An innovative start-up is an Italian corporation or cooperative that must meet the following requirements to be registered in the special section of the Chamber of Commerce:

• The company must have been incorporated and doing business for no more than 60 months;
• The company must have its headquarters and interests in Italy;
• The total annual production value of the company, starting from the second year, must not exceed 5 million;
• The company shall not distribute or have distributed profits;
• The company shall have as its exclusive or main corporate purpose the development, production and commercialization of innovative products or services with high technological value;
• The company must not have been formed by a merger, a corporate demerger, or the sale of a business or business unit.

The innovative start-up must have at least one of the following additional substantive requirements:

1. Research and development expenses incurred by the company must be 15% or more of the greater of cost and total value of production;

2. The company must employ as employees or collaborators, in any capacity, in a percentage equal to or more than 1/3 of its workforce, personnel holding a Ph.D. or who are pursuing a Ph.D. at an Italian or foreign university or holding a bachelor’s degree bachelor’s degree, and who have carried out certified research activities at research institutions for at least 3 years in Italy or abroad. It is possible, alternatively, to hire as employees or collaborators, in any title, in a percentage equal to or greater than 2/3 of the total workforce, personnel holding a master’s degree;

3. Being the owner or depositary or licensee of at least one industrial patent related to an industrial, biotechnological, semiconductor product topography or new plant variety invention directly related to the corporate purpose and business activity;

In the context of ownership of industrial property rights, an original computer program registered with the Special Public Register for Computer Programs is also understood to mean (SIAE), provided that it is also pertaining to the corporate purpose and business activity.

Tax benefits in the form of tax deductions and allowances

• deduction from personal income tax an amount equal to 30% (as of 2017, previously it was 19%) of the amount invested by the taxpayer in the share capital of one or multiple innovative startups (the maximum deductible investment cannot exceed the sum of 1,000,000 euros (as of 2017, previously it was 500,000 euros for each tax period and must be maintained for at least 2 years).
• income deduction f o r corporate income tax payers – other than innovative start-ups – 30% from 2017, previously it was 20% of the amount invested in the share capital of one or more innovative start-ups (the maximum deductible investment cannot exceed the sum of €1,800,000 in each tax period and must be maintained for at least 2 years).

Investments that benefit from tax breaks

• cash grants to innovative start-ups;
• credit offsets when subscribing to capital stock increases;
• shares of innovative start-ups or companies that invest primarily in innovative start-ups;
• shares of new issues of innovative start-ups;
• investments that do not qualify for tax relief

Investments in units of UCIs that invest primarily in innovative start-ups

• investments in innovative start-ups made through ICOs or companies – directly or indirectly – with public participation
• investments made in innovative start-ups that qualify as firms in difficulty as defined in European Commission Communication 2004/C 244/02
• investments in innovative start-ups operating in the shipbuilding and coal and steel sectors

Measures for raising venture capital in innovative start-ups

• Access to equity crowdfunding;
• The intervention of the Central Guarantee Fund for Small and Medium Enterprises free of charge and according to simplified criteria and modalities:
  • the guarantee is granted free of charge to innovative start-ups and certified incubators;
  • the guarantee is granted on a priority basis and without assessment of the balance sheet accounting data of the innovative start-up or certified incubator provided that the lender, in relation to t h e amount of the financial transaction, does not acquire any collateral, collateral, insurance or banking
  • applicants for the guarantee must have previously acquired appropriate affidavit in lieu of affidavit by which the legal representative or special attorney of the start-up company innovative or certified incubator attests t o registration in the special section of the Register of Companies;
  • declaration i n lieu of affidavit must be kept by the applicant and produced in case of insolvency of t h e innovative start-up or certified incubator, or produced on Simple request of the guarantee fund manager;
  • applications should be sent to the manager by fax or by registered mail with return receipt, until otherwise notified.

Regarding the coverage of financial operations, the Guarantee Fund for Small and Medium-sized enterprises can guarantee:

• up to 80% of the amount of exposure for principal, interest, contracts and defaults, of the applicant to the innovative start-up or certified incubator (direct guarantee);
• up to 80% of the amount guaranteed by the Confidi or other guarantee fund, provided that the guarantees issued by them do not exceed the maximum coverage percentage of 80% (indirect guarantee or counter-guarantee).

The maximum amount that the Small and Medium Enterprise Guarantee Fund is able to guarantee is 2.5 million per individual innovative start-up or certified incubator.In the event that the declaration i n lieu of affidavit attesting t o registration in the special section of the Companies’ Register is missing or the financing party has acquired collateral , insurance or bank guarantees, the guarantee may be granted on the basis of the ordinary terms and procedures provided for in the current operating provisions of the Guarantee Fund for Small and Medium Enterprises.

