Italy's patent box operational guidelines issued

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The Decree setting forth operational guidelines for the Italian Patent Box regime (the Decree) was published on October 20, 2015 in the Official Gazette. The Patent Box regime exempts from tax a percentage of a taxpayer’s income from intellectual property (IP) for which an appropriate election has been made. The regime originally was established in the 2015 Finance Act and underwent a subsequent extension of scope in the “Investment Compact” in March 2015. For the outline of the regime and the modifications, see our Tax Insights from December 2, 2014 “Proposed Legislation for Italian Patent Box regime” and February 18, 2015 “Italy’s new Patent Box regime: Additional Flexibility”. Until the operational guidelines were issued, it was not clear precisely how the regime would apply.     

From the Decree it is clear that the current intention is to benefit as large a pool of IP users as possible. The range of intangibles covered is wide, and includes marketing intangibles. All entities with rights to economic exploitation of the listed IP may benefit regardless of the nature of their legal ownership, provided they perform research and development (R&D) activities. The definition of R&D activities also is cast broadly, and includes marketing and IP maintenance activities. Only acquired/licensed IP with high levels of acquisition costs or licence fees or where significant R&D is performed by related parties is likely to suffer some restriction due to the calculation basis.

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