The Patent Box is the optional tax relief scheme for income deriving from the use of intellectual property. To further stimulate investment, the Box will soon be simplified thanks to a proposal – in conformity with OECD guidelines - of the Guarantor for micro, small and medium enterprises, included in the annual report that analyzes the phenomena of transformation that pass through the business system of enterprises and the policies adopted to address the new challenges of innovation.
The Patent Box, intended to promote investments in intangible assets, was introduced in Italy in 2015. Companies that can show an income deriving from intangible assets - patents, trademarks (only for the years 2015 and 2016), models, know-how, software - can request and agree with the Italian Internal Revenue a tax rebate on the income resulting from these. For the first two years the Patent Box was in force, just under 7,000 applications were submitted to the Italian Internal Revenue, which represent a case history sufficient to make some observations. Of the applications examined (about 50% of those submitted) only 1-2% were rejected or not accepted; over 40% were at least partly accepted (source: Il Sole 24 Ore, May 2018).
This index highlights one of the two main problems that were encountered during these first years the Patent Box was in force, that is, the slowness with which the Italian Internal Revenue examines the applications presented. One of the reasons that led to this delay is closely linked to the second main problem, that is, the difficulty of calculating the bonus and finding the documents that justify it.
To overcome this, and especially to promote small and medium-sized enterprises where there has been a greater difficulty in presenting consistent documentation, the Italian Internal Revenue intends to define, for the different types of activities, the reference parameters that allow to standardize the calculation of the value of the Company’s intangible assets. Based on this new procedure, the applicant will no longer have to present a benchmark analysis to evaluate the remuneration deriving from routine activities, and consequently demonstrate the profitability deriving from intangible assets; on the contrary, it will be the Italian Internal Revenue that will provide the benchmark analyses based on the type of routine activity. In order to cover all types of activities, the distinction coded by the Ateco 2007 codes will be used.
With this methodology, once the remuneration of routine activities has been defined, it will be possible to identify, through the difference, the remuneration deriving from intangible assets on which the tax rebate can be requested. This methodology will be applied in cases where the Italian Internal Revenue will consider it applicable and the resulting proposal will be binding for the applicant.