Italy

R&D Tax Credit

The Italian Government provides R&D tax credits for eligible expenses, tax credits for qualified staff and university scholarships. Tax law also offers deductions from the Italian Regional Tax (IRAP) taxable basis for employees that are hired for the association in R&D activities. In addition, tax laws have outlined different intervals for regimes. For instance,  certain incentives are granted regularly without a specific time frame, whereas others must be claimed and obtained within specific dates.

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 Description of Incentive

Companies or taxpayers who are investing in R&D activities may claim a tax credit to offset tax liabilities. The R&D tax credit is available up to 50% of the annual increase of R&D expenses. The annual maximum a company can receive in credit for each beneficiary is set at €2.5 million. In addition, Taxpayers must have a yearly turnover under €500 million to be able to claim. The Italian Government allocates a budget of €600 million as the highest amount available to all companies claiming during a three year period in which the credit is available. The current period ranges from FY2014 to FY2016. Underutilised credit may be carried forward, however, carryback is also permitted.

Eligibility Requirements

Eligibility is reliant  on a minimum annual investment of €50,000, where the credit will not be available for smaller investments. Current and future investments that qualify to receive the credit,  must file an application to either the Finance Ministry of the Ministry for Economic Development to claim.

Other Considerations

A patent box regime is available to Italian resident companies carrying out R&D activities, directly or through outsourcing to universities or research institutes. The regime exempts a portion of income derived from the exploitation either directly or through licensing “qualifying intangible assets” or intellectual property.

Services

Swanson Reed offers the following services:

  • Advice on tax preparation relevant to claiming the R&D tax credits incentive
  • Preparation of documents relating to filing and substantiating a R&D taxation claim
  • R&D tax advice and consultations
  • R&D tax claim planning and preparation

For a full range of services in relation to the credit, please click here.

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