The New Italian Patent Box

In: Business and Management

Submitted By LukePPP
Words 4828
Pages 20

Author: Luca Marco Pappalardo

Summary: 1. The new Italian Patent Box: a brief overview. - 2. Eligible assets. - 3. Eligibility requirements and determination of the relevant income: the nexus approach. - 3.1 Nexus approach and trademarks: what went wrong? - 3.2 Looking at the issue from a comparative perspective - 4. - Conclusions.

1. The 2015 Italian Stability Law, Article 1, subsections from 37 to 45, introduces an optional taxation regime for income produced by intangible assets, known as ‘Patent Box’. The regime has been subsequently modified by Article 5 of the Law Decree n. 3 of 24 January 2015.
The regime allows taxpayers to exclude from their tax base a percentage of the income derived from certain intangible assets.
According to the Stability Law, individual and collective entrepreneurs as well may choose to benefit from this regime, including foreign entrepreneurs having a permanent establishment in Italy and being resident in a state that has both a double tax agreement with Italy and undertakes an effective exchange of information.
The election of the regime cannot be revoked and lasts for five fiscal years.
The income that benefits from the exemption may originate from: 1) direct use of the intangible assets by the taxpayer; 2) allowance of use of the intangible assets given by the taxpayer to third parties; 3) transfer of ownership of the relevant assets.
In case of income generated by direct use, the taxpayer must enter an Advanced Pricing Agreement (APA) with the Italian Revenue Agency in order to the determine the amount of taxable income attributable to the relevant assets. Originally, the APA was also mandatory in every case of royalties generated by intra-group operations (transfer of ownership as well as allowance of use). The Law…...

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