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March 10, 2022

Italian Tax Authorities issue implementing instructions for new patent box regime

Executive summary

The Italian Tax Authorities issued implementing instructions (Instructions) in February 2022 (protocol n. 48243/2022) on the new patent box regime that was introduced by Law Decree n. 146 on 21 October 20211 (as modified by 2022 Budget Law2).

Under the new patent box regime, the amount of qualifying research and development (R&D) expenses incurred in relation to qualifying intellectual property (IP) may be recognized for tax purposes for an amount equal to 210% of the relevant expenditure for both corporate income tax (IRES) and regional tax (IRAP).

The Instructions include clarifications on qualifying R&D activities, eligible R&D expenses, specific requirements to qualify for the available penalty protection regime and procedures for electing the new incentive.

Detailed discussion

Starting from the fiscal year in course as of 31 December 2021 (i.e., FY2021 for calendar year companies), taxpayers (e.g., resident individuals carrying out a business activity, resident entities, Italian permanent establishments of nonresident entities) can elect the new patent box regime provided that they either directly carry out qualifying R&D activities or outsource such activities to universities, research institutions etc. to the extent that such taxpayers hold the right to economically exploit the qualifying IP and assume related R&D risks.

Qualifying IP and R&D activities

To access the new patent box regime a taxpayer is required to carry out specific R&D activities to develop and maintain qualifying IP (i.e., copyrighted software, industrial patents, legally protected models and designs).

Relevant R&D activities correspond to those qualifying for the existing R&D tax credit (i.e., those listed in Ministerial Decree 26 May 2020). They include activities relating to: (i) industrial research and experimental development; (ii) technological innovation; (iii) design and aesthetic ideation; and (iv) protection of legal rights on the qualifying IP.

The Instructions also clarify that to access the new patent box regime, R&D activities must be performed in laboratories or structures located within the Italian territory or within the European Union (EU) or qualifying European Economic Area (EEA).

Qualifying R&D expenses

Eligible expenses incurred in the context of the R&D activities mentioned above include: (i) personnel costs; (ii) depreciation, amortization, financial leasing fees, rents and other expenses related to tangible and intangible assets used to carry out qualifying R&D activities; (iii) consulting fees; (iv) expenses for raw materials, components and other goods; and (v) expenses for the maintenance, renewal and protection of legal rights on the qualifying IP, counterfeit prevention activities and related dispute management. 

R&D expenses are relevant in the fiscal year in which they are incurred and for the amount relevant for tax purposes regardless of any capitalization and irrespective of the accounting principle adopted.

If R&D expenses are incurred prior to the creation of a qualifying IP, the extra 110% deduction applies from the fiscal year in which the relevant IP is granted legal protection. The extra deduction includes R&D expenses incurred up to the eight fiscal years before IP protection is granted, provided that such expenses where not already included in the computation of the nexus ratio relevant for the application of the old patent box regime.

Penalty protection regime

Taxpayers may seek protection against penalties (ranging from 90% and 180%) imposed by the tax authorities if a deduction taken under the new regime is challenged. Taxpayers will have protection if they: (i) draft a set of documentation (Documentation); and (ii) notify the tax authorities of the possession of the Documentation in the tax return related to the fiscal year for which the deduction is claimed.

The Instructions provide guidance on the minimum mandatory information to be included in the Documentation and the specific format to follow in order to access the penalty protection regime. The Documentation shall be written in Italian and include a description of the qualifying R&D activities carried out (either directly or outsourced), a technical report prepared by the head of the R&D activities and countersigned by the legal representative of the company, a detailed list of the qualifying R&D expenses split by IP and year of reference and reconciled with the trial balance and the financial statements.

The Documentation must be signed by the Italian entity’s legal representative or a delegated person by means of an electronic signature and a time stamp no later than the date of filing of the relevant tax return.

Election of the new patent box regime

The election of the new patent box regime is made in the tax return related to the fiscal year for which the regime is first applied. It is irrevocable and lasts for five fiscal years with the possibility of subsequent renewals.

Transition rules

The Instructions clarify the transition rules applying to taxpayers who are still waiting for the conclusion of an old patent box ruling (including renewals of prior agreements) who may be allowed to renounce and elect the new patent box regime.

Such alternative is not available for fiscal years for which a patent box ruling (including renewals of prior agreements) is already concluded, or with reference to which taxpayers have elected the self-computation method.


For additional information with respect to this Alert, please contact the following:

Studio Legale Tributario, International Tax and Transaction Services, Milan

Studio Legale Tributario, Transfer Pricing, Milan

Studio Legale Tributario, International Tax and Transaction Services, Rome

Studio Legale Tributario, Business Tax Advisory, Rome

Studio Legale Tributario, Transfer pricing, Rome

Studio Legale Tributario, Bologna

Studio Legale Tributario, Florence

Studio Legale Tributario, Torino

Studio Legale Tributario, Treviso

Studio Legale Tributario, Verona

Ernst & Young LLP (United Kingdom), Italian Tax Desk, London

Ernst & Young LLP (United States), Italian Tax Desk, New York



  1. See EY Global Tax Alert, Italy issues Law Decree on new patent box regime, dated 22 October 2021.

  2. See EY Global Tax Alert, Italy issues 2022 Budget Law, dated 14 January 2022.


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