Preferential taxation for patents and trademarks: the Italian Patent Box

The Stability Law project has introduced the patent box, which is an optional regime of preferential taxation applicable to incomes deriving from the direct use of: – intellectual works – industrial patents – trademarks that are functionally comparable to patents. They are basically trademarks that require the financing for research and development activities. Commercial trademarks are therefore excluded from the preferential regime. – know-how and other intangible assets that can be legally protected. The subjects that profit from the optional regime of preferential taxation are all the subjects resident in Italy that are holders of business income, that is corporations, partnerships, individual enterprises and permanent establishments of Italy of subjects that are resident in states that are part of the white list. The condition to be part of the preferential taxation regime is that activities of research and development are carried out, also through external research entities, aimed at the realization of trademarks, patents or intangible assets which are the object of the facilitation. The optional regime of preferential taxation foresees a percentage of tax exception for incomes: – Deriving from the license to use the assets – Deriving from, in case of direct use of the intangible assets, from the use of the same; basically, the imputed income deriving from the direct use of the preferential intangible assets is percentage tax exempted, that is the economic contribution of the same to the overall income obtained by the business. In order to determine such a sum an international ruling procedure shall be activated, pursuant to art. 8 of the Legislative Decree 269/2003, that is a particular form of consultation with the Inland Revenue (Agenzia delle Entrate). The ruling procedure shall be activated also in the case in which the incomes deriving from the license to use patents and trademarks, or the gains deriving from the assignment of the same, have been obtained from operations inside the same company group.
The preferential income will then be identified on the basis of the relation between the research and development costs afforded for the maintenance and development of the activity and the costs afforded to produce the asset. The definition of such a relation is delegated to a decree of the Ministry of Economic Development, in cooperation with the Ministry of Economy and Finance. In such a decree the types of trademarks that are part of the preferential taxation regime will be identified as well.
A separate discussion deserve the gains on transfer that are integrally tax-exempted on condition that, within the second taxation period subsequent to the transfer, at least the 90% of the compensation is re-invested in the maintenance and development of further potentially preferential intangible assets. The optional regime of preferential taxation will operate in the next five taxation periods and the percentages of tax exemption can be summed up as follows: – 2015 will be the first taxation period of the regime and the tax-free share of income shall be of 30% – In 2016 the tax-free share of income shall be of 40% – From 2017 to 2019 the tax-free share of income shall be of 50% For the gains on transfer no gradualness in the effect of the facilitation is foreseen. In order to profit from the preferential taxation regime the exercise of an irrevocable option for five years is requested.

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