General Information

General Information

The commercial activities of the direct selling industry are regulated by the Legislative Decree 114/1998 as amended by Legislative Decree 59/2010, Law 173/2005 and Legislative Decree 206/2005.

Cooling-off right consumers

The cooling-off law helps eliminate high pressure sales negotiated outside commercial premises by allowing the final consumer fourteen (14) calendar days to rethink the purchase of consumer goods or services and to cancel without any obligation or penalty. The fourteen (14) days become thirty (30) in the case of unsolicited visits.

Under the current rule, the seller must furnish the buyer with a receipt or a copy of the purchase contract which shows the transaction date and a notice of the customers’ right to cancel the transaction by mean of a registered letter mailed to the seller’s address within fourteen (14)/ thirty (30) calendar days from the date of receiving the goods or, for services, from the date of signature of the purchase contract.

 

If the customer does cancel the sale, the seller must unwind the transaction within fourteen (14)/ thirty

(30) days; any deposit or down payment must be refunded; any negotiable instrument must be cancelled and returned; and any security interest must be terminated. The customer must return any goods received at his own expenses and within fourteen (14)/ thirty (30) days from the date of the exercise of the right. The substantial integrity of the goods returned is an essential condition for the assertion of the cooling- off right.

 

The cooling-off law does not apply:

 

• to transactions costing less than Euros 00
• to the sales of foods and beverages supplied by regular roundsmen
• to real estate transactions
• to insurance contracts
• to financial investment

 

Pyramid Schemes

The promotion and the organization of pyramid schemes and fraudulent operations, such as money games, developing plans, snow balls, chain selling, etc., are precisely forbidden by law 173/2005. The law provides also the description of those alleged elements and circumstances the recurrence of which indicates the existence of the forbidden scheme or operation. Failure to comply with the law results substantial penalties.

 

Multi-Level Marketing

In Italy, no specific regulation of multi-level marketing exists. MLM companies are subject to the rules regulating the direct selling industry.

 

Prohibition on Products

Generally, there are no prohibitions on the sale of any consumer products by direct selling industry. Certain regulated industries (e.g., drugs, arms and explosives, precious metals and stones, medicines) have requirements that apply across the board and do not discriminate against direct selling.

 

Credit Restrictions Country

The primary purpose of the consumer credit Law 385/1993 is to ensure a meaningful disclosure of credit terms as well as all the costs of credit. The law does not fix interest charges but those interest charges which exceed given values published by the Ministry of Treasury on a quarterly basis are unlawful.

The consumer credit law applies to any finance company that regularly extends or arranges for the extension of credit to be repaid in more than one instalment (excluding the down payment) for which a finance charge is required. Trading companies can only apply deferred payments without any finance charge.

Legislative Decree 141/2010 that concerns the transposition of Directive 2008/48/CE did update Law 385/1993 by introducing the right of withdrawal of 14 calendar days allowing the consumer to cancel the credit agreement without penalties.

With Legislative Decree 23/2023 which implemented EU Directive 2019/2161, an additional right of withdrawal of thirty calendar days was introduced for orders collected during unsolicited visits, giving the consumer the right to cancel the credit agreement, also in this case, without any penalty.

The exercise of the right of withdrawal does not automatically cancel the connected sales contract for goods or services.

 

Money Collections

Direct selling companies and direct salespeople are free to collect any payments or down payments at any time. There is no limit established by law for the amount of down payments but they normally do not exceed 30% of the selling price.

 

Licenses

Licensing laws are the most prevalent form of legislation regulating the sales activity outside commercial premises in Italy. They apply to both the Direct Selling Companies and the Direct Sales people (see also Status of Salespeople).

 

Depending on the nature of the particular business transaction a licensing requirement applies to the seller.

 

The three most common types of covered activities are:

Transient Merchant – usually a person conducting business where goods are displayed for sale at any place within jurisdiction. These enactments most often are designed to deal with those who operate out of the back of a car or truck or set up shop on a street corner.

Peddler – a seller of goods or services who carries his products from house to house for immediate sale.

Direct Selling Companies – usually a corporate entity soliciting orders or offers to sell goods or services, for future delivery, by means of independent salespeople.

The Direct Selling Companies established in Italy, in order to operate, must be enrolled with the Chamber of Commerce and must obtain approval from the City Council where the legal seat is established. Approval is obtained provided that the applicant can prove professional and moral qualifications.

