An innovative startup is a young company with a high technological content and strong growth potential, and is therefore one of the key pillars of Italian industrial policy.

In 2012, Decree-Law 179/2012 introduced a number of specific measures in support of this type of enterprise, to accompany it throughout its life cycle (start-up, growth and maturity). With this package, in addition to developing a dynamic and competitive innovation ecosystem, creating new opportunities for doing business and encouraging employment, the aim is to promote a strategy of sustainable growth.

Companies that meet the required conditions can obtain the status of innovative startup through a self-certification signed by the legal representative and benefit from the available incentives by registering in the special section of the Companies Register at the Chamber of Commerce of their province.

Innovative startups can enjoy the benefits provided for up to 5 years from their incorporation. After this period, they have the possibility of being transformed into innovative SMEs, without losing the benefits available.

Requirements for an innovative startup
Under the applicable legislation (Decree-Law 179/2012, art. 25, paragraph 2), an innovative startup is a capital company, which may also be incorporated as a cooperative, that meets the following objective requirements:

• it is a new enterprise or has been incorporated for no more than 5 years;
• it has its registered office in Italy, or in another country of the European Economic Area but with a production site or branch in Italy;
• it has an annual turnover of less than 5 million euro;
• it is not listed on a regulated market or on a multilateral trading facility;
• it does not distribute and has not distributed profits;
• its exclusive or prevailing corporate purpose is the development, production and marketing of a product or service with high technological value;
• it is not the result of a merger, demerger or transfer of a business branch.

Lastly, a startup is considered innovative if it satisfies at least 1 of the following 3 subjective requirements:
1. it incurs R&D expenditure equal to at least 15% of the higher of cost and total value of production;
2. it employs highly qualified staff (at least 1/3 PhD graduates, PhD students or researchers, or at least 2/3 with a master’s degree);
3. it holds, is the depositary or licensee of at least one patent or owns a registered software program.

Benefits available to innovative startups
The measures apply to innovative startups as from the date of registration in the special section, and for a maximum of 5 years from the date of their incorporation.
In addition, with Decree-Law no. 34 of 19 May 2020 (the so-called “Relaunch” Decree), measures were introduced to strengthen and support the innovative startup ecosystem. Below is a list of the benefits available to innovative startups.

• Tax incentives for investment in the share capital of innovative startups;
• Free and simplified access to the SME Guarantee Fund;
• Smart & Start Italy (soft loans for innovative startups located in Italy);
• Transformation into innovative SMEs without interruption of benefits;
• Exemption from Chamber of Commerce fees and stamp duty;
• Raising capital through equity crowdfunding campaigns;
• Internationalisation services for businesses (ICE);
• Derogations from ordinary company law rules;
• Flexible labour law regime;
• Extension of the deadline for covering losses;
• Derogation from the rules on non-operating and persistently loss-making companies;
• Remuneration through equity-based instruments;
• Exemption from the requirement of a compliance visa for offsetting VAT credits;
• Fail Fast (simplified procedures in the event of business failure).

Measures introduced in response to the Covid-19 emergency

• Non-repayable grants for the purchase of services for the development of innovative enterprises;
• Support for venture capital;
• R&D tax credit;
• Extension of the period of permanence in the special section of the Companies Register;
• Extension of the guarantee provided by the central guarantee fund for SMEs;
• Further incentives for investment in innovative startups;
• “Investor Visa for Italy” programme: halving of minimum investment thresholds;
• Incentives for innovative startups located in areas hit by earthquakes.

Source: https://www.mimit.gov.it/it/impresa/competitivita-e-nuove-imprese/start-up-innovative