#ISVwebinars: day 1 The Italian legislation for innovative startups

Rome, 12 September 2016

Mattia Corbetta

Member of DG Industrial Policy, Competitiveness and SMEs

The opportunities for innovative

startups

Spreading an innovation-oriented,

entrepreneurial culture

Creating qualified employment, for young people in

particular

Promoting social mobility and

merit

Attracting talents and capital from

abroad

Economic growth

Why are innovative startups important?

Decree-law 179/2012

Decree «Growth 2.0»: original legal framework (artt. 25-32)

Decree-law on “Labour”

76/2013 Broadening of the pool of eligible startups

Decree-law 3/2015

«Investment Compact»: Special regime extended to 5 years. New procedure for incorporation. Innovative SMEs introduced

Legal references

new businesses, or operational for less than 5 years

HQ in Italy or in another EU country, with at least a

production site branch in Italy

yearly turnover under €5 mln

not listed on a regulated market nor on a multilateral

negotiation system

do not distribute profits

are not a result of company merger, split-up or selling-off

have a clear character of technological innovation

Definition of «innovative startup» (D.L. 179/2012)

1. expenses in R&D and innovation are at least 15% of either

its annual costs or its turnover (the largest value is

considered)

2. employs highly qualified personnel (at least 1/3 PhD

holders and students, or researchers, or at least 2/3

Master’s graduates)

3. is the owner, depositary or licensee of a registered patent,

or the owner of a registered software.

Finally, a startup is innovative if it meets at least 1 of the 3 following criteria:

Definition of «innovative startup» (D.L. 179/2012)

The startup can redact its deed of foundation

and its successive amendments for free, using

a standard model, and with a digital signature

(art. 4, section 10 bis DL n. 3/2015 «Investment Compact»)

Free-of-charge incorporation with digital signature

SOSTITUIRE CON IMMAGINE 1. ALBERO

Instant access to the special section

of the Italian Business Register

by a self-certification, sent online

#ItalyFrontiers

An online showcase, both in Italian and English versions, where startups

can create a profile for free and with a digital signature. Its aim: to

increase their visibility to national and international investor, and to

favour open innovation dynamics

A special regime easy to access SOSTITUIRE

CON IMMAGINE 1. ALBERO

The innovative startup is exempted from paying:

Annual fees to the Chambers of Commerce

Other registration fees and duty stamps usually owed to the Business

Register

(circular 16/E Italian Revenue Agency, 11 June 2014)

Cuts to red tape and fees

Srl (Ltd.) are made more similar to SpA (Inc.):

Possibility to create categories of shares with particular

rights (e.g. voting rights non proportional to the participation in

capital)

Possibility to carry out operations on one’s shares

Possibility to issue participative financial instruments

Possibility to offer capital shares to the public

A flexible corporate management

Extension of terms for covering losses:

In the event of systematic losses, the innovative

startup benefits from a 1-year grace period to cover

losses over 1/3 of the share capital (terms postponed

by two financial years)

Easier to cover systematic losses

The innovative startup is exempted from regulations

on dummy companies and on companies registering

systematic losses.

As a result, the startup does not need to undergo

operationality tests to verify its inactivity status.

In case the revenues of the startup are considered as «not appropriate», it

is not subject to the tax penalties usually faced by dummy companies (e.g.

computation of a minimum income and tax base for corporate taxation

purpose).

No regulations on dummy companies

The innovative startup is exempted from the duty to

affix a compliance visa to compensate VAT credits, for

a maximum of €50,000

(regular threshold: €15,000)

Easier compensation of VAT credits

Specific variants to the regulations on fixed-time

contracts, as defined in DL 81/2015

(«Jobs Act»)

• no limits to durations and total number of renewals (max 36 months)

• possibility of one more renewal after 36 months (max 12 months, 48 overall)

• no obligation to keep a fixed ratio between fixed-term and open-ended contracts

Tailor-made labour law

Without prejudice to minimums determined in

collective agreements, parties can determine fixed

and variable components of the salary

(es. linked to efficiency, productivity, profitability, agreed

objectives)

Dynamic salaries

Employees and consultants can be remunerated

through stock options and work for equity

that are not included in taxable income

(taxed as capital gain!)

