Frequently asked questions about doing business in Italy
Q. Can an innovative startup registered in Italy participate in tenders and procurement procedures in another member State of the European Union? Which taxation applies?
A: According to the relevant legislation (Law Decree 179/2012, art.25, paragraph 2), an innovative startup is a joint stock company, also established in a cooperative form, which complies with the following requirements:
• is a new company or established for no more than 5 years
• is resident in Italy, or in another country of the European Economic Area but with a production site or branch in Italy
• has an annual turnover of less than 5 million euros
• is not listed on a regulated market or on a multilateral trading platform
• does not distribute and has not distributed profits
• has as its exclusive or prevalent corporate purpose the development, production and marketing of a product or service with a high technological value
• is not the result of a merger, spin-off or sale of a business unit
Furthermore, a startup is innovative if it meets at least one of the following three requirements:
• incurs R&D and innovation expenses equal to at least 15% of the higher value between turnover and cost of production;
• employs highly qualified personnel (at least 1/3 PhDs, PhD students or researchers, or at least 2/3 with master's degrees);
• is the owner, custodian or licensee of at least one patent or owner of a registered software.
For all the requirements for setting up an innovative startup, together with the relevant legislation and the facilities provided for this type of company, please refer to the following web page:
https://www.mise.gov.it/index.php/it/impresa/competitivita-e-nuove-imprese/start-up-innovative
In principle, a company legally established in a Member State of the European Union can provide its services in other Member States on a stable basis or on a temporary and occasional basis. Participation in tenders and procurement procedures is part of the occasional and temporary provision of services. With regard to the applicable tax regulations, Italy has entered into agreements with the other Member States of the European Union to avoid double taxation:
Under these conventions, the profits of a company of a Contracting State are taxable only in that State, unless the company carries out an industrial or commercial activity in the other Contracting State through a permanent establishment located there.If the company carries out its business abroad through a permanent establishment, the profits of the company are taxable in the other State, but only to the extent that said profits are attributable to the permanent establishment.
Last update 22/02/2023
