The "New Patent Box" incentive in Italy
- Prof. Germano Franceschin
- Feb 11
- 3 min read
It is a tax relief applied to costs to incentivize R&D activities and the economic exploitation of the following intangible assets:
- patents;
- designs;
- models;
- copyrighted software;
provided they are assets to be used in business activities.
This regime allows companies to benefit from reduced taxation based on the costs incurred for the development of these intangible assets.
Benefits of the New Patent Box
The new Patent Box incentive aims to promote technological innovation and encourage companies that invest in research and development.
The benefits of the new Patent Box include:
- a reduction in corporate tax (IRES + IRAP) of up to approximately 30.69% (calculated on an IRES of 24% and an IRAP of 3.9%) on costs incurred for the development of patents and other intangible assets covered by the law;
- a 110% increase is applied to eligible expenses related to research and development, meaning companies can deduct a greater portion of their expenses, thus reducing their taxable income;
- this incentive regime makes Italy a favorable environment for investment in innovation.
The incentive can be combined with the R&D Tax Credit.
Eligible Expenses in the New Patent Box
Eligible expenses under the new Patent Box incentive include expenses incurred for R&D and must be directly or indirectly related to the development and implementation of intangible assets, such as:
- personnel costs;
- materials;
- tools used for innovation;
- technical consultancy;
- equipment rental fees;
- expenses for the acquisition of industrial patents or rights to subsidized intangible assets.
- copyrighted software;
- industrial patents;
- designs and models.
The incentive can be obtained for expenses incurred within 8 years prior to the issuance of the patent, software, or industrial design.
Eligible Entities
The following may be eligible for the new Patent Box incentive:
- companies and holders of business income (IRES and IRAP);
- subsidiaries and branches of foreign entities resident in countries that have signed agreements against double taxation and on the exchange of information with Italy.
Beneficiaries must carry out R&D activities, including through contracts stipulated with:
- third-party companies other than those that directly or indirectly control the company;
- universities or
- research institutions and equivalent organizations;
aimed at the creation and development of the intangible assets listed above.
According to Revenue Agency Circular 5/E of February 24, 2023, the Patent Box can be used:
- by the licensee or sub-licensee under a contract that grants the right to economic exploitation of the asset;
- by business networks (Reti di Imprese) and consortium.
Deadlines
The new Patent Box incentive lasts for 5 tax periods and is irrevocable and renewable.
Patent Box incentive for Software and Designs
For patents, the Patent Box incentive begins in the year the patent is obtained.
For software and designs, to obtain Patent Box incentive, proof of the existence of the software and design is sufficient with a self-certification, made pursuant to Presidential Decree No. 445 of December 28, 2000; the benefit begins in the year the asset is registered with the SIAE (Società Italiana Autori Editori, the public entity competent for coyright).
Intragroup expenses Incurred for Patents, Software, and Designs
Intragroup expenses incurred by:
- by controlled or parent companies, including through family members, or;
- for activities carried out through research contracts signed with universities, research institutions, and similar organizations;
- with companies other than those that, directly or indirectly, control the company, or are controlled by it, or are controlled by the same company that controls the company.
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