Incentives to work for equity schemes

for legal persons, allowance from gross income tax amounting at 19% of the sum invested in innovative startups, up to €500,000

for entreprises, deduction on taxable income amounting at 20% of the sum invested in the share capital of innovative startups, up to €1.8 mln

strengthened incentives for investments in innovative startups with a social goal and cleantech (25% IRPEF allowance and 27% IRES deduction)

investments can be also disposed indirectly through CIUs and corporations that predominantly invest in innovative startups and SMEs

the incentive is conditioned to a holding period of no less than 2 years

Incentives to investment

Italy was the 1° country in the world to

introduce a special legislation on the matter

(Consob Regulation n. 18592/2013)

New measures post-Investment Compact

(resolution n. 19520 24/2/2016):

Extension to innovative SMEs, CIUs and other businesses investing predominantly in

innovative startups and SMEs

Dematerialisation of the transfer of quotes of innovative startups and SMEs, as a

waiver to the regular legislation, and consequent reduction of costs, with a goal of

fluidifying the secondary market

Broadening of the definition of professional investors to satisfy the 5% rule

for capital subscription (business angels now included)

Equity crowdfunding

Preferential access to the

Central Guarantee Fund:

Free intervention

Fast-track investigation

Guarantee on 80% of total amount, with no evaluation of the business plan and

balance sheets, and with no additional guarantees from the bank

Maximum amount guaranteed: €2.5 mln, which can also be spread on several

operations

Easier access to bank loans

Access to the “Startup Service Card”, granting a

30% discount on the following support services:

assistance in legal, societary, fiscal, real estate,

contract and credit matters, free-of-charge participation

in international fairs and showcases, matching activities with

potential investors.

To request the Card, enterprises must write to the following address,

writing in the subject “Startup Service Card request”:

Italian Trade Agency (ICE) – startup@ice.it

Targeted support from the Italian Trade Agency

A subsidised financing scheme for innovative

startups in any part of Italy.

• €200mln until exhaustion of funds, for expenditure

programmes between €100,000 and €1.5 mln each

• Zero-interest mortgages for 70% of the total sum (80% for

predominantly female or under-35 startups)

• 20% grant for startups located in Convergence regions

• Managerial and technical tutoring startup younger than 12 months

Further information: http://www.smartstart.invitalia.it

Smart&Start Italia

Launched on 24 June 2014, Italia Startup Visa is

aimed at non EU entrepreneurs who want to

establish an innovative startup in Italy, introducing a

new procedure to issue self-employment visas.

The procedure is:

• fast: it never takes more than 30 days

• centralised: it is based on a Committee of representatives of the Italian

innovation ecosystem, coordinated by the Ministry of Economic Development

• free-of-charge

• completely online

More information: italiastartupvisa.mise.gov.it

Italia Startup Visa

Since 23 December 2014, Italia Startup Hub

has extended the simplified procedure provided by

Italia Startup Visa to non EU citizens that already hold

a regular residence permit, in case they want to remain

in Italy to establish an innovative startup.

The ISH procedure allows to convert the previous permit (obtained, for

instance, for study reasons) in a «startup self-employment permit» with no

need to leave Italy at any time, enjoying the same fast-track, simplified

procedure granted to startup visa holders.

More information: italiastartuphub.mise.gov.it

Italia Startup Hub

Invitalia Ventures was set up to accelerate the

development of cutting-edge innovative entreprises:

startups and innovative SMEs.

The company (an SGR), controlled by Invitalia (The

national agency for inward investment promotion and enterprise

development, owned by the Ministry of Finance), manages the Venture

Capital fund Italia Venture I.

Endowed with €50 mln, Italia Venture I operates in co-investment with

national and international private operators, reinforcing at the same time

the Venture Industry and the Italian innovative startups and SMEs.

Visit the website www.invitaliaventures.it

Invitalia Ventures

Innovative startups are exempted from the regular

legislation on bankruptcy.

The process is made faster and less costly, with the goal of

allowing the entrepreneur to get back on track immediately

with a new entrepreneurial project, overcoming deep seated prejudices on

failure.

Fail fast

The opportunities for innovative

SMEs

SME as defined by EU regulation (Recommendation

2003/361/CE):

< 250 employees, < €50 mln yearly revenues, < 43 mln € total

turnover

HQ in Italy, or in another EU country, with at least a

production site branch in Italy

Certified statement of the accounts

Not listed on a regulated market

Not registered in the special section of the Business

Registry for innovative startup (a simplified transition between the

two regimes is provided)

Definition of innovative SME (D.L. 3/2015)

1. expenses in R&D and innovation are at least 3% of either its

annual costs or its turnover (the largest value is considered)

2. employs highly qualified personnel (at least 1/5 PhD holders

and students, or researchers, or at least 1/3 Master’s

graduates)

3. is the owner, depositary or licensee of a registered patent, or

the owner of a registered software.

