Frequently Asked Questions
Question: What measures has the government adopted to help small and medium businesses?
Reply: the Italian entrepreneurial system is very largely made up of micro-businesses. According to the latest available data, referring to 2009 and published by Istat, Italy has just over 4.2 million small and very small businesses. These constitute 95% of Italy's total business community, which is the real driving force of the Italian economy. It was precisely in view of this that in the "Save Italy" and "Grow Italy" decrees the government had already launched a series of measures to help the small and medium enterprises (SME). Under the "Sustainable Development" decree, approved on 22 June, 2012, the government once again issued provisions still further step up the measures already in force, and introduced others.
Here is a summary of the measures that have been adopted so far.
Guarantee fund: an additional guarantees for entrepreneurs
The "Save Italy" decree has refinanced the SME Guarantee Fund which was originally instituted in 1996 by Law No. 662. It is expected to increase the resources by €400 million in each of the years 2012, 2013 and 2014. A large number of SMEs are currently applying for access to the Fund. The latest statistics at 31 December, 2011 show that there were 59,968 applications (+13.8% over 2010). Of these, 55,209 have been admitted to the Guarantee Fund (+10.3% over 2010) for a total of €8.4 billion of funding agreed, and 4.4 billion in guarantees.
An examination of individual production sectors shows that 38.4% of the applications have come from the commercial sector, 40.9% from manufacturing, and 20.8% from services. The "Save Italy" decree offers the possibility to provide guarantees and counter- guarantees in an amount of up to 80% of the value of financial operations for the SMEs and consortia in the regions. If there are specific development objectives, the maximum guaranteed amount has been raised from €1.5 to €2.5 million for every individual company. It is also possible for an interest-bearing guarantee to be provided, both for individual operations and for portfolios of loans granted to SMEs. The implementing regulation will be adopted by a decree of the Minister for Economic Development, jointly with the Minister for the Economy and Finance. The Council of Ministers also introduced a series of mechanisms to monitor the procedures giving companies access to credit. This measure stems from the need to simplify applying to funding by SMEs. The decree tasks the Observatory for the Provision of Credit with appraising the documentation used by banks to assess company requests for funding, but also with helping companies to apply for this financial assistance.
Aid for Economic Growth, and new forms of financing
In order to assist the capitalisation of businesses and encourage new investment by reducing the cost of capital, the "Save Italy" decree has introduced a measure to reduce taxes on profits in proportion to the return on fresh capital ploughed back into the business (Italian acronym: ACE – ‘economic growth incentive scheme’). The introduction of the ACE will reduce the tax burden on companies by encouraging a rebalancing of their financial structure. Growth will also be boosted by two further measures to reduce the tax burden on businesses:
- Firstly, in respect of income tax, by making staff costs wholly deductible from taxable income for the purposes of the regional income tax (IRAP) payable;
- Secondly, IRAP will be adjusted directly by increasing the lump sum deductions provided by current law, but only for workers on an indefinite period employment contract who have not yet reached 35 years of age and for women workers, which differ according to the locality in which the business operates. With these measures, the easing of the company tax burden is also designed to reduce labour costs with expected positive results on the demand for our companies.
With the "Sustainable Development" decree, the government has also introduced new measures to simplify and increase the possibility for the SMEs to use new instruments for financing their operations. More specifically, both medium and small unlisted companies (according to the European classification) will be given greater access to the money and financial market. In essence, the SMEs can now issue short-term debt (bills of exchange) and medium and long-term debt (bonds and similar securities, and ‘subordinate participatory bonds’) also in a "dematerialised" form, in order to encourage their circulation.
To do this, three eligibility requirements must be met:
1. The issue of these securities must be assisted by a Sponsor to guarantee investors, sharing part of the risk. The Sponsor will be obliged to keep a share of the securities issued in proportion to their value in its own portfolio, until the natural maturity date;
2. The latest financial statement must have been audited by an external auditor;
3. The bills of exchange and bonds must be issued and subscribed for the benefit of qualifying investors who are not shareholders. The bills of exchange can be issued with a minimum one-month, and a maximum 18-month maturity; the decree also provides that the issuing companies can deduct the interest paid on the securities issued. To prevent tax avoidance, the issuer must submit to the Revenue Agency the data on the securities issued within 30 days thereafter. Lastly, the decree has introduced "subordinate participatory bonds", which are defined as bonds maturing by not less than 60 months, which entitle bondholders to a share of the company profits.
