Italy’s building the ecosystem for growth. Shifting from Debt to Equity.

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In about one and a half hours as MPs we are called to vote the Budget Law for 2019 and I’d like to share some thoughts about it regarding what I call a bold cultural revolution.

In the said law a number of measures to increase the allocation of resources to SMEs and Startups IPOs, VC funds and innovative Startups are going to see the light.

First of all pension funds will be able to invest more than before in Italian and EU resident VC funds as the quota of allowed investment increases up to 10% of each pension fund assets.

The discipline of PIR (Long Term Investment Plans) is modified so that 3.5% of their funds should be invested in MTS (e.g. the small cap market AIM) and 3.5% in VC funds.

Considering that in the last 18 months 18.5bn Euros have been collected, the latter measure will give a significant boost to IPOs and equity investment to the so called “real economy” in a Country where debt has often been the option chosen by entrepreneurs to grow.

During the financial crisis, who hit very hard a “bank centered” Country like Italy, AIM market sometimes represented the only alternative for SMEs to find capital.

With this measure Milan can in a hand fund Italian SMEs and Startups for their growth and in the other hand attract foreign subjects that can enjoy not only the more capitalized MTS but also the 50% tax credit for SMEs IPO costs.

Moreover at least 15% of the dividends distributed by companies participated by the Ministry of Economy and Finance will be invested in VC funds and the Government is allocating a total amount of € 110m from FY2019 to FY2025 to set a fund supporting VC activities in the Country. The latter will be managed within the Ministry of Economic Development.

Another measure going to be approved is that in case of investments in Innovative Startups (as defined by the Italian Startup Act) Individuals and Companies will enjoy in 2019 a tax deduction increased from 30% up to 40% and to 50% only for Companies (CIT payers) in case of purchase of 100% quotas of the IS with an holding period of 3 financial years.

Within the new Flat Tax framework (one of League’s «warhorses» during the last electoral campaign), setting forth a tax rate of 15% (5% for new activities) for taxpayers with maximum revenues of € 65K, the work for equity subjects have been included other than all those professionals investing e.g. in Innovative Startups.

With financial allocations estimated in more than a billion Euros and significant tax deductions the framework for Growth is almost ready; the real challenge will be changing Italians’ mindset and convincing foreign entrepreneurs that Italy is the best place to Grow their ideas.

We are definitely ready to do that!

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