The new Italian Patent Box: an interesting measure for the fashion industry

The Italian Parliament recently approved the so called Stability Law 2015, a bill containing a number of measures aimed at revitalizing the Italian economy and boosting growth in the system, including the so-called patent box, a tax incentive designed to encourage companies to profit from their patents by reducing the tax paid on those profits.

According to the bill, starting from 2015, Italian companies may request the application of a discounted tax rate for profits deriving from the exploitation of their intellectual property for the following five years.  The percentage of profits deriving from intellectual property rights to be excluded from taxation is 30 percent in the first year; 40 percent in the second year; and then 50 percent for the remaining three years.

The measure covers profits deriving from patents, but also copyrights and trademarks which are functionally equivalent to the patents, as well as from know-how exploited through licenses.  In the event the IP is exploited by the IP holder directly (or through subsidiaries), it will be necessary to determine the percentage of the IP profits within the profits generated by the company.  Furthermore the profits gained by the holder with the transfer of the IP do not concur to form the basis for if they have been re-invested for at least 90 percent in other intellectual property rights of the same holder.

The fashion industry might benefit significantly from the adoption of this measure, which represents an important step to stimulate innovation and, overall, to incentive foreign investments in Italy.