Thursday, 19 February 2015

Italy’s new Patent Box regime — additional flexibility

Italy has introduced a Patent Box regime based on the “nexus approach” set out by the Organisation for Economic Co-operation and Development (OECD).  Only a month after the Italian Parliament approved the 2015 Finance Act (Law no 190 of December 23, 2014), which enacted the Italian Patent Box regime, the Italian Government has extended its scope through a Law Decree “Investment Compact”, which is due to be converted into law within 60 days of its publication in the Official Gazette on January 24, 2015.
The Investment Compact extends benefits of the Patent Box to trademarks, removing the stipulation that they have to be “functionally equivalent to patents” although maintaining the requirement that the Patent Box applies to research and development (R&D) activities/costs.  It reduces the number of instances in which it is necessary to obtain an Advance Pricing Agreement (APA) in order to take advantage of the regime, which previously was obligatory in all cases.  In addition, it extends the situations where Italian taxpayers that do not perform R&D themselves or through universities are able to benefit from the regime.
These factors make the regime more attractive, although it is still necessary to await the Regulations which are expected to provide a definition of total qualifying expenditure to understand exactly how the provisions will apply.
The regime entered into force on January 1, 2015 and grants an exemption for Corporate and Regional Tax purposes in respect of income sourced from specified intangible assets.  It is being phased in during 2015 and 2016, reaching the final target exemption percentage of 50% by 2017.
Source & more info: PwC