ITALY Law and Practice Contributed by: Silvia Bordi, Emanuele Bosia, Federico Dettori and Rodrigo Boccioletti, Gianni & Origoni
fuel their growth. It offers a simplified listing process, lower access requirements, and ongoing guidance from a Euronext Growth Advisor. This market is particularly beneficial for companies that need access to capital but are not yet ready for a full-scale IPO. These government programmes, combined with the support provided by Euronext Growth Milan, create a strong environment for attract - ing VC and equity financing to innovative Italian companies. 4.2 Tax Treatment In Italy, the tax treatment of investments in growth, start-up and VC fund portfolio com - panies is characterised by significant incen - tives that deviate from the general corporate tax regime. These measures are specifically designed to encourage investments in innova - tive businesses and strengthen the country’s entrepreneurial ecosystem. Equity investments in qualifying innovative start- ups and SMEs benefit from tax deductions, allowing individuals and corporations to offset up to 30% of their investment annually. From 2025, individuals will access a 65% deduction for investments up to EUR100,000 per year under the de minimis regime, although this enhanced benefit will no longer apply to innovative SMEs. A further deviation from the general regime is the full capital gains tax exemption available for qualifying investments made between June 2021 and December 2025, provided the investment is held for at least three years. This exemption applies only to investments eligible for the 30% deduction and does not extend to de minimis investments. Certified incubators and accelerators investing in start-ups can also benefit from an 8% tax credit,
capped at EUR500,000 annually, provided the investment is maintained for three years. Addi - tionally, pension funds face new obligations from 2025, with mandatory allocations to VC funds reaching 10% by 2026. Non-compliance results in the loss of certain tax exemptions, further illustrating the state’s effort to channel capital into innovation. For debt investments, interest income is gener - ally subject to a 26% withholding tax for non-res - ident investors, although treaty relief may apply. Convertible instruments may, in some cases, qualify for capital gains treatment if structured appropriately. Equity-based incentive schemes such as stock options also enjoy favourable tax treatment, particularly within innovative start- ups, offering exemptions or deferrals that are not available under the standard rules. 4.3 Government Endorsement The Italian government has implemented several material initiatives to increase equity financing activity, particularly in the start-up and SME sec - tors. • Scale-up Act (Law 193/2024): enacted in December 2024, this Law introduces new incentives to enhance the start-up ecosys - tem, including expanded tax breaks and sup - port for emerging sectors like AI, blockchain and green technology. It aims to make Italy more attractive for equity investors by simpli - fying regulations and offering more financial incentives. • EU funding access: Italy’s participation in EU programmes like Horizon Europe and Inves - tEU provides Italian start-ups with access to significant cross-border funding. This strengthens Italy’s position in the European equity financing landscape, particularly in research-driven sectors.
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