The document summarizes Italy's new policies to support investment and innovation, focusing on "Industria 4.0" and innovative startups. It outlines the Italian Startup Act framework which provides benefits like online incorporation, tax breaks, and easier funding for startups. The 2017 budget law enhances supports including raising the R&D tax credit to 50%, increasing tax incentives for equity investments in startups to 30%, and introducing hyper-depreciation allowances to encourage digital transformation investments. The document positions Italy among having the most favorable tax treatment for digital investors in the world.

1. Italy’s new policies
for investment and innovation
Focus on “Industria 4.o”
and innovative startups
RobertoVolpe
Directorate-General for Industrial Policy, Competitiveness and SMEs
Italian Ministry of Economic Development
SMAU Berlin | Italy RestartsUp in Berlin
15-06-2017

2. The Italian
StartupAct
A special legal framework introduced in late 2012 (d.l. 179/2012).
An “innovative startup” is a newly-founded, unlisted limited company
(new or less than 5 years old, annual turnover lower than €5 mln) with
a focus on innovation.
(3 main requirements:
R&D, highly-qualified team, or IP).
The company may be based elsewhere in the EU, provided that it has a
production branch in Italy.
After registration, innovative startups can benefit from a tailor-made
legal framework, which helps them throughout their whole life-cycle
(first steps, growth, maturity) and affects the national
startup ecosystem as a whole (investors, incubators, universities…)

3. Main benefitsforinnovative startups
• Incorporation online, for free
• Cuts through red tape and fees
• Flexible corporate management
• Easier to cover losses
• Exemption from regulations
on dummy companies
• Tailor-made labour law
• Work for equity schemes
• 30% tax break for investors
• Equity crowdfunding
• Guarantee Fund for SMEs
• Special support by ITA
• Italia StartupVisa
• Fail-fast
• Innovative SMEs

4. Focus:adigitalprocedureforincorporation
and,fromJune2017,foranyamendmentoffoundingacts
 From 20 July 2016, innovative startups can redact their deed of
foundation and articles of associations for free, by using a standard
model, and with a digital signature.
The procedure can be carried out entirely online.
 From 22 June 2017, this procedure will also be available for
subsequent amendments of the founding acts.
 Why is it important? The digital procedure entails a massive cost
reduction for entrepreneurs (up to €2,000), making it easier to set up
a limited company. It can be followed independently (no notary
public is required) or with the technical (and free-of-charge)
assistance of the local Chamber of Commerce.
 31 March 2017: more than 400 startups incorporated online.

5. Italy’s2017BudgetLaw:
opportunitiesforinvestorsandinnovators
Tax credit on
(incremental) R&D
raised to 50%,
tax benefit increased
to € 20 million
Tax incentives
for equity investments
in innovative startup/SMEs
raised to 30%
up to € 1 million
Corporate income
tax rate lowered
From 27.5% to 24%
Renewal of 140%
super-depreciation.
New 250%
hyper-depreciation to
encourage Industry 4.0
investments
Startup losses can be
transferred to listed
companies holding 20% of
their shares
A brand-new
visa for investments
of more than €1 million,
€500,000 for investments in
innovative startups
ITAtech e AccelerateIT
initiatives by CDP (National
Promotion Bank)
No capital gain tax for
individual savings plans
(PIR) e new tax regime on
carried interest
remuneration

6. A30%taxbreakforstartupinvestors
This incentive is specifically targeted to innovative startups (and innovative
SMEs).
Since 2012, investors in the share capital of a registered innovative startups or
SME benefit from a large income tax break.
The 2017 Budget Law made it one of the most generous in
Europe (on par with UK’s EIS).
The rate of incentive is raised to:
 a 30% deduction from gross income tax (IRPEF) on the sum invested in
innovative startups by individuals (previously 19%), up to a ceiling of €1
million (previously €500,000)
 a 30% deduction on taxable income (IRES) on the sum invested by
companies (previously 20%), up to a ceiling of €1.8 million.
The minimum holding period allowed for the incentivised investment is 3
years (the incentive can be claimed before that date, but will have to be repaid in case of non-
compliance).

7. Hyper-depreciation
(«iper-ammortamento»)
The 2017 Budget Law introduces
a 150% hyper-depreciation, on tangible and intangible
assets functional for the digital transformation of industry.
As a result, for accounting purpose, the acquisition cost
amounts to 250% of the actual costs incurred. Due to fiscal
depreciation, this entails a significant tax deduction over
several years.
Companies that benefit from hyper-depreciation can also
claim an additional 40% depreciation bonus on selected,
stand-alone software (e.g. 3D modelling, data analytics
clients).
The benefit is available to any company, regardless of its
location and activity, and is automatically applied when the
yearly balance sheets are deposited.

8. Hyper-depreciation
(«iper-ammortamento»)
Hyper-depreciation is available for a wide set of
instrumental goods (see examples of eligible technologies
on the right). A full list is attached to the 2017 Budget law.
Three main categories:
 Computer-controlled capital equipment
 Quality control system
 Human-machine interfaces
Hyper-depreciation is also applied to solutions aimed at
revamping existing production systems.
Key concept of «interconnection»: to benefit from the
incentive, the I4.0 instrumental good must be demonstrably
«inter-connected», i.e. it must exchange information with
internal or external systems (e.g. clients, suppliers, other
actors along the supply chain).

9. TaxCreditonR&D
newdevelopmentsafterthe2017BudgetLaw
• The incentive, introduced in 2015 and previously amounting to
25% of the incremental annual expenditure on R&D (i.e.
additional expenditure compared to a fixed average), is raised
to 50%, for both internal and outsourced investment.
• The fixed reference for calculating the incentive is the average
expenditure between 2012 and 2014 fiscal years.
(if the company, e.g. a startup, was set up later than 2012, the
incorporation date is taken as reference)
• The maximum amount of the tax credit is raised from €5
million to €20 million.
• Moreover, multinational enterprises with a branch in Italy, or
that carry out R&D activities on behalf of foreign-based
companies, are now eligible for the incentive.
25% 50%
50% 50%
Before Now
5 mln 20 mln
Tax credit
Rate for Internal
investment
Rate for
outsourced
investment
Maximum
amount

10. Ataxtreatmentfordigitalinvestors
amongthemostfavourableintheworld
(PwC–ZEW2017)
Country
(Region)
Effective tax rate 2017 Ranking
Ireland -10.32% 1
Italy -8.84% 2
Hungary -6.85% 3
… … …
Switzerland (Zurich) 8.39% 11
United Kingdom 11.11% 16
France 12.39% 18
Spain 12.85% 20
Netherlands 13.61% 22
Germany 22.81% 31
USA (California) 22.82% 32
«Ireland, Italy and Hungary are at the top of
the 2017 tax digitisation index. The negative
effective burdens reflect the application of
R&D incentives and IP Box regimes, which
lead to investments in digital business
models being more profitable after tax than
before tax, or, to put in another way: they
are essentially subsidised.
[…] especially Italy, which traditionally ha[s]
rather high tax levels, [is] able to greatly
enhance [its] attractiveness.»

11. Informationresources
Innovative startups:
- Policy summary (English – Italian)
- Slides (English – Italian)
National Plan «Industria 4.0»:
- Booklet (English – Italian)
- Slides (English – Italian)

12. Want to know more? Write to us:
roberto.volpe.ext@mise.gov.it
startup@mise.gov.it
pminnovative@mise.gov.it
Directorate-General for Industrial Policy, Competitiveness and SMEs
Italian Ministry of Economic Development
SMAU Berlin | Italy RestartsUp in Berlin
15-06-2017