New rules for the tax incentive connected to the taxation of income derived from the intangible assets

Three days ago the Council of Ministers approved a law decree – currently not yet published in the Gazzetta Ufficiale – through which several relevant amendments have been introduced in the tax incentive called Patent Box set forth by art. 1, paragraphs from 37 to 45, law dated 23 December 2014 n. 190 (Financial Bill for 2015).

The amendments introduced by the aforementioned law decree can be summarized as follows:

  • widening of the objective scope of the rule: with regard to trademarks, the tax incentive  is no longer limited to "trademarks functionally equivalent to patents" but it is extended to all trademarks;
  • widening of the subjective scope of outsourcing: the R&D activity can be outsourced to universities, research institutions and similar bodies as well as companies other than the ones belonging to the same group;
  • review of method for determining the quota of the income benefiting from tax incentive: the quota results from the ratio between (a) the costs of R&D incurred for the maintenance, growth and development of the  intangible asset  and (b) the overall costs incurred to produce such an asset. The ratio can be increased by the cost for the acquisition of either the intangible asset or the R&D agreements entered with affiliates within the cap of 30% of expenses borne on its own or through third parties' outsourcing;
  • mandatory APA only in case of direct use of the intangible. Accordingly the APA is no longer required in case of indirect use of the intangible despite the users are related parties.

Please be aware that the Patent box is an optional regime that provides for a tax relief for the income arising from the exploitation of intangible assets and finalized to achieve a triple scope:

  • attracting intangible assets currently held abroad by Italian or foreign companies;
  • supporting the maintenance of intangible assets in Italy (or rather, prevent the relocation abroad);
  • supporting investment in R&D activities.

Pursuant to the Patent Box regime, a 50% deduction (30% for 2015 and 40% for 2016) is taken from the income derived from the exploitation of patents, trademarks, and other forms of qualifying intellectual property (IP) as secret formulas and know-how. Capital gains arising from the sale of said intangible are instead entirely excluded from corporate income taxation to the extent that the 90% of the relevant proceeds are reinvested, within the second fiscal year following the one in which the sale has been realized, in the maintenance and development of other eligible intangible assets.

The beneficiaries are resident companies, partnership and individual enterprise to the extent carrying out (also through outsourcing) R&D activities on the qualifying IP. The incentive concerns also Italian permanent establishments of foreign companies to the extent residing for tax purposes in a "white-list Country".

The regime is optional.The election remains in force for five fiscal years and cannot be revoked once exercised.