• services made available by ICE – Agency for the promotion abroad and internationalization of Italian companies and Desk Italia, thus benefiting from the assistance regulatory, corporate, tax, real estate and credit provided by these entities. In particular, ICE provides for t h e identification of major international trade fairs and events where innovative start-ups can be hosted free of charge and develops initiatives to facilitate the meeting of companies with potential investors.

Measures to encourage the creation of innovative startups by foreign applicants

The government has also allowed the entry of foreign nationals for the purpose o f self-employment to establish innovative start-ups for which a self-employment relationship with the company can be attributed.

In a decree dated March 24, 2014, the Ministry of Economic Development provided for the establishment of a special committee of a technical nature to carry out the activity of assessing and verifying the requirements under the law for obtaining the nulla-osta for granting the innovative startup visa for this category of entities.

Therefore, an “Italy-Startup Visa Technical Committee” was established at the Ministry of Economic Development-Directorate General for Industrial Policy, Competitiveness and Small and Medium Enterprises-which will be in charge of:

• To conduct a technical evaluation of innovative startup projects submitted by applicants foreigners;
• Of the verification of minimum requirements in terms of financial readiness;
• Of receiving statements of commitment to enroll in projects evaluated and approved directly by certified innovative startup incubators;
• To have acquired the provisional clearance for the purpose of entry of the foreign national issued by the territorially competent Police Headquarters;
• Issue their own clearance, which is the prerequisite for obtaining a self-employment visa for non-EU foreign nationals wishing to enter the country at the purpose of establishing innovative start-up companies.

• Exemption from paying stamp duty and secretarial fees at t h e time of registration of the innovative start-up company and for chamber requirements during the life of the company;
• Exemptions from payment of annual fee to Chambers of Commerce.
• Exemptions are subject to continued eligibility and are only active for four years.

In view of the high rate of business risk associated with investment in high-innovation activities, the innovative start-up is exempt from the discipline of bankruptcy and other insolvency procedures, with the exception of the over-indebtedness settlement and asset liquidation procedures provided for non-bankruptcy parties.

• Possibility of postponing the reduction of share capital to the second year of operation in the case of a loss of less than 1/3 for innovative start-ups (Art. 2446 and Art. 2482 Civil Code);
• In the event of a reduction of the share capital below the legal minimum, the shareholders’ meeting is authorized to postpone until the end of t h e next financial year the resolution to reduce the capital and simultaneously increase it by an amount not less than the legal minimum, as provided for in Articles 2447 Civi l Code and Art. 2482 ter Civil Code; – the articles of incorporation of the innovative start-up company established as a limited liability company may:
  1. Create categories of participation shares with different rights;
  2. Determine the content of the different shares;
  3. Create categories of participation shares that do not confer voting rights or that confer voting rights that are not proportional to the shareholding held by shareholders;
  4. Create categories of participation shares that confer limited voting rights to particular subject to or contingent upon the occurrence of particular conditions;

• Shares held in the innovative start-up established as a limited liability company can be the subject of public offerings of financial products;
• In innovative start-ups established as limited liability companies, it is permissible to waive to the prohibition to carry out transactions on its shareholdings provided for i n Article 2474 of the Civil Code, in the event that such transactions are carried out in implementation of incentive plans that provide for the allocation of shares to employees, collaborators or members of the administrative body, providers of work and services, including professional ones;
• It is permissible for the articles of incorporation of the innovative start-up and certified incubator to provide for the following
• The issuance of financial instruments with equity rights or even administrative rights with the exclusion of voting rights against a contribution of shareholders or third parties, including labor or services.

Simplifications have been introduced for innovative start-ups in claiming the tax c redi t for new hires of highly qualified personnel hired on a permanent basis, including personnel hired under apprenticeship contracts.

With the new research and development tax credit provided by the May 27, 2015 decree, the priority grant over other companies and the possibility of self-certification by the legal representative a r e eliminated.

A favorable tax regime is provided for incentive plans that provide for the distribution of shares or units to executives, employees or collaborators of innovative start-ups.

Employee income from the assignment to directors, employees or continuing associates of financial instruments or any other right or incentive that provides for the assignment of financial instruments or similar rights, as well as from the exercise of the option right conferred for the purchase of the aforementioned financial instruments, does not contribute to the formation of taxable income for both tax and contribution purposes.

However, the application of the relief is subject to the financial instruments or rights not being repurchased by the innovative startup or certified incubator, issuing company or any other 13 entity that directly controls or is controlled by the innovative start-up or certified incubator. When this condition is met, in fact, the earned income contributes to taxable income and is subject to taxation with
reference to the period in which the transfer of the financial instruments or related rights took place.