Recently, several countries have introduced tax exemption schemes for small and young firms. A prominent European example is the Italian Law 221/2012, but, among others, Belgium and the UK have introduced similar law changes. The main goal of the Italian Law 221/2012 is to create favorable conditions for the establishment and the development of innovative enterprises in order to contribute significantly to economic growth and employment, especially youth employment. The main benefits for innovative start-ups are threefold:

  • tax incentives for equity investments
  • credit guarantees on bank loans
  • the option to have fixedterm employment contracts until the end of the fourth year after start-up

The academic literature on evaluating these policies is extremely scarce. Therefore the Innovation group aims to fill this gap by examining whether the Italian Law 221/2012 could be a role model for other EU member states. The Italian program is most interesting for a pilot study as it is the most sophisticated scheme and, in addition, it is most closely related to innovation. The main goal of this research line is to evaluate whether the Italian Law 221/2012 enables newly founded firms to acquire more equity and more debt capital as well as more labor. In addition, the overall firm performance as well as survival rate will be considered. Subsequently, also the Belgian policies for (innovative) start-ups will be investigated.