In 2025, Italy introduced significant reforms through Law No. 193/2024, impacting both innovative startups and innovative SMEs (PMI innovative). These changes update the registration and eligibility criteria, aligning them more closely with EU definitions and addressing evolving market needs.
Below are the key changes compared to the previous framework.
Innovative startups: key changes
- SME definition alignment: innovative startups must now qualify as micro, small or medium enterprises (SMEs) per EU Recommendation 2003/361/EC, accounting for linked or partner companies. Turnover must be under € 50 million or assets under € 43 million. Startups controlled by large enterprises are excluded.
- Consultancy activities excluded: startups primarily engaged in consultancy or agency services no longer qualify.
- Higher R&D threshold: at least 15% of turnover or operating costs must be invested in research and development.
- Demonstrated technological innovation: startups must show technological innovation via patents, proprietary software, or advanced expertise.
- Reduced duration: standard innovative status lasts three years, extendable to seven years if scale-up requirements are met.
- Annual compliance declaration: startups must annually declare ongoing eligibility.
Innovative SMEs (PMI Innovative): new framework
- Definition and scope: innovative SMEs include all small and medium enterprises that actively pursue innovation, with similar criteria to startups but applicable to companies beyond the startup phase.
- Eligibility requirements: companies must demonstrate significant investment in innovation (at least 3% of turnover or at least € 50,000 annually) in research, development, or innovation projects, including digital transformation and sustainability.
- Registration: innovative SMEs are registered in a special section of the Companies Register, distinct from innovative startups, allowing for tailored incentives.
- Technological or organisational innovation: these SMEs must either possess technological advancement (patents, software, R&D) or organisational innovation (business process improvements, digitalisation).
- No turnover cap for scale-up SMEs: unlike startups, innovative SMEs do not have the strict five-year founding limit and can continue to benefit from the status as long as criteria are met.
- Benefits: innovative SMEs access tax credits, simplified administrative procedures, and easier access to funding mechanisms, supporting growth beyond the startup phase.
Comparison with previous legislation
Previously, the regulatory framework primarily focused on innovative startups, which were limited to a maximum lifespan of five years and a turnover cap of €5 million. The concept of innovative SMEs was less clearly defined within the legislation, resulting in fewer specific incentives and registration rules for this category. However, the 2025 reform formally recognises innovative SMEs, bridging the gap between startups, scale-ups, and mature innovative companies, thereby creating a continuous support system that reflects the full lifecycle of innovation-driven businesses.
SUBSCRIBE TO THE SCALEUPITALY NEWSLETTER
For more details, see the Ministero delle Imprese e del Made in Italy (MIMIT) Circular that provides clarifications on the new regulatory framework for innovative startups in Italy (in Italian): https://www.mimit.gov.it/images/stories/images/Circolare-startup-innovative-2025_nf.pdf