Investing in innovative start-ups is a good way to try to make money and at the same time enjoy tax benefits that in Italy are provided from 2013. In particular, the Decree of January 2014 signed by the Ministry of Economy and Finance has set the guidelines and the stake for all those who want to join the crowdfunding, that is the public collection of money to favor companies of that type.
Investing in startups, the tax breaks work as follows
How do tax breaks for those investing in startups? As established by the Decree, at least until the end of 2016, individuals will be able to deduct from IRPEF an amount equal to 19% of their cash payments for an amount not exceeding 500 thousand euros per year while legal entities will be able to deduct from IRES an amount equal to 20% of the payments made, for an amount not exceeding 1.8 million euros for each tax period and the benefits apply both to payments to a startup in the process of formation and to the capital increase in a startup already established. If the startups are social or develop and market innovative products or services with a high technological value in the energy sector, the benefits increase, the deductions rise to 25% and 27% respectively.
In order to be entitled to the above deductions, natural or legal persons must prove that they have a certificate issued by the innovative startup certifying the object of its activity, whether they are projects with a social vocation or innovative startups that develop and market innovative products or services with a high technological value in the energy field, a copy of the investment plan of the innovative startup containing detailed information on the object of the activity, on the products and on the trend of sales and profits and a certification issued by the startup demonstrating compliance with the lower limit of 2.5 million euros for payments of money for the tax period of the investment.
Rules for investing in startups
When you invest in startups there is no minimum ceiling and therefore everyone can join, each with their own financial resources, but bearing in mind that for natural and legal persons the investment must be maintained for at least two years if you do not want to incur heavy penalties. In any case, within seven days of joining, it is possible to withdraw at no cost, through a communication to the portal on which the investment was made. And then the money already paid to the online platform will be returned to those who are entitled to it.
The tax breaks are valid both in the case of direct and indirect investments, ie through corporations that invest in startups and the risks are the classic ones of any investment because these companies are born from nothing there is no historical to go and check their past balance sheets.
How to distinguish an innovative startup
How to distinguish an innovative startup? There are very precise rules to identify them and in the guidelines we can identify the main ones:
- They are capital companies, also in the form of cooperatives, with headquarters in Italy and Italian legislation.
- The members, as natural persons, hold at the time of the constitution of the startup and for the following 24 months, the majority of the shares representing the share capital and voting rights in the ordinary shareholders’ meeting.
- The startup is established and has been operating for no more than 48 months and has its principal place of business and interests in Italy.
- Starting from the 2nd year of activity of the innovative startup, the total annual production value, as shown in the last balance sheet approved within six months of the end of the financial year, does not exceed 5 million euro.
- It does not distribute and has not distributed profits in the past.
- Its exclusive or prevailing corporate purpose is the development, production and marketing of innovative products or services with high technological value.
- Expenditure on research and development is equal to or greater than 20% of the greater of the cost or total value of production of the innovative start-up.
- It employs as employees or collaborators, in a percentage equal to or greater than one third of the staff, men and women who hold a PhD degree or who are carrying out a PhD at an Italian or foreign university, or who are still in possession of a degree and who have carried out certified research activities at public or private research institutes in Italy or abroad for at least 3 years.