Article 56 of Decree-Law 50/2017 has removed trademarks from the list of IP rights that can benefit from the package of fiscal incentives known as the 'Patent Box' (for further information please see "Patent Box: new strategies for IP rights management"). However, a transitional system has been established for companies that have already exercised the Patent Box's three-year incentive option. Paradoxically, this decision strengthens the credibility and therefore the attractiveness of these incentives for investors, as it makes the Patent Box system more compatible with the Organisation for Economic Cooperation and Development (OECD) guidelines. However, the onerous accounting requirements that must be met for a company to avail of these incentives remain in place. As a result, a general rethink of the Patent Box's rules is advisable.

Patent Box and trademarks

Trademarks were on the list of IP rights that could benefit from the Patent Box's fiscal incentives for less than two years. The package was introduced in 2014, but became applicable only at the start of the 2015 fiscal year and fully operative in 2016 following the issue of Circular 11/E of April 7 2016, drawn up by the Revenue Agency and the Ministry for Economic Development, which introduced the Patent Box.

The Ministry for Economic Development and the Ministry of Economy and Finance introduced the Patent Box through Law 190/2014 (Article 1, paragraphs 37 to 43), amended by Law 33/2015 (Article 5). It was originally conceived of as an 'IP box', which is an optional system of incentivised taxation for revenue deriving from patents, creative works, know-how, designs, models and trademarks.

However, the inclusion of trademarks among the rights that could enjoy the Patent Box's incentives was strongly criticised, as it ran counter to the OECD's Action Plan 5, which states that incentives should be granted only in relation to patents and rights functionally equivalent thereto. In the first version of the Patent Box, a compromise was sought with trademarks being made functionally equivalent to patents. However, the wording made no sense, as the OECD's Action Plan 5 expressly stated that marketing-related intangibles – and first and foremost, distinctive signs – could not be considered functionally equivalent to patents, as they were deemed to be incompatible with the nexus approach on which the fiscal incentive was based. A few months after the Patent Box's introduction, the patent-equivalent trademark formula was annulled, which amended Decree-Law 3/2015. However, the Patent Box included trademarks tout court (ie, with no addition or qualification) and therefore ran counter to the OECD directives which give states only a limited period of time to comply therewith.

OECD compliance

OECD compliance was implemented in Italy through Article 56 of Decree-Law 50/2017, which removed trademarks from the list of IP rights that could benefit from the Patent Box's incentives. Further, Article 56 changed the scope of benefits in relation to know-how and compatibility with OECD directives. The previous rule stated that "company know-how and technical-industrial experience, including commercial or scientific know-how and experience may be protected as legally safeguarded confidential information". Instead the new text refers to "processes, formulas and know-how relating to experience acquired in the industrial, commercial or scientific fields", thus apparently limiting its scope to structural know-how, albeit not restricting it to only technical aspects. However, the new rules will penalise only rights holders that have already exercised the three-year option to take advantage of the Patent Box's incentives. Such holders can continue to avail of the Patent Box until the end of the three-year period through a transitional system which considers financial years that do not coincide with calendar years.

The government's decision to comply with OECD guidelines was largely foreseen and, although it reduces the Patent Box's objective scope of application (and creates problems regarding the interpretation of the ambiguous new wording concerning know-how), it makes the Italian IP framework more compatible with OECD guidelines and thus more attractive for investors.

However, the onerous accounting requirements that must be met for a company to avail of these incentives remain in place and involve costs that can exceed the benefits of the incentives offered, especially for small and medium-sized enterprises. Circular 11/E offers practical solutions which allow taxpayers to identify the benefits of the Patent Box's incentives and prove the protectability of those rights which are not based on patenting or registration – in particular, know-how – through the use of self-certification. However, the circular also imposes the adoption of analytical management accounting systems to determine:

  • costs and revenue which may be attributed to each single right; and
  • the nexus ratio, which, when qualified and overall costs are the same, would actually be superfluous.

A transitional system exists which broadly admits recourse to aggregate amounts for the first three years of incentives. However, these burdens – which are particularly onerous and, in some cases, bordering on the impossible (eg, the difficulty of subdividing research investments into research which has or has not produced IP rights, which are often inextricably linked) – have hindered the uptake of the Patent Box, particularly among smaller companies.


A general rethink of the Patent Box's rules is advisable so that it can be implemented in such a way that its incentives can be availed of by all types of investor and company (eg, the re-entry into the Italian framework of IP rights in the name of foreign subsidiaries of Italian business groups, which would allow the taxable base to be increased, thus levelling off the incentivisation costs for financial administration). In this way, the Patent Box could be added to the list of IP rights matters in which Italy excels, including:

  • the efficiency and rapidity of civil law cases, in which injunctions for ongoing infringement take only a few weeks or months to be issued; and
  • decisions on the merits, including compensation and marginal profit disgorgement orders, in which sums running into millions of Euro are no longer the exception but the rule and take approximately two years to be granted.

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For further information on this topic please contact Cesare Galli at IP Law Galli by telephone (+39 02 5412 3094) or email ( The IP Law Galli website can be accessed at