Direct Selling Companies established in any other Country of the EU are in principle not required to have a legal seat but only a fiscal office nor are required to obtain any authorization or enrolment in any Public Register. However if it can be proved that the Company has achieved the status of permanently established in the Country than all the conditions outlined above do apply. It has to be noted that the creation of a sales organization although independent is an element that proves the permanent establishment of the Company.

 

Status of Direct sellers

The Direct Seller’s role can be described as an activity of commercial intermediation rather than trade. In fact the seller, namely the subject authorized to be the contractual party with the final user, is the Direct Selling Company.

In other words, the sales take place directly between the Company who sells and the final user who buys, whereas the Direct Seller, who acts as an intermediary, only puts the two contracting parties in contact by demonstrating the product on offer, illustrating the terms of the offer and collecting an order proposal from the consumer on behalf of the Company and addressed to latter.

In Italy we have two categories of Direct Sellers namely: part-timers and spare-timers are classified as Solicitor Business and full–timers with obligation to perform as Professional Agent. Both are independent salespeople who are not allowed to buy and resell the product and then do not earn on margin but are paid on commission.

 

The independent salespeople must obtain from the Company an “Identification Card” signed by the Executive Officer, showing the personal data and the photo of the individual. The Identification Card is released by the Company after a communication to the Police Department in order to assess the moral requisite of the prospective salesperson and must be renewed or up-dated annually.

At certain level of activity, i.e. when the Solicitor’s annual net income from this activity exceeds 5.000 Euros, the Solicitor of Business becomes liable to VAT, on the commission earned, and must be enrolled with the VAT office. The value of 5.000 Euros is not to be understood as a yearly exemption. When exceeding this limit VAT liability becomes permanent.

If it can be determined that the job foresees the obligation to perform (in other words the commitment to achieve agreed upon results) then the independent salesperson is classified as a Professional Agent and must also be enrolled with the Chamber of Commerce.

 

Earnings Claims

No law exists on earning claims. However, rules of fair and reasonable representation relating to compensation to a prospective participant in the compensation plan are provided by the DSA Code of Conduct.

 

Taxes and Fees

 

Individual

 

Income Tax – The Solicitor of Business is subject to a 23% withholding tax on the 78% of all commissions received. The tax is withheld by the Direct Selling Company in lieu of all income taxes.

 

The Solicitor of Business need not to file any tax return since this withholding tax fulfils any income tax obligation.

 

The Professional Agent is subject to an 23% withholding tax on the 50% of all commissions received which is withheld by the direct selling company against income taxes. A tax return must be filed by the Agent and more may be owed.

 

Regional Tax on Business Activity (IRAP)

 

The Professional Agent and Solicitors of Business are exempted from this tax.

 

Value Added Tax (VAT) – It is applicable on commissions of those independent salespeople who are liable to this tax. The VAT is collected and paid over to VAT Tax Office.

 

Corporate

 

Direct Selling Companies are bound to pay a corporate tax and the regional tax on business activities. They are also bound to file an information return on all commissions disbursed and taxes withheld (Form 770). Failure to withhold tax on commissions and to file such an information return can result in criminal offence and substantial penalties.

 

Social Security

The Solicitor of Business, whether liable to VAT or not, is subject to a state pension plan only if his annual net income from this activity exceeds 5.000 Euros. This value is to be understood as a yearly exemption beyond which the Social security contribution applies only to new commissions exceeding that limit. In that case the rate of contribution is 33.72% on the 78% of gross commissions (the rate is reduced to 24% on the 78% for retired people and those who already pay contributions because of other employments).

One third of the contribution is paid by the individual and two thirds by the Direct Selling Company. The one third due by the individual is withheld by the Company on commissions.

 

The Professional Agent is subject to a state pension plan with a contribution of 24.09% – 25.09% paid directly by the individual, without any involvement of the Company, and to a private pension plan with a contribution of 17.00% paid fifty-fifty by the individual and the Company.

The fifty per cent due by the individual is withheld by the Company on commissions.

 

Direct Sellers- cooling-off and buy back

 

Cooling off

 

The Direct Seller shall have a period of at least ten (10) working days in which to withdraw from his agreement without penalty and without giving any reason.

