2016 was a successful year for the Patent Box regime in Italy. The tax bonus was introduced by the Italian Stability Law in 2015 in order to improve the development of intellectual property, granting tax benefits to resident and non-resident taxpayers carrying out research and development activities. In the last days of December, the Italian Revenue Agency has reached agreements with four big companies allowing them to take advantage of this favorable tax regime for the next 5 years. In particular, the four companies, joining this measure aimed at strengthening businesses competitiveness, have a turnover higher than 300 million euro and operate in the fashion, chemistry, energy and telecommunications industries.
The Patent Box agreements have defined the methods and the criteria for calculating the economic contribution of intangible assets to the production of taxpayers' business income, to determine the amount of taxable income eligible. To quantify eligible income has been used in three cases the Cup method - Comparable uncontrolled price internal and external – and in one case the Rpsm - Residual profit split. Eligible intangible assets have been brands, trademarks, designs, models and know-how.
Patent box in detail
The Patent box regime is a tax bonus aimed at improving the development of intellectual property, granting tax benefits to resident and non-resident taxpayers carrying out research and development activities.The benefit concerns the optional partial tax exemption from corporate tax for those incomes arising from direct use or licensing of qualified intangible assets. Under this regime, taxpayers can partially exclude from their tax income, for purposes of the income tax and of regional tax on productive activities, those qualified incomes deriving from the direct exploitation of intangibles or from licensing of the IP, such as royalties earned by the taxpayer, net of all IP-relating costs.The bonus can be required by companies, individual entrepreneurs, other bodies different from companies carrying out business activities and non-resident taxpayers with a Permanent Establishment in Italy, if they are resident in a Country with which Italy has an effective tax information exchange agreement. The Patent Box tax regime concerns Software protected by copyright, patents, trademarks including collective brands, business and technical-industrial know how and other legally protected IP, such as designs and models.