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San Marino Publishes Decree on Incentive Regime for High-tech Enterprises

San Marino has published Delegated Decree No. 25 of 4 February 2019, which provides new rules for the regulation of high-tech enterprises, including tax incentives. To qualify as a high-tech enterprise, certain conditions must be met, including inter alia that the company is governed by San Marino law, has been certified as highly innovative, and holds an industrial or service license. Companies that meet the general requirements are classified as one of three types of high-tech enterprise:

  • A First Level Technological Start Up (Start Up Tecnologica di Primo Livello - SUT I), which are newly established qualifying companies (the duration of SUT I status is three years);
  • A Second Level Technological Start Up (Start Up Tecnologica di Secondo Livello - SUT II), which are generally qualifying companies for which SUT I status has expired (the duration of SUT II status is four years); and
  • A High-Tech Company (Societá Altamente Tecnologica - SAT), which are generally qualifying companies for which SUT II status has expired.

Certain capital and employee number conditions also apply.

Depending on the status of the high-tech enterprise, incentives and benefits apply as follows:

  • General income tax exemption or reduced rate:
    • SUT I - exempted from the payment of the income tax
    • SUT II - pay income tax at a rate of 4%
    • SAT - pay income tax at a rate of 8% (for five years)
  • Income tax deductions for investments made by legal entities, in cash or in kind, in high-tech enterprises:
    • SUT I - 60% of the investment, up to EUR 2 million
    • SUT II - 30% of the investment, up to EUR 2 million
    • SAT - 15% of the investment, up to EUR 2 million
  • A tax deduction equal to 20% of qualifying capital increase realized each year for legal entities;
  • Income tax deductions for investments made by natural persons, in cash or in kind, in high-tech enterprises:
    • SUT I - 80% of the investment, up to EUR 1 million
    • SUT II - 60% of the investment, up to EUR 1 million
    • SAT - 20% of the investment, up to EUR 1 million
  • Exemptions for capital gains from the sale of investments in high-tech enterprises:
    • a 100% capital gains exemption if reinvested within two years in a company performing the same activities; and
    • a 50% capital gains exemption in other cases.

Other benefits are also provided for qualifying high-tech enterprises, including license fee exemptions, reduced registration rates, special residence permits for foreign workers and their families, and others

The Decree entered into force on 4 February 2019.

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