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The new Italian tax relief provides for a 110% increase in the costs of intangible assets for taxable income calculation purposes, thus allowing for aggregation with the tax credit for research and development activities.
In this article:
In its former structure, the Patent Box granted 50% tax relief on the economic contribution provided by the intangible assets developed or used by the company. It concerned, more specifically, direct use (i.e., the application of the intangible asset for the production and marketing of goods and/or the provision of services), indirect use (i.e., the granting to third parties of a licence to use the qualifying intangible asset), and capital gains on disposal (i.e., the profits obtained from the sale of the qualifying intangible asset). For a more detailed analysis of the previous regime, see the article ‘The Patent Box: A Guide to the Tax Benefit’.
Article 6 of Italian Decree-Law 2021/146 replaced the previous Patent box regime, introducing a super deduction for research and development costs incurred in relation to some intangible assets used directly or indirectly as part of the business activity.
This regime was subject to significant amendments implemented by Article 1, Section 10 of Italian Law 2021/324. While the amendments increased the positive effects of the incentive (which was increased from 90% to 110%), the scope of application of the new regime was limited (it is reserved only for certain intangible assets). The tax option, and thus the benefit from the Patent box, has a duration of five tax periods, is irrevocable and renewable.
This relief may be claimed by the owner of the right to the economic exploitation of the intangible asset.
The relief may be claimed by:
A major innovation in the new Patent Box is the exclusion of know-how among the assets considered for tax relief. The following intangible assets, on the other hand, remain eligible for the tax relief:
These assets may be used either directly (i.e. use in the context of any business activity which the rights to the intangible assets reserve to the holder of the right itself) or indirectly (granting the right to use such assets).
With regard to Article 6 of Italian Decree-Law 2021/146, one may note the exclusion of trademarks and know-how relating to the specific process in the chemical, industrial and scientific fields, from the scope of the assets eligible for tax reliefs
The following activities must be considered for eligibility:
The following expenses are relevant in determining the basis to which the 110% bonus is to be applied:
The new Patent box application must be reported in the tax return for the tax period to which it relates.
In order to avoid penalties in the event of a future cross-examination, applicants must produce a specific set of documents, which shields the taxpayer from penalties for misrepresentation in the event of an adjustment of the relief.
In particular, the document must be prepared in two sections:
This document must be prepared for each tax period for which the relief is claimed and its possession must be communicated to the Revenue Agency in the declaration relating to the tax period for which it benefits from the increase.
Micro, small and medium-sized enterprises may draw up the above documentation in a simplified form, by providing equivalent information.