Benefit from the most favorable legislation on StartUps in Europe

Innovative start-ups are companies whose corporate purpose is the development, production and trade of innovative products or services of high technological value. This can independently be an LLC or Srls that is distinguished by the high innovative content of its business and the use of cutting-edge technologies.

The distinctiveness of an innovative start-up lies in its potential to revolutionize an entire market. The technology of an innovative start-up revolutionizes processes, making them more agile and automated, enabling rapid expansion with fewer resources. The goal is to bring real change to the target industry, whether through the launch of a new product/service or through a different way of enjoying that product/service. Success is often found in the ability to identify new needs and requirements, which change and evolve with the very evolution of society, as well as an impeccable user-centric approach.

The Italian Government has implemented a special legislation package to favor the creation and development of innovative startups in Italy – including companies whose core business consists in the development, production and commercialization of innovative goods or services of high technological value – providing one of the most favorable legislation in Europe for start-up companies.

The status of “innovative start-ups” is acquired by registering in the special section of the Register of Companies, and thereafter they can benefit from the favorable legislation.

WHAT ARE THE REQUIREMENTS TO QUALIFY AS AN “INNOVATIVE STARTUP COMPANY”?

To qualify as “innovative start” a company shall meet the following requirements:

The company’s core business consists in the development, production and commercialization of innovative goods or services of high technological value;
The company must have been established for no longer than 48 months;
The company must reside or be subject to taxation in Italy;
The company has no turnover or has a turnover that does not exceed 5 million euros;
The company does not distribute profits;
The company shall not result from the merger, division or transfer of business from an existing company;
either 30% of the company’s costs are related to Research & Development, or at least one third of the Company’s team is made up of people who either hold a PhD or are PhD candidates at an Italian or foreign university or have conducted research for at least three year, or the Company is the owner or the licensee of a patent.

WHAT ARE THE MAIN BENEFITS FOR INNOVATIVE START-UP COMPANIES IN ITALY?

Tax incentives (tax credit up to 40%) and facilities for corporate and private investments in startups, both for direct investments in startups and in case of indirect investments (by the means of other companies investing predominantly in startups);
Tax credit by 35% for hiring highly-qualified personnel;
Robust (19-27%) tax relief on investments fueling start-ups;
Fast track VISA procedure (maximum 30 days) to obtain a VISA trough the “Italia Start-up VISA procedure”;
Possibility to raise capital through equity crowdfunding websites (Italy was the first country in the world to implement a special and comprehensive legislation on equity crowdfunding);
Fast-track, simplified and free-of-charge access for startups to the Fondo Centrale di Garanzia, a Government Fund that supports access to credit through guarantees on bank loans (covering up to 80% of the sum borrowed);
Tailored support by the Italian Trade Agency;
Simplified procedure for bankruptcy. This basically amounts to an exemption from the Italian bankruptcy procedures whereby innovative startups are subject only to the so-called “over-indebtedness procedure”;
Startups can hire personnel through fix-time contracts (6 to 36 months). Contracts can be renewed more than once. After 36 months, the contract can be further renewed for just one more time, for no longer than 12 months, i.e. the total duration of the contract must not exceed 48 months;
No stamp duties and fees paid for issuing documents;
Special financial instruments for debt management;
Extension by 12 months of the so-called “loss carry-forward period” (rinvio a nuovo delle perdite), to better absorb the whole initial operation running at loss;
Postponement of the recapitalization obligations to the following financial year when needed to protect the share capital;
Start-ups can remunerate their team members and the providers of external services, including lawyers and accountants, with stock options and work for equity respectively. The tax system applicable to these instruments is advantageous and is tailored on the most common needs of a startup.

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