Participating financial instruments (strumenti finanziari partecipativi, PFIs), introduced into Italian corporate law by the 2003 reform, are hybrid instruments combining equity-like and debt-like features. Despite their structural flexibility, the absence of a detailed statutory framework has long limited their use, while enabling innovative applications in restructurings, private equity, venture capital and incentive schemes. This article analyses PFIs under Italian law, focusing on their tax qualification for issuers and investors. Particular attention is paid to interpretative issues raised by the tax authorities, treaty classification of PFI proceeds and conversion mechanisms.
Barcellona et al. (Mon,) studied this question.