Investments in Innovative Start-ups: The Current Italian Legal Framework

The aim of this essay/chapter is to examine the Italian provisions concerning tax incentives/benefits for investments in innovative start-up companies. In this regard, it will carry out an analysis of Section IX of Decree-Law n.179 of October 2012, approved with amendments by Law No.221 of 17 December 2012, aimed at promoting investments in innovative start-up companies. It will start by concisely summarizing the features of the new framework introduced by the above-mentioned provisions. Then, after illustrating the requirements to be met by companies to qualify as innovative start-ups, the tax benefits laid down will be outlined elucidating the differences in treatment between investments by private individuals subject to personal income tax and by legal persons subject to corporate income tax. Next, attention will be paid to the possibility to benefit from tax advantages in case of indirect investments into the equity of eligible start-ups and to factors increasing the tax breaks (id est investments in start-ups with primarily social objectives or innovative start-ups developing and marketing solely products/services with high technological value in the field of energy) as well as to other relevant fiscal profiles. The analysis will include an evaluation of prospective implications in terms of compatibility with European Union Law in the light of the Decision of the European Commission C(2013) final, dated 05.12.2013, and of the case law of the European Union Court of Justice. Finally, other prospective tax incentives regimes for start-up companies adopted by EU Member States other than Italy will be investigated and compared with the Italian provisions.