All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Italy: New decree extends Patent Box regime to commercial trademarks and introduces tax measures for “indirect lending”

foglia.jpg

emma.jpg

Giuliano Foglia


Marco Emma

With the so-called "Investment Compact" decree (Law Decree no. 3 of January 24 2015), the Italian Government introduced certain urgent measures to support the banking system and also to encourage investment. Article 5 of the decree amends the Patent Box to improve its attractiveness, keeping the overall structure of the beneficial regime recently adopted (see our Italy update in the December/January issue).

The most favourable adjustment is to the regime's scope of application: together with patents, formula, process and similar creations of the mind, the discounted tax rate may now apply to any kind of trademarks (including purely commercial ones), designs and models capable of legal protection.

Similarly to the original version of the regime, only taxpayers involved in qualifying research and development (R&D) activities may be admitted to the Patent Box regime. However, the decree now allows that such R&D activities may be also outsourced to any third (unrelated) party and not only to universities or similar research entities, as initially required.

The decree also confirmed that, as per the OECD's nexus approach, only part of the income deriving from intellectual property (IP) would be exempt, based on the ratio of (A) R&D expenses borne to maintain, increase and develop the intangible asset to (B) total expenses sustained for the creation of such IP right. For such purposes, expenses sustained for R&D activities (i) directly carried out by the taxpayers or (ii) outsourced to third (unrelated) parties are fully qualified for the regime. In addition, pursuant to the new decree, expenses (iii) borne for R&D activities outsourced to related entities (intra-group) and those (iv) sustained to acquire IP rights are now also taken into account, although up to the limit of 30% of the sum of the fully eligible R&D expenses under (i) and (ii) above. In other words, costs for IP acquisition and for R&D activities outsourced to related parties now also count for the nexus approach computation, but they would grant a full benefit only if resulting in 30% or less of the other "original" qualifying expenses under (i) and (ii).

Finally, in relation to the Patent Box regime the ruling procedure is no longer compulsory for intra-group transactions but is still necessary in relation to income stemming from direct use of IP rights.

The Investment Compact also includes tax measures to support access to alternative forms of "indirect" foreign financing. In particular, article 6 of the decree extended the scope of application of the exemption from Italian withholding tax to foreign institutional investors participating indirectly to banking financing transactions (that is, institutional investors providing funds to Italian lending banks). Only institutional investors established in "white-list" countries and subject to surveillance therein are able to take advantage of the exemption.

The measures enacted by the decree are in force as from January 25 2014. However, amendments could be passed during the process of conversion of the Decree into law by Parliament. If not converted before March 26, the decree must be deemed as retroactively non-effective.

Giuliano Foglia (foglia@virtax.it) and Marco Emma (emma@virtax.it)

Tremonti Vitali Romagnoli Piccardi e Associati

Tel: +39 06 3218022 (Rome) +39 02 58313707 (Milan)

Website: www.virtax.it

more across site & bottom lb ros

More from across our site

The Dutch TP decree marks a turn in the Netherlands as the country aligns its tax policies with OECD standards over claims it is a tax haven.
Gorka Echevarria talks to reporter Siqalane Taho about how inflation, e-invoicing and technology are affecting the laser printing firm in a post-COVID world.
Tax directors have called on companies to better secure their data as they generate ever-increasing amounts of information due to greater government scrutiny.
Incoming amendments to the treaty could increase costs on non-resident Indian service providers.
Experts say the proposed minimum tax does not align with the OECD’s pillar two regime and risks other countries pulling out.
The Malawian government has targeted US gemstone miner Columbia Gem House, while Amgen has successfully consolidated two separate tax disputes with the Internal Revenue Service.
ITR's latest quarterly PDF is now live, leading on the rise of tax technology.
ITR is delighted to reveal all the shortlisted firms, teams, and practitioners for the 2022 Americas Tax Awards – winners to be announced on September 22
‘Care’ is the operative word as HMRC seeks to clamp down on transfer pricing breaches next year.
Tax directors tell ITR that the CRA’s clampdown on unpaid taxes on insurance premiums is causing uncertainty for businesses as they try to stay compliant.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree