Proposed legislation for Italian Patent Box regime

Philippe Vanclooster 10 December 2014


In Italy the bill for the 2015 Stability Law will introduce a “Patent Box” regime for companies performing R&D activities, either directly or in cooperation with universities. Both Italian and foreign companies (through a PE) would be able to benefit from the reduced effective income tax rate on profits generated by R&D projects. The exemption (50%) is granted for income sourced from intangible assets (e.g. patents and other IP considered functionally equivalent). The exemption is limited to 30% and 40% the first 2 years (2015-2016). Important to note is, however, that the bill in almost all cases requires the taxpayer to enter into an advance pricing agreement with the Italian Revenue Agency in order to have access to this regime. For calculating the eligible income, the bill adopts the recently enunciated OECD “Nexus Approach” (in reference to BEPS Action Plan: Action 5 – Harmful tax practices).

More information about the proposed legislation can be found here.