New companies: the introduction of ‘simplified’ and ‘reduced capital’ limited liability companies.
1. The simplified limited liability company: incorporating a company with a one euro share capital
The "Grow Italy" decree makes it possible for young people, who have not yet completed their 35th year, to incorporate a limited liability company, with a one euro share capital. The Memorandum of Association and registration of these companies are not subject to stamp duty and secretarial fees, or notarial fees.
2. Reduced capital limited liability companies
Italy is ranked 77th in the "Doing Business" classification because of the higher costs of starting up a business in Italy. Precisely to remove this major obstacle, the government issued the "Sustainable Development" decree to introduce a new form of limited liability company, the ‘reduced capital limited liability company’. Like the simplified limited liability company, the reduced capital company can also be incorporated under contract or by a unilateral deed, but the parties incorporating it must have attained their 35th birthday. The memorandum must be drawn up in the form of public deed and can also provide that the management of the company be entrusted to one or more natural persons who need not necessarily be shareholders.
National public contracts databank: cutting the red tape
Current legislation governing tendering for public contracts requires all companies, including small and medium enterprises, to produce a large number of documents and certificates. The "Simplify Italy" decree has substantially streamline the procedures for public tenders. Public corporations must now submit their documentation once only, updating it only in the event of variations. All the general, technical/organisational and economic/financial requirements will be stored in the National Public Contracts Databank, which will come into operation in January 2013. Two benefits will accrue from these novelties. The first is financial. The government departments and agencies will be able to conduct an online check of the file on each company. It is estimated that this will save €1.3 billion every year. The second benefit is administrative. The new databank will enhance the effectiveness, efficiency and transparency of government. In relation to tendering for public contracts and government franchises, the Fiscal Decree introduces a major novelty not only for the general public but also for business. Before this measure was introduced, any entrepreneur who had made an arrangement to pay tax debts in instalments could not tender for public contracts or franchises, because they were deemed to be in default. This situation has now been corrected with this new measure: for now, entrepreneurs can tender for public contracts and franchises because in reality very are not in default, even if the payment of the tax due takes the form of instalments. It will be the responsibility of the tax offices, after issuing the necessary certificates, to specify the actual tax situation of the taxpayer.
De minimis assistance for small and micro enterprises in the Abruzzo region
The "Grow Italy" decree provides that the Fund for ‘Urban Free Zones’ can also be used for de minimis State aids (of less than €200,000, which do not require notification to the European Union) for small and micro businesses in the areas stricken by the April 2009 earthquake in Abruzzo.
Businesses: government departments and agencies begin paying the backlog their payment arrears
The "Grow Italy" decree also provides that government departments and agencies debt arrears with suppliers at 31 December, 2011 can also be paid in the form of government bonds. For this purpose, the government has allocated €4.7 billion (€2.7 of which in cash) plus a further billion for intermediate consumption. A decree will be issued by the Minister of the Economy and Finance to establish the ways in which this will be done, specifying which government bonds can be assigned, and the procedures for so doing.
An Authority for micro, small and medium enterprises
Law No. 180 of 11 November, 2011 (Companies Statute) instituted the Authority for micro, small and medium enterprises (MPMI) at the Ministry of Economic Development, with the following remit:
- To monitor the implementation of the Small Businesses Law in the Italian legal system;
- To evaluate the ex ante and ex-post impact of regulation on the MPMI;
- To draft proposals for developing MPMI;
- To notify the institutions involved of any legislative or regulatory initiatives, or administrative measures likely to give impose financial or administrative charges on the MPMI;
- To submit a report on its activities to the Prime Minister, by February 28 of each year, with an ex ante appraisal and an ex post evaluation of the impact of public policies on the MPMI, and to propose measures to enhance the competitiveness of the MPMI.
Furthermore, the Authority has instituted a permanent consultation panel of the leading associations representing the MPMI to submit proposals and to report requests and criticisms.
Sistri
With the "Sustainable Development" decree, the government has extended to 30 June, 2013 the deadline for the entry into force of the Waste Traceability Monitoring System (SISTRI). This extends the period for appraising the way the system operates, also looking to the possibility of using the simplified procedures provided by Decree Law No. 138/2011 (known as the "Manoeuvre-bis”, adopted by the Berlusconi government), in cooperation with the most representative associations in this sector. However, the existing rules for monitoring the situation still remain in force.
Page published on 07/03/2012
Latest update: 09/07/2012