Finally, an SME is innovative if it meets at least 2 of the 3 following criteria :

Definition of innovative SME (D.L. 3/2015)

The opportunities for innovative SMEs

• Free access to #ItalyFrontiers

• Flexible corporate management

• Easier to cover systematic losses

• Exemptions on dummy companies

• Work for equity incentive schemes

• Incentives to investment

• Equity crowdfunding

• Easier access to bank loans

• ITA Service Card

The Italian innovative startup ecosystem Territorial distribution – Updated on 05/09/2016

397

483

619

750

1350

PIEDMONT

VENETO

LAZIO

EMILIAROMAGNA

LOMBARDY 1,350

199

483

149 14

397

750

340

619

97 295

152

396

47

142

232

289

152

107

Top 5 regions

Top 5 provinces

195

201

298

536

917

BOLOGNA

NAPLES

TURIN

ROME

MILAN

Total:

6,235

25

The Italian innovative startup ecosystem : registration trends – Updated on 05/09/2016

479

1477

3120

5143

6235

0

1000

2000

3000

4000

5000

6000

7000

MARCH 2013 DECEMBER 2013 DECEMBER 2014 DECEMBER 2015 JUNE 2016

479

1,477

3,120

5,143

6,235

DEC 2013

DEC 2014

DEC 2015

SEP 2016

MAR 2013

The Italian innovative startup ecosystem : dimensional distribution – Updated on 05/09/2016

65%

27%

5% 3%

Production value

up to 100kbetween 100k and 500kbetween 500k and 1Mmore than 1M

64%

30%

6%

Share capital

up to 10k

between 10k and 100k

more than 100k

79%

15%

6%

Employees

up to 4

between 4 and 9

more than 10

1122; 19%

293; 5% 77; 1%

1815; 30% 895; 15%

505; 8%

1354; 22%

What they do

Industry and handicraft

Trade

Tourism and agriculture

Software production andcomputer consultancyScientific research anddevelopmentIT and related services

Other services

Business Register trends – how many people are involved? Updated on 30/06/2016 (2° quarter 2016)

• 8,193 employees +1,669 than late December 2015,+25.6%

• 23,045 shareholders +1,927 than late March, +9.1%

• July 2015 – July 2016, the overall number of people involved in innovative startups registers a 33.4% increase, going from just under 21,000 to more than 31,000.

34

• 44.2% have at least a woman in the company (slightly below the average of all capital companies)

• 22.2% have a majority of under-35 members (more than three times higher than average)

• 12.6% include at least one non Italian citizen (average: 10,5%)

– In 2.5% of innovative startups foreigners make up a majority

of its members

Business Register trends – how many people are involved? Updated on 30/06/2016 (1° quarter 2016)

• €328 mln in 2014 (data calculated on 2.821 companies with at least one statement of accounts)

• 29.7%: average ratio between fixed assets and all assets: (average of capital companies: 6%)

• Profitable startups generate on average more added value than other capital companies (33 cents vs 21)

Business Register trends – how much value do they generate?

Updated on 30/06/2016 (1° quarter 2016)

• 1.065 innovative startups were granted bank financing with an intervention of the Public Guarantee Fund for SMEs

• Total sum: 417,990,236 €

• Average: 252,868 €

• 1,653 operations overall

• 54.2 months: average duration of funding

Access to the Public Guarantee Fund 3° two-monthly report, 2016 30/06/2016

Compared to 30 April 2016:

+128 startup financed

+55.81 mln in funding

+226 loans

Access to the Public Guarantee Fund 3° two-monthly report, 2016 30/06/2016

Favour diffused monitoring and data journalism: 4 outputs

Excel database, freely accessible and

editable, with a rich set of information, published on

startup.registroimprese.it

Report on access to the Public

Guarantee Fund for SMEs

Quarterly report on trends

observed in the special section of

the Business Register

Minister’s Report to the Parliament, based on the work of a Committee of

Monitoring and Evaluation

every monday every 2 months every 3 months every year

Italia Startup Visa updated on 31/08/2016 132 applications

29 countries

5 ongoing 94 accepted 33 rejected

x2

x2

x1

x1

x1

x1

x3

x14

x1

x1

x3 x3

x3

x2

x1

x4

x1

x1

x1

x1

x1 x14

x30

x1

x18

x2

x14

x1

x1

25% tax credit on incremental R&D investment

on a 5-year period (2015-2019).

Granted a maximum yearly sum of €5 mln.

The increase is calculated on the average investments

made in the 2012-2014 three-year period.

For costs related to highly qualified staff employed in R&D activities,

and research activities with universities, research organisations, other

businesses (innovative startups and SMEs included) the Tax Credit

increases to 50%

(DM MEF-MISE 27 May 2015)

Tax Credit on R&D

Patent Box

Opportunity to choose a facilitated fiscal regime:

exemption from overall income of 50% of profits

coming from direct/indirect use of intellectual

property, industrial patents and trademarks

(DM MEF-MISE 30 July 2015)

Further information:

startup@mise.gov.it

pminnovative@mise.gov.it

italiastartupvisa@mise.gov.it

info.italiastartupvisa@mise.gov.it

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startup@mise.gov.it pminnovative@mise.gov.it info.italiastartupvisa@mise.gov.it

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