Pension Funds and Venture Capital: A Structural Regulatory Shift for Italian Innovation
Pension Funds and Venture Capital: A Structural Regulatory Shift for Italian Innovation
Curated by Att. Riccardo Piselli and J.D. Federico Cotroneo
The Legislative Decree No. 95 of 30 June 2025 (the so-called “Economic Decree”) marks an important step in strengthening the role of pension funds in financing the real economy and Italy’s innovation ecosystem. In particular, Article 18 redefines the tax regime applicable to qualified investments made by social security institutions and complementary pension schemes (pension funds), introducing conditions and incentives that make it easier to allocate resources to venture capital. With this framework, the legislator confirms that venture capital is no longer a marginal activity in the landscape of institutional investments, but a recognized component of the real economy. The guiding principle is that pension capital, if properly integrated and managed, can contribute to the growth of innovative companies without compromising prudence or the pension function.
The decree intervenes in the discipline of “qualified investments” established by Article 1, paragraphs 88–96, of Law No. 232 of 11 December 2016 (2017 Budget Law), which allows pension entities and pension funds to benefit from tax exemption on income derived from financial instruments held for at least five years.
A key point is the authentic interpretation recognizing as qualified not only actual investments but also binding commitments to make such investments directly or indirectly, including subscriptions to fund-of-funds or other vehicles investing in Venture Capital Funds (VCFs). This clarification facilitates the activation of incentives even before the full allocation of capital to portfolios of startups and innovative SMEs.
In an Italian market where total pension savings exceed €225 billion but the shares invested in venture capital have remained limited, this regulatory change represents an operational and strategic turning point.
INDICE
- A New Profile of Tax Incentive
- Compatibility with European Regulation and the Definition of SMEs
- A Strategic Challenge for Pension Funds
A New Profile of Tax Incentive
The provision gradually redefines the minimum investment thresholds in venture capital funds, contextualized within the broader portfolio of qualified investments:
- 3% in 2025,
- 5% in 2026,
- 10% from 2027.
These percentages apply to the ratio between investments in VCFs and total qualified investments reported in the previous year’s financial statements and constitute the condition to benefit from the tax exemption on income derived from realized qualified investments.
It should be noted that the new framework applies both to mandatory social security entities (so-called “casse di previdenza”) and complementary pension schemes (pension funds), with uniform conditions for access to the favorable regime in terms of thresholds and tax treatment.
Compatibility with European Regulation and the Definition of SMEs
The regulation stipulates that, for the purposes of qualifying as a VCF, Venture Capital Funds must invest at least 70% of the capital raised in unlisted SMEs resident in Italy or in EU/EEA states, and that these companies meet at least one of the alternative requirements established by Regulation (EU) No. 651/2014, Article 21, paragraph 3. This condition is crucial to ensure that pension capital is directed toward companies with genuine innovation profiles and growth potential.
A Strategic Challenge for Pension Funds
The issue is now not merely regulatory but strategic. Pension funds are called to carefully assess how to integrate venture capital into their investment policies, considering the long-term nature of their commitments, risk/return profiles, and the need to contribute to the sustainable growth of the Italian economy.
This legislation does not introduce a mere obligation but a conditional tax incentive mechanism, rewarding engagement in supporting innovative companies and revitalizing a still-developing venture capital market. Investing in venture capital, if carried out systematically and competently, can become a driver of innovation and returns for pension fund members.