What are the benefits for innovative start-ups?
In the previous article we talked about how to create a startup in Italy and the the requirements to start (or become) an innovative start-up, focusing on the numerous aspects that every new entrepreneur must take into account in order to start his own innovative start-up and lead it to success.
It is time to also analyze the most important legal, economic and tax benefits provided for by Law Decrees nn. 179 of 2012 and no. 3 of 2015 for innovative start-ups, as well as the “Relaunch” Decree, in response to the economic crisis caused by the pandemic.
Legal benefits for innovative start-ups
From a legal point of view, innovative start-ups enjoy numerous legal benefits, including:
- the establishment of the start-up through the digital procedure, simplified and free (optional and valid only for Limited liability companies), which provides for the online compilation, on the portal https://startup.registroimprese.it/isin/home, of a standard typed and customizable model of the deed of incorporation and statute, without the intervention of the notary.
We talked about it in depth in the previous article “The requirements to start (or become) an innovative start-up”.
- The automatic transformation into innovative SMEs, after 5 years from the establishment and after maintaining the innovative character of its products or services.
- Exceptions to ordinary corporate regulations, as regards innovative start-ups established in the form of s.r.l. it is allowed to:
- create categories of shares endowed with particular rights (eg: shares that attribute voting rights to an extent that is not proportional to the investment);
- carry out transactions on their own shares;
- offer shares of capital to the public;
- issue equity financial instruments;
- The ability to use flexible work.
For the first 4 years, the innovative start-ups:
- with more than 5 employees, are not required to stipulate fixed-term contracts in relation to the number of active permanent contracts;
- can hire personnel with fixed-term contracts with a maximum duration of 24 months and renew them several times in this time frame, without limits on the duration and number of extensions provided for by the general regulations.
- Extension of the deadline for coverage of losses.
In the event of operating losses that lead to a reduction in company capital:
- by more than 1/3, the deadline by which the loss must be reduced to less than one third is postponed to the second subsequent year (instead of the first subsequent year, as provided for by the Italian Civil Code);
- below the legal minimum, the shareholders’ meeting can resolve:
- the immediate reduction of the capital and the simultaneous increase of the same to a figure not less than the legal minimum;
- the postponement of the decision to the end of the following year, as an alternative to solution a).
- Derogation from the regulations on shell companies and systematic loss companies.
In the event of “inconsistent” revenues or systematic tax losses, the tax penalties envisaged for “shell companies” are not applied to the innovative start-up (eg: the imputation of a minimum income and a tax base minimum for IRAP purposes, the limited use of VAT credit, etc.).
- Fail Fast Procedure, ie quick and simplified failure.
Innovative start-ups are considered “non-fallible” subjects: for this reason they are subject exclusively to the procedure for resolving the over-indebtedness crisis and liquidation of assets, as well as exempt from bankruptcy procedures, arrangement with creditors and compulsory administrative liquidation.
Economic benefits for innovative start-ups
The main economic benefits, on the other hand, are the following:
- Subsidized loans and non-repayable grants, made available to the State to support business projects and the presence of the innovative start-up on the international market.
The most important measure is certainly “Smart & Start Italy” (which we talked about in detail in a previous article (click here to read it), which provides for the disbursement of a zero-interest loan, without any guarantee and covers up to 80% of the eligible expenses, for projects with an expenditure program between 100 thousand and 1.5 million euros.
- Priority, automatic and free access to the Guarantee Fund for SMEs, ie the public capital fund that facilitates access to credit by granting guarantees on bank loans. The guarantee is applicable both directly and on transactions carried out through confidi and covers up to 80% of the credit disbursed by the bank to the innovative start-up, up to a maximum of € 2.5 million.
- Ability to raise capital through equity crowdfunding campaigns, on the register of authorized online portals.
- Remuneration through equity participation instruments.
Innovative start-ups can remunerate:
- their collaborators with instruments for participation in the share capital (eg: stock options) and to establish the fixed and variable components of the remuneration in total autonomy (eg: agreeing them on the basis of the efficiency or profitability of the company);
- external service providers, with work for equity schemes.
Furthermore, the income deriving from the assignment of these instruments is not considered taxable from a tax and contribution point of view.
Tax concessions for innovative start-ups
Finally, the law provides for numerous tax benefits for innovative start-ups, including:
- Exemption for 5 years from the payment of stamp duty and secretarial fees, due for registration in the Business Register and for the annual fee in favor of the Chamber of Commerce.
- Tax incentives for individuals who make investments in the risk capital of an innovative start-up – either directly or through collective investment schemes (CIS) – as long as they maintain their participation in the start-up for at least three years. In particular:
- for individuals, there is a deduction from income tax equal to 30% of the amount invested, up to a maximum of 1 million euros;
- for legal persons, a deduction from the IRES taxable amount equal to 30% of the invested amount, up to a maximum of 1.8 million euros.
- Exemption from the obligation to affix the compliance visa for offsetting VAT credits up to € 50,000 (notwithstanding the ordinary discipline, which provides for a limit of € 5,000), resulting in significant benefits for start-ups in terms of liquid assets.
The additional benefits provided by the “Relaunch” Decree
To cope with the unprecedented economic crisis that Italian companies are facing as a consequence of the “Covid ’19” pandemic, the Government has provided, with the “Relaunch” Decree (DL n. 34/2020, converted into law by L. 77/2020), further benefits in favor of innovative start-ups:
- Non-repayable grants aimed at:
- the acquisition of services provided by incubators, accelerators, innovation hubs, business angels and other public or private entities operating in the development of innovative start-ups;
- communication, promotion and enhancement of the innovative ecosystem, to facilitate the connection between innovative and traditional businesses.
- Disbursement of € 200 million for the year 2020 to the Venture Capital Support Fund, to support investments in the capital of innovative start-ups, including through the subscription of participatory financial instruments or the provision of subsidized loans. We talked about it in depth in a previous article (click here to read it).
- Tax credit for research and development activities.
- 12-month extension (from 19/05/2020) of the term of stay in the special register of innovative start-ups (5 years from the establishment of the company).
- Extension of the guarantee for the central guarantee fund for SMEs.
- Additional de minimis incentives for investment in innovative start-ups.
In each tax period, for those who invest up to 100,000 Euros in the share capital of one or more innovative start-ups, an income tax deduction of 50% of the investment amount is provided (if maintained for at least 3 years);
- Halving of the minimum investment thresholds in the “Investor Visa for Italy” program (from € 500,000 to € 250,000).
- Facilitations for Innovative start-ups located in areas affected by earthquakes: non-repayable grant equal to 30% of the loan and return of 70% of the loan received.
The importance of legal and tax support
The initial phase is fundamental for the medium to long-term success of an innovative start-up. For this reason, the assistance of serious, qualified professionals with proven experience in consulting for innovative start-ups, allows entrepreneurs to know all the legal, economic and tax benefits and set up a winning strategy.
Our firm, thanks to the expertise and experience in consulting and assistance to innovative start-ups, both in the legal, tax and corporate fields:
- provides all entrepreneurs interested in starting their own innovative start-up with targeted advice to assess the existence of the requirements and allow them to take advantage of all the benefits provided by the law;
- assists its clients in the market analysis phase, in the preparation of the business plan and in the search for the economic resources necessary to finance the innovative start-up;
- supports the innovative start-up at every stage of development, recommending the best commercial and legal strategies to be implemented.
Contact us immediately at numbers +39 0683521985 or +39 3711453121, or write to us at email@example.com to help you start and grow your innovative start-up!