The notion of innovative SMEs has been introduced in Italian legal system to represent the numerous points of contract regarding the discipline of innovative start-ups. The innovative SME was introduced by the Decree Law of 24 January 2015 n. 3 called “Investment Compact“, which outlines a specific discipline for all those small and medium enterprises that carry out their activities in the field of technological innovation.
Innovative SMEs can access a range of benefits once they satisfy the following requirements:
- they are established as joint-stock companies, even in a form of a cooperative
- they are resident in Italy in accordance with the Art. 73 of the TUIR, or in one of the member states of the EU or in countries that have special agreements with the European Economic Area (EEA), provided they have a production headquarter or a branch in Italy;
- certification of the last financial statements prepared by an auditor or auditing company registered in the official register of auditors.
- has no shares listed on a regulated market;
- It’s not registered in the special section of Business Register dedicated to innovative start-ups and certified incubators.
The last point excludes the possibility for innovative start-ups to re-enter simultaneously in the discipline of innovative SMEs. However, nothing prevents that once 5 years of application of the discipline on innovative start-ups have expired, the same company can have access to the status of an innovative SME.
In addition to the abovementioned requirements, there are 3 more closely related to the company’s innovative profile. By law, an innovative PMI should possess at least 2 of the following additional requirements:
- the volume of expenditure in research, development and innovation should be equal to, or greater than 3% of the greater amount between cost and total value of the production of innovative SMEs.
- employment as employees or collaborators in any title, in percentage equal to or greater than one-fifth of the total workforce, personnel holding PhD or who are conducting a research doctorate at an Italian or foreign university, or holds a degree and has carried out, for at least three years, certified research activities in public or private research organizations, in Italy or abroad, or staff with a Master’s degree.
- ownership of an industrial property right also as depositors or licensees
Innovative SMEs should also present the additional requirements set out in Recommendation 2003/361 / EC to access the qualification of SMEs, namely:
- maximum 250 employees,
- maximum annual turnover of € 50 million,
- total annual budget of € 43 million
Access to measures in favor of innovative SMEs is subject to registration by the company in the business register. Moreover, for these, there is no prohibition on the distribution of profits or limitations of the corporate object, as in innovative start-ups. Furthermore, there is no maximum limit on the production value of the recipient undertaking. The innovative SME scheme is therefore a natural evolution for innovative start-ups that, despite having exceeded five years of activity or five million turnovers, maintain a clear characteristics of innovation.
Hyper and Super amortization:
The Super Amortization had already been introduced in 2015 but its functioning has been extended until the end of 2017, however with some exceptions. It foresees an increase in the tax cost “for the subjects holding business income and for the merchants and professions who make investments in new instrumental material assets, excluding vehicles and other means of transport” of 40% (Article 1, paragraph 8 of Law No. 232 of 2016), unlike the Hyper Amortization introduced with the Budget Law of 2017 which increases the tax cost of assets by 150%.
The benefits relating to the Hyper Amortization, based on the provisions of article 1, paragraph 9, of law no. 232 of 2016, apply to:
- Investments in new, highly technological and interconnected tangible assets that can be steered towards the achievement of the objectives set for Industry 4.0;
- Investments in instrumental intangible assets (Software, systems and System Integration, platforms, App) made by parties benefiting from over-amortization, for which it’s envisaged an additional 40 % facilitation of the acquisition cost.
On the one hand, these tools are actually beneficial for companies, however, from a critical point of view we must consider that the benefits are only available until the end of 2017 (end of July 2018 but only on condition that by the end of 2017 the purchase order is accepted by the seller, and the buyer has paid a deposit of 20% .In addition, in the case of hyper-amortization, the interconnection requirement is also provided: the asset must have been put into operation and should have been interconnected to the production system).
Partnerships are therefore excluded from the benefit.
The patent Box is the facilitative measure introduced with the 2015 Stability Law for companies that generate intangible assets (brands, patents, know-how, software).
The main objective of this instrument is to is to favor the investment of companies in research and development activities, to fossilize the internally produced intangible assets and, by contrast, to ensure that domestic brands abroad are brought back to Italy.
All the subjects holding business income can ask for the access to this measure, no matter of the legal form, the size and accounting system adopted. It is however necessary that these subjects carry out research and development activities related to intangible assets in Italy, regardless of whether these activities are carried out internally, through universities or through third parties.
The benefit is not intended to incentivize the investment, it is rather similar to an obligation that recognizes the benefit at the end and only if the investment is maintained in Italy for 5 years.
The subsidy initially provided for a tax exemption equal to 30% of income produced in 2015 and 40% for those produced in 2016. For 4.0 purposes, the tax exemption was raised to 50% of income earned in 2017 deriving from use of such intangible assets.
