In line with the models already approved by other member countries of the European Union (Belgium, France, Great Britain, Luxembourg, the Netherlands, Portugal, Spain), an optional preferential tax regime was introduced in Italy with the 2015 stability law: the so-called Patent Box.
The new instrument would allow entities with business income, without turnover limits, regardless of their legal form, the economic sector in which they operate and the accounting system adopted, to benefit from a deduction system equal to 50% of the income deriving from the use of intangible assets (software protected by copyright, industrial patents whether granted or in the process of being granted, including patents for inventions, including biotechnological inventions and the related supplementary protection certificates, patents for utility models, as well as patents for certificates for plant varieties and topographies of semiconductor products; trademarks, including collective trademarks, whether registered or in the process of being registered; designs and models, legally protectable; company information and technical-industrial experience, including commercial or scientific information that can be protected as secret information, legally protectable). The tax relief also includes fees deriving from the concession for use of the aforementioned assets.
According to the 2015 Stability Law, the patent box could have found indiscriminate application for all intellectual works; however, the implementing decree, subsequently confirmed in the same provision by the 2016 Stability Law, established that, among intellectual works, only software protected by copyright will be able to benefit from the new regime.
Even companies and entities of any kind, including trusts, with or without legal personality, not resident in the territory of the State, can join it provided they are resident in countries with which an agreement to avoid double taxation is in force (including Albania, Algeria, Argentina, Australia, Austria, Bangladesh, Belgium, Brazil, Bulgaria, Canada, Czechoslovakia, China, Cyprus, South Korea, Ivory Coast, Denmark, Ecuador, Egypt, United Arab Emirates, Estonia, Ethiopia, Russia, Philippines, Finland, France, Georgia, Germany, Ghana, Greece, Hungary, India, Indonesia, Ireland, Israel, Kazakhstan, Kuwait, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Morocco, Mauritius, Mexico, Mozambique, Norway, New Zealand, Oman, Netherlands, Pakistan, Poland, Portugal, United Kingdom, Romania, Senegal, Singapore, Spain, Sri Lanka, United States, South Africa, Sweden, Switzerland, Tanzania, Thailand, Trinidad and Tobago, Tunisia, Turkey, Ukraine, Uganda, Hungary, Uzbekistan, Venezuela, Vietnam, Zambia).
Another important innovation introduced through the implementing ministerial decree and subsequently corrected by the 2016 stability law consists in considering as a single asset, for the purposes of calculating deductible income, those assets that participate jointly and/or complementaryly for the finalization of the product. The government decree provided that this advantage could derive only from assets belonging to the same type, a specification that no longer applies with the issuance of the new financial law. Furthermore, capital gains deriving from the transfer of intangible assets would also be excluded from business income, provided that at least 90% of the consideration deriving from the transfer of the aforementioned assets is reinvested, before the end of the second tax period following the one in which the transfer occurred, in research and development activities aimed at the development, maintenance and growth of other intangible assets. The relief consists of a deduction of 30% in 2015, 40% in 2016 and 50% starting from 2017. Companies subject to bankruptcy proceedings, compulsory liquidation and extraordinary administration of large companies in crisis cannot benefit from the new deduction regime. The option has a duration of five tax periods, is irrevocable and renewable.
Taxpayers who carry out research and development activities directly or through independent third parties (universities, research centers) may join the optional regime. Research activities carried out by parent and/or controlled companies are excluded. It is not necessary for the R&D activities relating to a specific intangible asset to be carried out in the tax period in which, in practice, the benefit of the income deriving from the same asset is enjoyed; it is sufficient that such activity was carried out in previous tax periods.
However, it is always necessary that the research and development activity is directly linked to the asset generated by them; this verification must therefore be conducted separately asset by asset. The place where the research and development activity was carried out is irrelevant, and may also have taken place abroad.
Until 2016, the option must be directly communicated to the Revenue Agency on plain paper (by direct delivery or registered mail), starting from 2017, the adhesion to the option must be included in the income tax return, starting from the tax period to which the same return refers. The exercise of the option is also relevant for the purposes of determining the value of net production pursuant to Legislative Decree 15 December 1997, no. 446.
Sources of the patent box Stability Law 2015 (Law 23 December 2014, n. 190 published in the Official Journal n.300 of 29 December 2014), Ministerial Decree of 30 July 2015, Stability Law 2016 (Law 28 December 2015, n. 208, published in the Official Journal n.302 of 30 December 2015).
Palermo, February 23rd 2016.
Attorney Giovanni Babino
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