On 24 March 2015 the Investment Compact Decree (published on January 2015) was finally converted into law, with a number of modifications to the Italian patent box (IP Box) approved at the end of last year.
As mentioned in our previous posts (here and here), the peculiarity of the Italian regime is that the tax benefit covers not only patents but also other intellectual property rights, as, for instance, copyright, trademarks, designs, know how etc.
Within this framework, the legislator confirmed the discounted tax rates applicable to profits deriving from the exploitation of any intellectual property rights owned by Italian entities. The percentage of profits deriving from IP to be excluded from taxation amounts to 30% in the first year, 40% in the second year and 50% for the remaining three years. The regime is irrevocable and renewable after the first five years.
An essential condition to be eligible for the taxproperty rights is the result of R&D activities, carried out by the company either directly or given in outsourcing.
It is therefore essential for the ministerial decree which will implement the Law (and that is currently being drafted by the Ministry for Economic Development in conjunction with the Ministry of Economics), to define what would constitute R&D expenses. In light of the above, this is a delicate phase, essential for the success of the initiative which is aimed at creating an appealing environment for the growth of the economy of intangibles in Italy. The IP Box represents in fact an important step to stimulate innovation and, overall, to incentive foreign investments in the country.