The new Italian Patent Box: 110% extra deduction

The Italian Patent Box once again changed its shape.

By the publication of the 2022 Budget Law (law n. 234 of December 30th 2021) in the Gazzetta Ufficiale of December 31th 2021, the Italian Patent Box regime saw the introduction of relevant updates, partially modifying the Law Decree n. 146 of 2021, the so-called “Financial Decree”.

Let’s have a look to the new incentive.

All holders of business income and all kinds of institution can benefit from the Patent Box. It lasts 5 years, it is irrevocable and renewable.

The main news is the introduction of a 110% extra deduction on research and development costs related to specific types of intangible assets.

In particular, the intangible assets included in the 2022 Patent Box are: industrial patents, copyright protected software, designs and models.

It is therefore noticeable the exclusion from the intangible assets eligible for the Patent Box of trademarks, which L.D. 146/did include.

Same fate befell the know-how, the expertise related to a specific chemical, industrial or scientific process. Copyright is also partially excluded, as the new Patent Box can be only used in relation to copyright protected software.

It is now possible to benefit at the same time from the new Italian Patent Box and also from the tax credit for research and development activities, as the 2022 Budget Law has eliminated the ban to cumulate these two measures.

Another interesting aspect that should be highlighted is that businesses can benefit from the Patent Box in relation to intangible assets used directly or indirectly in their business activities.

Lastly, the new Patent Box provides also that, if the research and development costs related to industrial patents, copyright protected software, designs and models are incurred in one or more tax periods, it will be possible to use the deduction of the costs starting from the tax period in which the same were bore.

The increase of the deduction to 110% will be therefore applied to the costs incurred within the 8th tax period from which the intangible asset obtains the title of industrial property.