Abstract
According to theoretical studies and empirical approaches, there is a link between taxation, innovation, and sustainable development: the more a Government seeks to ensure the birth, growth, survival, and competitiveness of innovative and sustainable firms, the better it must diversify and reinforce the national entrepreneurship ecosystem. A suitable solution is to develop new tax rules that support them.
This study seeks to fill the existing gap in literature on the synergy between specific fiscal policies introduced in favor of innovative entrepreneurship in line with EU State Aid rules, development, and sustainability by analyzing the Italian strategy. At least, the objective of the researcher is to provide some valuable suggestions to European policymakers developing new rules and measures with the same goal and also an inspiration for enlightened entrepreneurs. The method selected initially proposes an overview of Italian legislation to clarify why it is considered compatible with the European rules, followed by a proper analysis which clarifies its remarkable outcomes. Subsequently, the outcomes are highlighted through the development of the Italian strategy over the last 6 years, with the aim of reinforcing the initial assumption: the significance of an addressed fiscal policy for the sustainable development of an innovative business ecosystem. Indeed, innovative enterprises, achieving rapid growth, attracting international investments and representing a driving force for sustainable development – understood as the ability to cope with environmental, economic and social changes – have a broad impact on both overall productivity and new job opportunities.
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Notes
- 1.
In July 2012 the Council of Ministers of the European Union formulated two recommendations concerning start-ups: first of all, Italy was expressly encouraged to favor the creation of start-ups as important entities counteracting the issue of youth unemployment and, in addition to this, to simplify the regulatory framework and to focus on the financing methods of companies just starting out.
- 2.
According to article 2, paragraph 1, of the Decree-Law n. 155/2006, these are the social areas involved: social work; healthcare and social care; education and training; environmental protection; promotion of cultural heritage; social tourism; undergraduate and post-graduate education; cultural services, non-academic training; services for social enterprises.
- 3.
The leading cases from the Court of Justice relating to the notion of advantage are: De Gezamenlijke Steenkolenmijnen (C-30/59); SFEI (C-39/94); Altmark (C-280/00) and EDF (C- 124/10).
- 4.
Three categories of aid shall be compatible with the Internal Market: (a) aid having a social character, granted to individual consumers, without discrimination related to the origin of the products concerned; (b) aid to make good the damage caused by natural disasters or exceptional circumstances; and (c) aid granted to certain areas of the Federal Republic of Germany affected by the former division of Germany, in so far as such aid is required as a compensation for the economic disadvantages caused by that division. Then, five categories of aid may be considered to be compatible with the internal market: (a) aid to promote the economic development of underdeveloped areas of the EU (with abnormally poor living standards or high levels of unemployment); (b) aid to promote the execution of an important project of common European interest or to remedy a serious disturbance in the economy of a Member State; (c) aid to facilitate the development of certain economic activities or areas (provided it does not adversely affect trading conditions to an extent contrary to common interest); (d) aid to promote culture and heritage conservation (again provided it does not affect trading conditions and competition in the EU to an extent contrary to common interest); (e) such other categories of aid as may be specified by decisions of the Council as proposed by the Commission.
- 5.
It is worth noting that the new legislation contains a detailed concept of innovative startup including any companies with shared capital, whose shares are neither listed on a regulated market or on a multilateral negotiation system. These enterprises must also comply with the following requirements: (a) be newly incorporated or have been operational for less than 5 years; (b) have their headquarters in Italy or in another EU country, but with at least one production site in Italy; (c) have a yearly turnover lower than €5 million; (d) do not distribute profits; (e) have as exclusive or prevalent company objectives the production, development, and commercialization of innovative goods or services of high technological value; f) not to be the result of a merger, split-up or selling-off of a company or branch. Moreover, the innovative character of the enterprises is identified by at least one of the following criteria: (1) at least 15% of the company’s expenses can be attributed to R&D activities; (2) at least 1/3 of the total workforce are PhD students, the holders of a PhD or researchers; or, alternatively, 2/3 of the total workforce must hold a Master’s degree; (3) the enterprise is the holder, depositary or licensee of a registered patent (industrial property), or the owner and author of a registered software.
- 6.
Companies which do not carry on any significant activity. The rules establish relating earnings to assets, calculating a presumed minimum income and comparing predicted minimum earnings with effective results.
- 7.
Consulting the “Guide to the use of equity and work-for-equity plans” issued by the Ministry of Economic Development in March 2014 and available on the relative website, it is noted that the aim of the measure is to provide innovative startups and certified incubators with loyalty and inspired management, in a field in which human capital is extremely important. Moreover, the rules allow easier access to qualified professional services that could not otherwise be exploited by innovative start-ups, especially at an early stage of business activity – as, by definition, where they often operate with a lack of liquidity.
- 8.
The equity-based model of crowdfunding is a true collection of social capital: it determines, against the investment, realized through the payment of money, the appointment of a shareholding in the capital of the company and of the status of a shareholder, as well as of the related patrimonial and administrative rights.
- 9.
Italy’s budget law for 2017 (Law 11 December 2016, no. 232) makes a number of significant changes to the incentives.
- 10.
The Commission always acts applying suitable general principles which allow the compatibility of aid with exchange and transparency. The first criterion requires the aid to be assessed from a common perspective and not in reference to the beneficiary undertaking, or to the specific national context, considering the real possibilities of the measure to achieve the common objective which is the subject of the derogation. The second, on the other hand, invests the Commission with the task of verifying the compatibility of the measure with intra-Community trade and with competition, taking into account all the factors which, for this purpose, may be relevant.
- 11.
The benefits are assured to those who decide to invest in one or more innovative startups, certified incubators and SMEs in case of direct investments and even indirectly, through intermediary companies or by using collective investment schemes. The law ensures that incentives apply in the case of investments in the share capital and in the share premium reserve of the shares or stakes of the innovative startup. In case of indirect investment through other limited companies, it should be pointed out that only cash investments that determine an effective capitalization of the intermediary company may be incentivized. Furthermore, Circular no. 16/E/2014 of the Italian Revenue Agency has clarified that the eligible investments are all cash investments, carried out either at the incorporation of the innovative startup or when the registered capital of an already established startup is increased.
- 12.
Innovative startups registered in the Special Section of the Chamber of Commerce Business Register.
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Accordino, P. (2020). Fiscal Policy for Sustainable Development: The Italian Way to Promote Innovative Entrepreneurship According to European Union Rules. In: Mauerhofer, V., Rupo, D., Tarquinio, L. (eds) Sustainability and Law. Springer, Cham. https://doi.org/10.1007/978-3-030-42630-9_11
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