As has been known for several months now, and after more than 12 years since the reforms known as the Startup Act, in December 2024, the government passed a package of measures aimed at revitalizing Italy’s innovative startup ecosystem, called the Scaleup Act. Through the Annual Law for the Market and Competition 2023, the Centemero Law, and the 2025 Budget Law, the provision introduces incentives for venture capital, redefines the criteria for access and permanence in the Special Business Register, and establishes the figure of certified accelerators.
An attempt to foster innovation? Yes. A series of new regulations introduced in good faith? Hopefully. Interesting measures, yet still incomplete? Unfortunately, yes.
On the one hand, new investment opportunities are opening up for pension funds and social security institutions, but on the other, the regulatory framework remains incomplete, and concrete tools to support startups are still lacking. A half-hearted renewal, therefore, that fails to address the structural issues that have long hindered the growth of Italy’s innovation ecosystem.
Below, we have summarized the main topics discussed during our panel, which took place on Thursday, February 20, at the Legance law firm, on the occasion of our Members’ Meeting. All of this was made possible thanks to the valuable contributions of Paolo Guaragnella, Counsel at Legance, and Roberto Scibetta from the Pomara Scibetta & Partners.
A booster for Pension Funds and Capital Gains Tax Exemption
One of the measures marking a potentially positive shift for the ecosystem concerns pension funds and social security institutions. The government has introduced a mechanism to encourage these entities to invest in venture capital over the next two years.
Starting in 2025, in order to qualify for capital gains tax exemption on “qualified investments” made by the fund, at least 5% of the qualified investment portfolio must be allocated to venture capital funds—a threshold that will increase to 10% in 2026. European funds will also be eligible, an important step in attracting more foreign capital to Italy. This change is seen as having long-term positive effects on the ecosystem, as a significant portion of retirement savings will be directed toward key sectors of the real economy, including productive enterprises, infrastructure, and innovative startups.
Additionally, a capital gains tax exemption has been introduced for individuals who invested between June 2021 and December 2025. If the investment was made during this period, any future capital gain will be tax-free.
During the event, we explored how this incentive can also apply to investments made through fiduciary structures, but not to investment vehicles. This last aspect was considered crucial for Business Angels, such as those in the IAG network, who have been using these instruments for some time and may now benefit from tax-exempt capital gains on their investments.
De Minimis Regime: More Incentives but Also New Limits
One of the most significant changes concerns the strengthening of the de minimis regime, where the tax deduction benefit increases from 50% to 65%. Additionally, any unused portion of the deduction in the tax return will be converted into a tax credit, which can be used to offset any other tax liabilities.
However, new restrictions have been introduced alongside these benefits. Investors will not be allowed to hold more than 25% of the company’s capital after their investment, and tax advantages will only be available for investments made within three years of the startup’s registration in the business register (five years under the standard regime). Furthermore, only this type of incentive will recognize the SAFE model for tax benefits.
A crucial limitation to consider is that a startup cannot grant tax benefits beyond €300,000, a cap that also includes grants received from the government or other support initiatives. This effectively means that startups can raise a maximum of approximately €460,000 under this regime. As a result, many companies will be forced to opt for the standard 30% tax deduction, diminishing the effectiveness of the incentives designed to fuel growth.
If we look at typical funding round sizes in venture capital today, it becomes evident that even in pre-seed rounds, startups aim to raise amounts well above the newly imposed limits. This mismatch between market trends and the legal framework risks making the new regulations obsolete before investors can fully take advantage of them.
New Requirements to Qualify as an Innovative Startup and Scaleup
Another key topic discussed during our event with industry experts was the conditions for obtaining and maintaining the status of an innovative startup, which have become more stringent.
In addition to the existing requirements, the new regulations establish that a startup must be a micro, small, or medium-sized enterprise (SME)—meaning it cannot be controlled by a large corporation—and its primary business activity cannot be agency or consultancy services.
Moreover, the recognition of startup status will no longer be automatically valid for five years. Instead, it must be periodically renewed based on specific targets to be met within the third year of operation. At least one of the following conditions must be fulfilled:
- At least 25% of expenses allocated to R&D
- An experimental contract with a public institution
- Operating revenue growth of at least 50% compared to the second year
- Establishment of a capital reserve of at least €50,000 (including through SAFE)
- Acquisition of at least one patent
After the first five years, a startup can extend its status for an additional two years only if it achieves one of the following milestones:
- A funding round of at least €1 million
- An annual doubling of operating revenues (100% revenue growth)
Final Thoughts: A half-hearted reform
The Scaleup Act represents a step forward in the regulation of Italian startups, introducing new tools to encourage investments and strengthen innovative businesses. The incentives for pension funds to invest in venture capital, the stricter qualification criteria for startups, and the enhanced tax incentives are all positive elements that show a clear intention to support companies in their growth.
Italy now has a more modern regulatory framework, but for the country to truly become an innovation hub in Europe, it will be essential to continuously assess the impact of these measures and adjust them to correct any inefficiencies. The Scaleup Act can be seen as a good starting point, but the real challenge lies in making it work in the long run.
To compete on a European—if not global—level, Italy must not only monitor the effects of these policies but also remain flexible in adapting and improving them based on the real needs of the entrepreneurial ecosystem.
In conclusion, the hope is that we won’t have to wait another 12 years for new reforms—especially in the venture capital world, where innovation evolves daily and requires a high degree of adaptability.