Innovative Start-ups and SMEs: New Rules 2025 in Force.

New regulatory and fiscal framework for Start-ups and Innovative SMEs: definition, requirements, permanence in the Companies Register and subsidised investments.

As of 2025, the tax rules for innovative start-ups and SMEs have changed, both with regard to their definition and with regard to the benefits for those who invest in these types of companies. The changes are mainly contained in the annual Competition Law (Law 193/2024) and the so-called Startup Law (Law 162/2024).

For 2025, tax breaks are focused on Innovative Startups, with enhanced measures such as tax credit for incubators and higher IRPEF/IRES deductions. Innovative SMEs, on the other hand, see the scope of incentives limited: the 50 per cent deduction has not been extended.

These changes outline a strategy that prioritises the early stage of entrepreneurial development, directing resources to innovative start-ups to foster innovation and scale-up.

New definition of Innovative Startup.

The definition of innovative startup was updated by Law 193/2024 to include more specific requirements, aligning with European directives and market needs. According to the new legislation, an innovative start-up must:

• be a micro, small or medium-sized enterprise (MSME) classified according to Recommendation 2003/361/EC, with an annual turnover of less than EUR 50 million or a balance sheet total not exceeding EUR 43 million (a start-up participated by a large enterprise is therefore excluded);
• have as their exclusive or predominant corporate purpose the development, production and marketing of innovative products or services with high technological value;
• exclude predominantly consultancy activities and thus start-ups that operate primarily as agencies or provide consultancy services no longer fall into the category;
• invest in research and development by allocating at least 15 per cent of annual turnover or operating costs to innovative projects;
• demonstrate a relevant technological component through registered patents, developed software or highly qualified teams.

By changing the definition of an innovative start-up, the "standard" stay in the special section of the Companies Register is reduced to three years, although some requirements make an extension possible. However, start-ups that meet the requirements for the scale-up phase will be able to benefit from additional tax breaks for another four years (a total of seven years), with priority access to subsidised financing.

Permanence in the special section of the Companies Register.

The permanence in the special section of the commercial register, reserved for innovative start-ups, was thus extended to a maximum of 7 years (3 + 2 + 2) with changes to the conditions for maintaining the status.

• First verification within three years: start-ups must prove that they have achieved (within twelve or six months, provided they have been registered in the special register for more than or less than eighteen months, respectively) the above-mentioned objectives in terms of turnover growth, recruitment of qualified staff or investment in technology. Otherwise, they can register as Innovative SMEs.
• Extension up to 7 years: it is possible to extend the stay of start-ups by a further 4 years (2+2) provided the start-up is in a scale-up phase. The extension is only granted if:
• turnover has grown by at least 20% annually over the last two years.
• partnership contracts were concluded with research organisations or large companies.

Withdrawal of status.

Failure to meet the new requirements results in the automatic revocation of the innovative start-up status and removal from the special register.

NB: For start-ups already registered by 18 December 2024, there is a special transitional regime. To remain registered, they must meet at least one of the above requirements:

• for start-ups that have been registered for more than eighteen months, the adjustment must be made within 12 months of the expiry of the third year;
• for start-ups that have been registered for less than eighteen months, the adjustment must be made within six months of that deadline.

The changes regarding the definition of innovative startup and the rules for remaining in the special register of the Companies Registry were therefore incorporated into the previous legislation, namely Decree Law No. 179 of 18 October 2012 (the so-called Startup Act), converted with amendments into Law No. 221 of 17 December 2012.

Facilitated Investments in Innovative Start-ups.

IRPEF and IRES deductions.

Investments in the share capital of innovative start-ups continue to benefit from a 40 per cent IRPEF deduction for individuals, applicable to the amount invested directly or through collective investment undertakings.

For IRES taxpayers, the portion of the investment that does not contribute to the formation of taxable income is maintained (Article 29 of DL No. 179/2012, as amended).

De minimis deductions increase.

The 50% deduction, introduced by the previous legislation, is increased to 65% for investments in innovative start-ups, provided they fall within the limits of the de minimis regime.

Tax credit for incubators and accelerators.

Certified incubators investing in innovative start-ups will be eligible for a tax credit of 8 per cent on the amount invested, up to a maximum of EUR 500,000 per year, starting in 2025, with the obligation to maintain the investment for at least three years.

What is changing for Innovative SMEs.

The facility allowing a 50 per cent IRPEF deduction for investments in innovative SMEs expired definitively on 31 December 2024, making this measure inapplicable for investments made in 2025.

Companies registered in the special register of innovative SMEs retain access to specific benefits. To access these benefits, however, they must meet the requirements updated by Law No. 193/2024 (which include new criteria for innovativeness and financial transparency) and prepare a detailed business plan demonstrating how the investments will contribute to the development of innovative products or services.