The period for the exercise of this right shall begin from the day of conclusion of the agreement. The direct seller shall inform the company in writing of his decision to withdraw from the agreement.

Where the right of withdrawal is exercised by the Direct Seller, the Company shall buy back all products and business aids that the Direct Seller has purchased at the start of his activities. The Company shall reimburse free of charge all sums paid by the Direct Seller. The substantial integrity of the goods returned is an essential condition for the assertion of the cooling-off right.

 

Buy back

 

Notwithstanding the Direct Seller’s right of withdrawal, should a Direct Seller decide at any time to put an end to his relationship with the Company, the Company shall buy back all products purchased by the Direct Seller. The terms of this buy back will be that the Direct Seller will receive a minimum of 90% of the purchase price, less any earnings or benefits received based upon the purchase of the products being returned. Here again the substantial integrity of the goods returned is an essential condition for the assertion of this right.

 

Others

 

Law on Abusive Clauses in Consumer Contracts

Law 52/1996 prohibits the use of abusive terms in any standard contract concluded with a consumer by any person acting in the course of his trade, business or profession.

The law contains an indicative list (black list) of clauses which can be classed as abusive.

The law provides that if, notwithstanding this prohibition, unfair terms are used in such a contract they shall be void and that the remaining terms shall continue to be valid and that the contract shall continue to bind the parties upon those terms.

 

Legislative Decree 146/2007 on unfair commercial practices

Decree 146/2007 concerns the transposition of Directive 2005/59/EC into Italian legislation. The Decree has introduced new rules governing unfair commercial practices that may occur before, during and after a commercial negotiation between a trader and a consumer.

 

The commercial practices that can be regarded as unfair are:

• misleading practices when they contain false information of they are untruthful thus deceiving the average consumer;
• aggressive practices when they are performed by harassment, coercion or undue influence so that the average consumer’s freedom of choice is significantly impaired.

Both causing or being likely to cause the average consumer to take a transactional decision that he would have otherwise not taken.

 

On the protection of personal data — Privacy

According to the EU 2016/679 Regulation of the European Parliament, the processing of personal data and the free movement of such data are valid and lawful when no clear contrast occurs with the Regulation.

To put it briefly, the EU Regulation specifies:

• that the Person concerned (the client) shall be informed on the aim of the processing and the free movement of their personal data;
• that the Person concerned (the client) shall be informed on their specific rights at the time of data collection;
• that the Person concerned (the client) shall be informed on obtaining a free and informed consent to process the personal data defined as “Particular” (formerly sensitive-Judicial-Biometrics) and as massive commercial communications (Marketing);
• that any appropriate measure shall be implemented in order to protect archive security from accidental or unauthorised leaks, unauthorised cancellations, unauthorised access, unauthorised modification or any other unauthorised processing;
• that the personal data of the Person concerned (the client) shall be protected in the event of the transfer of the above mentioned data to non-EU countries;
• on responsibilities and on Consumer Guarantees

Legislative Decree 24/2002 concerns the transposition of Directive1999/44 EC regarding certain aspects of consumer goods sale and guarantees.

The most noteworthy aspects of the decree are:

• definition of goods: any movables are regarded as consumer goods;
• conformity to contract: the seller is required to deliver goods conforming to the contract and to the description, fit for use, and having the habitual features and performance of the typology of the goods involved. When installation is included in the contract or has been carried out under the seller’s supervision, the faulty installation is equalized to defective conformity of the goods themselves;
• conventional guarantee: any further undertaking by the seller to intervene should the consumer goods not conform to the terms stated in the guarantee statement itself or in the pertinent advertising;
• consumer’s rights: in case of defective conformity existing at the time of delivery of the goods, the consumer can, in the first instance, by his own choice and at no cost, request the repair or replacement of the goods and then, if the requested remedy is impossible or exceedingly onerous, either a price reduction or the cancellation of the contract;
• terms: the seller is expected to put right the faulty conformity manifesting itself within two years of goods delivery, while the consumer loses his rights if he does not notify said fault within two months of the date when it was noticed, and the right, however, lapses in any case after twenty-six months of the goods delivery;
• imperative nature of the regulation: any agreement and contract clause, that aim at excluding or limiting, even if indirectly, recognized consumer’s rights, are void;
• regression right: the final seller can regress with the producer in order to obtain refund of the remedies lent to the consumer.