "right of recovery", which must, however, be exercised in the manner expressly provided for by law.
On invoices relating to products intended as prizes for draws and competitions, the VAT cannot and must not be deducted. In the case of exempt, non-taxable or non-chargeable products, the promoter is required to pay substitute tax of 20%.
Are there any special procedures for delivering prizes and closing the draw or competition?
Prizes must be offered and used without any constraints or costs on the part of the winners.
The prize awarded must be delivered to the person entitled to it within a maximum period of 6 months from the end of the draw or competition, or a shorter period if expressly provided for in the regulations.
After this period, prizes not assigned and those not requested will be made available to one or more not-for-profit organisations indicated in the regulations.
The proper delivery of prizes shall be recorded by an official of the Chamber of Commerce or by a notary.