Italy's newly published Annual Law on Small and Medium-Sized Enterprises (Law No. 34/2026) reintroduces tax deferrals for business networks through 2028, exempting up to EUR 1 million in allocated profits per company annually, while mandating regulatory consolidation for start-ups within twelve months to streamline entrepreneurial frameworks. 

RF Report

Italy’s tax authority has published the Annual Law on Small and Medium-Sized Enterprises (Law No. 34/2026) in the Official Gazette on 23 March 2026, which introduces targeted tax measures to boost business collaboration and attract foreign investment.

Business network tax incentives return

Legislative Decree no. 5/2009 introduced the so-called network contract. This institution aims to create a joint network program under which two or more companies undertake to jointly carry out one or more economic activities falling within their respective corporate objectives, to increase their mutual innovative capacity and market competitiveness.

The law reinstates a three-year tax deferral scheme (2026-2028) for companies joining business networks. Under this arrangement, profits allocated to a network’s common fund are exempt from corporate income tax up to EUR 1 million annually per company, provided these funds finance certified investments outlined in the network’s joint program.

The scheme encourages businesses to pool resources for innovation and competitiveness while maintaining individual legal identities. Companies must complete planned investments within the following financial year, with oversight from the Revenue Agency and certification bodies. The total relief is capped at EUR 15 million for each year from 2027 to 2029, applicable when settling annual income tax obligations.

Regulatory overhaul for start-ups

Article 24 grants the government twelve months to consolidate regulations governing innovative start-ups, SMEs, incubators, and accelerators into a unified framework. This aims to eliminate redundant requirements, enhance legal clarity, and reduce administrative burdens while promoting entrepreneurship and competition.