Landmark Reform of the Third Sector in Italy

Roberto Randazzo and Emiliano Giovine of R&P Legal comment on the recent approval of the decree reforming the Italian Third Sector

By ESELA Posted 28/09/2017

During the last decade, the news of Italy being close to the adoption of a substantial reform of its Third Sector has been spread across Europe on a regular basis. However, the adoption failed to materialise on several occasions for various political reasons, causing the process to restart time and time again. Surprisingly, this is no longer the case.

In June 2016, the Italian legislator issued Law no.106/2016 delegating to the Government the reform of Third Sector and social enterprise and the discipline of universal civil service. By the beginning of August 2017, most of the subsequent implementing decrees were published in the Italian Official Journal and what used to be considered a missed opportunity, is now a genuine, binding attempt at harmonising, simplifying and incentivising the Italian Third sector.

Code of the Third Sector

Among other things, the implementing decree introduces the “Code of the Third Sector”, which contains the most innovative principles from both civil law and fiscal perspective.

Throughout its 104 articles, the decree tries to reduce the normative fragmentation traditionally affecting the various entities of the Italian Third Sector, by gathering most of them (i.e. associations, foundations, social enterprises, philanthropic entities, voluntary organisations etc.), below the common status of “Entities of the Third Sector”. In particular, by introducing a Code of the Third Sector and abolishing a relevant set of special overlapping laws, the decree harmonises the characterising criteria of the Third Sector’s entities, including the definition of the activities of common interest which each such entity should exclusively or primarily perform in order to be admitted to a national single register of the Third Sector, also imposed by the decree. Among the listed activities, the following were introduced to respond to the key social challenges currently faced by Italy: humanitarian assistance, health care and social assistance, scientific research, and cooperation and development.

Important clarifications and mandatory requirements entered into force also concern extraordinary operations, which can be executed by entities of the Third Sector, including keeping of accounting records, and content of bylaws.

Only those entities complying with the requirements set by the Code of the Third Sector and admitted to the corresponding national register will be entitled to receive fiscal incentives and facilitations set for the entities of the Third Sector.

Discipline of Social Enterprise

Another important implementing decree, which generates great expectations in the sector, is one intervening on the discipline of social enterprise (Legislative Decree no. 112/2017). New social enterprises will enjoy greater flexibility compared to those, which were set and incorporated under Legislative Decree 155/06 (abolished by the reform).

In particular, social enterprises, if incorporated as companies, will be entitled to distribute dividends within certain limits. This may favour the interception of new sources of funding by moving to an investing approach as opposed to the mere search for grants. Such interception of private capital is expected to be incentivised by fiscal facilitations, which will be granted to investors as with the possibility for new social enterprises to gain capital also through equity based crowdfunding platforms.

Social enterprise can be considered as a “qualification”, which can be chosen and assumed by any private legal entity, regardless of their incorporation as not for profit entities or for-profit companies, subject to their full compliance with the requirements of scope, performed activities and governance set by the new decree. It should not come as a surprise then to see associations, foundations and social cooperatives qualified as social enterprises, together with limited liability companies and corporations, also qualified as such, included in the same section of the Companies’ Register specifically dedicated to social enterprises.


These are just a few hints of an articulated and comprehensive reform, which certainly represents a turning point for the Third Sector in Italy and an important step forward towards the abandonment of the total distinction and separation between for-profit and non-profit entities. However, the distance between the Italian approach and other systems, traditionally more open and oriented to hybrid solutions, remains wide. We await the first results and feedback from practitioners after the launch of the implementation phase of the reform, to find out if this was simply a matter of providing cover for the sector, or if it can actually be considered a small but important revolution.

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