To calculate the effective amount of the facilitation, we must first determine the income produced by the use of the immobilization that can be:
- Indirect: the holder grants the use of the intangible asset under license to third parties. Income taxable income is calculated in this case on the fees. However, the licensee is required to distinguish between direct and indirect costs (incurred by the licensor). In this regard, it should be emphasized that there is no specification of the distinction between the costs, that can entail incorrect calculation of the income eligible for some costs (think of amortization).
- Direct: the holder uses the intangible asset for the production and marketing of goods and services. The eligible income is calculated on the economic contribution of the intangible asset on the total income from the business. In this case, we want to try to minimize the differences deriving from the two methods of use.
Then it is necessary to define the relationship between:
• Research and Development (R&D) costs incurred for the maintenance, growth and development of the intangible asset object of the subsidy (coincide with the direct / qualified costs);
• Total cost incurred to produce the intangible asset (even unqualified costs, i.e. purchased under license). There is therefore a risk for the licensee to have the value of the benefit reduced to zero, in the event that he does not bear any qualified costs.
This ratio must be multiplied by the total income deriving from the intangible asset and by the tax exemption quota. This is how the facilitated share of income is calculated.
La Nuova Sabatini:
With the new Decree the government has issued the so-called “Sabatini bis” or “Nuova Sabatini” law. This act comes from its original version of 1965 Sabatini Law provided to grant the subsidies for all those companies that decide to buy production machinery. The objective is therefore to restart the investment economy, granting an advantage to micro, small and medium enterprises (according to the criteria deriving from the definition of the European Commission) that respect these characteristics:
- Do not operate in the coal industry, in financial and insurance activities and do not manufacture products for imitation or replacement of milk or dairy products,
- They are registered in the Register of Companies and have their headquarters in Italy,
- They are in full exercise of their responsibilities and are not in voluntary liquidation or subject to bankruptcy proceedings,
- They have not received and subsequently not repaid or deposited in a blocked account the aid from the European Commission,
- They are not in the conditions of companies in difficulty.
Companies that comply with all abovementioned requirements may be granted a loan or a leasing with facilitated conditions, given that a loan is corresponding to the total amount of interest calculated on the basis of amortization.
The amount of the subsidized loan can vary from a minimum of 20,000 euros to a maximum of 2 million euros, and the request can be made from March 31st (2014) until December 31st, 2016. The loan must be used for the purchase of new machinery, equipment, business assets and equipment for “productive use”, as well as hardware, software or digital technologies classified under items B.II.2, B.II.3 and B.II.4 in the assets of the balance sheet.
Therefore, it must be highlighted that this subsidy is not valid for the expenses related to machinery, plants and equipment used, as well as to the purchase of machinery with the price lower than 500 euros net of VAT. Finally, the purchase of the asset must be part of an expansion of an existing production unit, or the creation of a new one, or a process of diversification of the production of a plant or of the fundamental change in the overall production process of an existing production unit. To request the financing, the company must apply using the forms available on the site www.mise.gov.it, signing it with a digital signature of the legal representative or any attorney. The request must be presented to the leasing company or to the bank before starting the investment, with all the information relating to the company (description, type, value) and to the loan requested (amount, duration, amortization, type of loan).
In addition, the company must not submit any other requests to other banks or leasing companies for the financing of the same assets in question, as it undertakes not to sell the purchased good (s) in the three years subsequent to the date of completion of the investment.
The banks or leasing companies that receive this request must examine it, verifying the completeness of the documentation presented and its regularity; when the bank has positively assessed the position of creditworthiness of the company, it will have to transmit the request for funding to “Deposit and Consignment Office SPA”, a company owned by the Ministry of the Economy and Finance, which will be the one that actually provides granting of loans.
Once the request has been sent to the Deposit and Consignment Office, it will be necessary to wait 30 days for the decision by the Ministry of Economic Development that will issue the list of companies to which the financing with the facilitations is granted. This list will then indicate the amount of eligible investments, the concessions and the related disbursement plan. At this point the company must sign a loan agreement with the bank (or the leasing company) by the last day of the second month following the payment by the Deposit and Consignment Office of the provision booked, if the company does not respect this term will lose the facility on financing.
The company can start the investment only after submitting the application to the bank, but must conclude it within 12 months from the date of signing the bank loan or leasing contract. During the implementation of the investment the company may decide to change the asset for which the loan was requested, without prior authorization from the Ministry, under the condition that the two investments are functionally equivalent, and that the total expenditure does not result in an increase in funding. Instead, the method of financing cannot be changed by the company, in fact there is no possibility to decide to switch from a leasing contract to a bank loan and vice versa.
When the investment is realized the companies can / must request within 60 days the disbursement of the interest subsidy, with the form for the request for disbursement present on the site of the Ministry of economic development. The application must also contain the following documents:
- Statements attesting the requirement of new factory goods,
- Payment declarations issued by suppliers,
- If the investment exceeds € 150,000, the “anti-mafia declaration”.
The company must also keep in safe all the documents relating to the purchase of the asset in question for ten years, if in the case of control, the company did not have an invoice or other document attached to the purchase, the granted concession will be lost.