Tax breaks for investors

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Who can benefit from the tax breaks

Tax breaks on investments in innovative startups and innovative SMEs apply only to investors with tax residence in Italy. Concessions are available to both individuals and companies investing in the capital of innovative startups and SMEs registered in the special section of the Companies Register.

Measure of the concessions

Individuals have the right to deduct in their annual tax return an amount equal to 30 percent of the investment made in the capital of one or more startups or innovative SMEs up to a maximum limit of 1,000,000 euros annually, with a minimum investment maintenance period of 3 years.

The amount of the benefit that is not deductible in the tax period, in case of incapacity, can be deducted from personal income tax in subsequent tax periods, but not beyond the third.

Companies that invest in the capital of startups or innovative SMEs are entitled to deduct from their total taxable income an amount equal to 30 percent of the investment made in the capital of one or more startups or innovative SMEs, with a maximum of 1,800,000 euros annually, with the obligation to maintain the investment for at least three years.

If the deduction exceeds the total declared income, the excess can be counted as an increase in the amount deductible from the total income of subsequent tax periods, but not beyond the third.

Required documentation

To be eligible for tax benefits on investments in innovative startups and innovative SMEs, the investor must have the following documentation:

• a certification from the eligible innovative startup or innovative SME that it has not exceeded the limit set forth in Article 4, Paragraph 7, or, if exceeded, the amount for which the deduction or deduction is available, to be issued within sixty days of the contribution or, for contributions made from the tax period following the one in progress as of December 31, 2016 and up to the date of entry into force of this decree, within ninety days of the date of publication of this decree in the Official Gazette;
• a copy of the investment plan of the eligible innovative start-up or innovative SME, containing detailed information on the object of the planned activity of the same enterprise, the related products, as well as the expected or current trend of sales and profits.

Both of these documents are made available within one's personal area on Mamacrowd following the closing of the campaign.

N.B. The tax year of reference for the deduction is the year in which the company benefiting from the investment completed the process of filing the shareholder list with the Chamber of Commerce. (DM 05/09/2019 art.3, paragraph 3)

Exclusions

The tax benefits do not apply:

(a) in the case of investments made through collective investment undertakings and companies, directly or indirectly, with public participation;

(b) in the case of investments in eligible innovative start-ups or innovative SMEs that qualify as:

1) enterprises in difficulty as defined in the European Commission's "Guidelines on State aid for rescuing and restructuring non-financial firms in difficulty" (2014/C 249/01);

2) enterprises that have received unlawful state aid that has not been fully recovered;

(3) enterprises in the shipbuilding and coal and steel sectors;

(c) innovative start-ups, eligible innovative SMEs and certified incubators, collective investment schemes, and other corporations that invest primarily in innovative start-ups or eligible innovative SMEs;

(d) in the case of direct investment, or indirect investment through the other capital companies that invest predominantly in innovative start-ups or eligible innovative SMEs and whose shares are not listed on a regulated market or a multilateral trading facility, to persons who own shares, securities or rights in the innovative start-up or eligible innovative SME that is the subject of the investment, with the exception of additional investments upon the fulfillment of the conditions set forth in paragraph 6 of Article 21 of Regulation (EU) No. 651/2014

With regard to the IRPEF/IRES deduction equal to 30 percent of the investment made, the DDL Concorrenza 2024 also specified that:

1. They are granted for a maximum of five years from the date of registration of the innovative start-up in the special section of the business register;
2. do not apply where a qualified shareholding is acquired with the investment, that is, more than 25 percent of the company's share capital or governance rights;
3. do not apply if the taxpayer is also a service provider to the start-up, directly or through a subsidiary or associated company, for a turnover exceeding 25 percent of the eligible investment.

65% Tax Break: An Opportunity for Anchor Investor under "De Minimis" Scheme

In addition to the standard 30 percent tax deduction for those who invest in innovative startups, there is an even more advantageous option: to benefit from a 65 percent IRPEF tax deduction on the investment.
However, this benefit is not automatic and can only be applied in special cases when specific regulatory requirements are met.

When is it possible to get the 65% deduction?

The 65% incentive applies when two basic conditions are met:

1. The company must meet the requirements of the "de minimis"regime
The de minimis regime allows state aid to be granted in a simplified manner, as long as the company does not exceed a ceiling of 300,000 euros of relief in a three-year period. The company must therefore:

• Fall within the de minimis aid limits;
• Be in compliance with tax obligations and not be in financial difficulty;
• There are also some limitations depending on the business sector.

2 .Investors must be identified prior to raising capital
To qualify for the 65%, investors must:

• Give their commitment to the investment before the official opening of the campaign;
• Are registered in a special system of the Ministry (which monitors de minimis incentives).

This makes the incentive particularly suitable for anchor investors, i.e., those strategic investors who make an early commitment, helping to lend solidity and credibility to the capital raising from its inception.

Features of the 65 percent relief

• IRPEF deduction of 65% on the amount invested for individuals.
• No risk of losing the benefit if the startup fails: the deduction remains valid even if the venture is unsuccessful.
• any transfer, even partial, of the investment before three years does not result in forfeiture of the benefit for cases of transfer that are independent of the taxpayer's will.
• Cannot be combined with the standard 30 percent deduction: it is necessary to choose one of the two modes.
• Innovative SMEs are not covered by this specific 65% benefit.
• Do not apply where a qualified shareholding is acquired with the investment, i.e., more than 25 percent of the share capital or governance rights;
• do not apply if the taxpayer is also a service provider to the start-up, either directly or through a subsidiary or associated company, with a turnover exceeding 25 percent of the eligible investment;

If you are an investor interested in this opportunity or would like more details on how this scheme works, contact us our team is available to provide you with more information.

Warning

We recommend that investors interested in the initiatives proposed on the portal www.mamacrowd.com to contact their tax advisors for the correct and best management of the benefits they are entitled to.