TEN – The European Network

The "innovative startup" in Italy

1. Definition and requirementsRecently in Italy it was introduced a new type enterprise, the

"innovative startup", in order to attract talent and capital, both Italian andforeign, and to foster innovation (art. 25 of Decreto Legge, October 18,2012, n. 179).

To qualify a company as an "innovative startup" are provided thefollowing requirements:1. Formal requirements:a. the company must be a corporation or cooperative society, Italian orEuropean company resident in Italy;b. shares in the capital should not be listed.2. Substantial requirements:a. the company must be constituted and carry out business activities no more than four years;b. the majority of the shares in the share capital and voting rights must beheld by individuals at the time of the constitution and for the next two years;c. the company should not distribute or have distributed profits;d. the company must not have been formed by a merger, division orcompany as a result of sale of the company or business unit;e. the company must have its principal place of its business and affairs inItaly;f. the total value of the annual production of the company, should not bemore than € 5 million;g. the object of the company must be the development, production andmarketing of innovative products or services with high technological value.

2. Special Section of the Company RegisterThe innovative startup must be enrolled in the Special Section of the

Registry of Companies in order to get the benefits of the law and thepublicity of the initiative (art. 25, paragraph 8, DL 179/2012).

3. Exemption from charges for startFor the first four years, the innovative startup will not pay the stamp

duty, the administrative fees for enrollment in the Special Section of theRegistry of Companies and the annual fee to the Chamber of Commerce.

4. Exceptions to the company lawThere are several exceptions to the corporate legislation in favor of

innovative startups provided from art. 26 DL 179/2012:1. the constitution act of innovative startups of the limited liability companymay: a. create classes of shares with different rights; b. determine thecontent of different shares;2. the shares held in innovative startup incorporated as a limited liabilitycompany may be the subject of a public offer of financial products;3. the constitution act of innovative startups can provide for the issue of

financial instruments with equity rights or even administrative rights;4. is admitted the possibility of postponing the second year of operation thereduction of the share capital in the event of a loss less than 1/3 for innovative startups;5. in case of a reduction of share capital below the legal minimum, it isallowed to the shareholders to postpone the end of the year following theresolution to reduce the capital and the simultaneous increase of the same toan amount not less than legal minimum.

5. Tax and contributory facilitated in favor of incentive plansThe DL 179/2012 provides that the labour income arising from the

allocation to the directors, employees or continuous collaborator of financialinstruments or of any other similar right or incentive, as well as from theright option granted for the purchase of related financial instruments doesnot contribute to the formation of the taxable income for both fiscal andcontributory.

6. Incentives to investment ex DL 179/2012Art. 29 for the years 2013, 2014 and 2015 provides that: 1. is

allowed to deduct the tax on natural person income an amount equal to 19%of the amount invested by the taxpayer in the capital of one or moreinnovative startups; 2. not contributes for the formation of taxable incomeof the companies – different from innovative startup companies – 20% ofthe amount invested in the share capital of one or more innovative startups.

Art. 30 DL 179/2012 introduced the regulations for raising venturecapital through online portals from innovative startups. The "online portalfor raising capital for innovative start-ups" is defined the online platformwhich has the sole purpose of facilitating the collection of risk capital fromthe innovative startups.

To facilitate access to finance innovative startups can benefit from the intervention of the Central Guarantee Fund for small and medium-sized enterprises in a free and simplified way determined by the Ministry of Economic Development.

7. Financial aid for the recruitment of staffThe contribution by the tax credit for new hiring of highly qualified

members is applied either to the innovative startups (Art. 27bis DL179/2012).

For such companies, the application of the contribution is simplifiedbecause: 1. the tax credit is granted as a priority over other companies; 2.the application for obtaining the tax credit is drawn in a simplified form; 3.the tax credit is granted to highly qualified staff which have permanentcontracts.

8. Composition and crisis management firm innovative startupsThe innovative startup can not be subjected bankruptcy proceedings

except in special cases and during the first four years of "life". Thelegislature removed the innovative start-up to the discipline of bankruptcycause the great risk of a company included in an investment in activitieswith a high level of innovation.

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