Growth and Innovation. On October 4, 2012 the Italian Government passed a new bill offering innovative start-ups, researchers and investors a vast array of legal and tax instruments aimed at fostering growth and innovation, and attracting investment capitals to Italy. The bill is the latest of a series of measures enacted by the Italian Government to spur investments in innovative and technologically advanced fields, thus stimulating growth in strategic industries. The stimulus package is expected to enter into force within the next few weeks.
Innovative Start-ups. The new stimulus measures apply to innovative start-ups that meet the following requirements:
- The majority of capital must be owned by individuals;
- The corporate seat must be located in Italy and the company must be incorporated and active for no longer than 48 months;
- Revenues per year, starting from the second year of activity, must not exceed €5 million and there must be no distribution of profits;
- The sole corporate mission must be to develop and manufacture highly technological innovative products or services;
- The company must not originate from a merger, a demerger or transfer of business;
- R&D expenses must be at least equal to 30% of the total expenses or revenues, whichever is higher;
- At least one third of employees must be PhDs, PhD candidates or researchers;
- The company must be owner or licensee of protected intellectual property.
Incubators. The stimulus package also applies to certified incubators, i.e., entities providing services to start-ups, including use of premises, facilities, consulting services.
Corporate benefits. Start-ups will be granted an extended timeframe for covering losses as compared to ordinary companies (two fiscal years; one if losses caused the corporate capital to decrease below the statutory minimum).
Start-ups incorporated in the form of limited liability companies will be able to issue participations with limited, non-proportional or no voting rights, and different categories of quotas may be freely created: these are all options previously reserved to corporations. Further, limited liability companies will be entitled to offer to the public their quotas and may issue financial instruments. An online “crowdfunding” platform will be created to incentivize public investment in innovative start-ups.
Lastly, start-up companies will be exempted from the payment of fees and duties due to the Companies Register.
Tax incentives. Tax incentives have been introduced for individuals and legal entities investing in innovative start-ups. Stock option plans for employees, directors or collaborators will also be subject to a more favorable tax treatment.
Employment flexibility. It will be easier for start-ups to create temporary job positions: the requirements set forth by Italian law for the employment of fixed-term personnel will be automatically deemed to be met in case of innovative start-ups. Fixed-term employment contracts may last up to 36 months and may be renewed one or more times within such timeframe. The contract term may be extended up to 48 months, if the employment contract is executed before the competent labor office.
Bankruptcy protection. Innovative start-ups are not subject to ordinary insolvency proceedings, but rather to the specific bankruptcy protection granted by Italian law to over-indebted small businesses and individuals, which entails the possibility to reach a debt-restructuring agreement with creditors under Court supervision. Start-up shareholders will also not be subject to personal bankruptcy sanctions.