An amendment dated November 25, 2024, signed by the Minister of Economic Development, Adolfo Urso, updated the Startup Act, modifying regulations dating back to 2012. This intervention represents an important step in accelerating the development of startups and innovation in Italy, with the objective of making the country more competitive internationally and attractive to foreign investors.

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The main new measures introduced include a 50% tax deduction for investments in startups for the first five years, with a threshold rising to 65% from 2025, subject to limitations for qualified holdings exceeding 25%. Additionally, some structural constraints proposed in the previous draft have been abolished, such as the requirement of a minimum share capital of €20,000, the hiring of at least one employee within two years, and the possession of registered patents or software. On the other hand, any company operating mainly as an agency or consultancy is excluded from the benefits. The incentive package also includes a dedicated tax credit for certified incubators and accelerators.

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Registration in the special startup registry will be valid for three years, with a possible extension to five for those meeting specific criteria, such as a 25% increase in R&D spending or obtaining a patent. Further extensions are planned for startups that transition into scale-ups, demonstrating an increase in capital exceeding €1 million or a doubling of revenues. The financial coverage for these measures will initially be provided through special funds from the Ministry of Enterprises and Made in Italy for 2025, followed by a mechanism that reduces the number of beneficiary startups while increasing revenues.

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Despite these advancements, some challenges remain. Italy’s bureaucratic complexity, with constraints such as mandatory payments to the INPS (National Social Security Institute), notarial intervention, stamps, and VAT, continues to be an obstacle compared to international best practices.

 

A comparison with the UK’s SEIS/EIS model highlights how the United Kingdom currently leads Europe in startup support, thanks to broader incentives and more streamlined regulations. However, the Italian system is attempting to align by introducing measures inspired by the British model, such as the 65% tax deduction, the retention of incentives in case of startup failure, and the extension of the special registry period up to nine years for those achieving specific goals.

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A major innovation is the involvement of pension funds, which will now be able to invest in startups. This could mark a paradigm shift, positioning Italy at the forefront in Europe. The goal is to channel part of retirement savings into high-tech sectors, promoting industrial development and national competitiveness. Moreover, Italian pension funds will be required to allocate a portion of their risk capital to maintain the tax exemption on capital gains they have benefited from so far.

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The 2024 reform, while representing a significant step forward, will need to be accompanied by further simplifications to overcome the structural limitations of Italy’s bureaucratic system and make the country fully competitive on a global scale.