The measures introduced by Italy's “Relaunch Decree” to strengthen the capital of small and medium-sized enterprises in difficulty have come into force.
A tax credit and the ‘SME Capital Fund’ have now been implemented thanks to the decrees signed yesterday. These measures are set to benefit limited liability companies or cooperatives (excluding those operating in the banking, financial and insurance sectors) that complete a share capital increase, have their registered office in Italy and have revenues of between € 5 and 50 million and that, in the months of March and April 2020, recorded at least a 33% drop in revenues compared to 2019.

Tax credit

The tax credit in question shall apply to those that complete a share capital increase in one or more companies and amounts to 20% of the invested amount, with an investment not exceeding € 2 million and with the relative equity investment being held until 31 December 2023. An additional credit is also available, equal to 50% of the losses exceeding 10% of shareholders' equity, for up to 30% of the value of the share capital increase in question.
Applications must be submitted to the Italian Revenue Agency, in accordance with the terms and procedures that will be defined in a decree passed by the Agency's Director. Once all data has been checked by the Revenue Agency, the tax credit will be issued.

SME Capital Fund

Another important measure that has been introduced is the 'SME Capital Fund', which will be able to subscribe bonds or debt securities of companies with revenues exceeding € 10 million and that increase their share capital by at least € 250,000.
The Fund has been issued with € 4 billion, which will be managed by Invitalia, and the subordinated financial instruments will be remunerated at a favourable rate.
The funding obtained must be used for investments, working capital and personnel costs. Incentives have also been introduced for investments in environmental sustainability or technological innovation, as well as those aimed at maintaining employment levels, by reducing the repayment value.
Companies that benefit from this measure must fulfil reporting and monitoring obligations with regard to company performance.
The process to request and issue the funding will be managed quickly and easily by Invitalia, which will shortly be publishing the application form on its website, together with the other documentation required to apply.
This measure is expected to create a number of benefits, the main ones being: strengthening of the capital structure of SMEs, thanks to the contribution of private capital and the ‘amplification effect’ of the government loan; immediate liquidity available to companies; greater ease of access to bank loans.