‘It’s too expensive’: This is the typical counter-argument clients resort to when financial advisors suggest them the best strategies to finance corporate growth and introduce public listing.
Indeed, advisory costs for public listing are most likely to discourage SMEs, making listing less appealing than the solutions proposed by banks and private equity funds.
However, a capital market more inclined towards private rather than public investors is never a plus for the competitive system in general and, over the long haul, it may jeopardise the private market that typically seeks its preferable way out in the public market.
The lawmaker seems to have identified an interesting solution to this issue. By a decree issued on April 23, 2018 the Ministry of Economic Development enacted the tax credit proposed in the Budget Law for 2018. The tax credit covers 50% of the advisory expenses (under any form whatsoever) incurred by SMEs in listing on a public market.
All public listings - with or without capital increase - are eligible for this tax benefit, which is granted up to a maximum of 500,000 Euro for each applicant company.
But let’s see in detail what this tax credit comprises.
The ministerial decree has enacted the tax incentive established by para 89-92 of law no. 205/2017 defining the relevant terms and requirements for enjoyment.
Beneficiaries are those companies, which qualify as SMEs according to the 2003/361/EC recommendation (that is companies employing fewer than 250 persons with an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet total not exceeding EUR 43 million). Applications can be filed by SMEs who have incurred advisory expenses to be admitted to stock exchanges or European multilateral trading systems, provided that the public listing is completed by the end of 2020.
The advisory expenses eligible to be credited include consultancy fees of external advisors for legal, tax, contractual, marketing and communication advice. Expenses incurred for advice provided internally or by legal persons related to the company are not admitted.
The decree recognizes a tax credit equal to 50% of the advisory expenses incurred as of January 2018 and until completion of the public listing (in any case by the end of December 31, 2020) up to a maximum amount of Euro 500,000.
To apply for the tax credit, SMEs must fill in and file electronically the application form attached to the Ministerial Decree (downloadable here) by sending a certified email message to the following address: dgpicpmi.div05@pec.mise.gov.it. Applications must be submitted from October 1 of the year in which the listing is obtained and March 31 of the following year.
Download the application form (PDF) [ 172 kb ]
The Ministry of Economic Development has set aside 80 million Euro, a ‘reservoir’ big enough to ensure granting of the tax credit to at least 160 SMEs that decide to opt for public listing.
