ITALY Trends and Developments Contributed by: Giuliano Foglia, Foglia & Partners
Special tax regime for pensioners The regime was introduced in 2019 to foster the relocation of foreign-based pensioners to the small Municipalities of the Southern Regions of Italy and, thus, promote investments and consumption in those specific areas. Electing taxpayers are subject to a 7% annual substi - tute tax on non-Italian-sourced income of any type. Similarly to the Flat Tax Regime, an exemption from the obligation to report foreign assets, investments and rights on the income tax return, as well as from the payment of IVIE and IVAFE, is also provided. Measures to attract corporations Italy offers a wide range of favourable regimes and measures for corporations and entities that are also of interest to foreign investors willing to invest in Italy. Incentives for R&D investments A tax credit, whose amount (ranging from 5% to 20%) depends on the type of investments made, is estab - lished for the following R&D activities: • research and development; • technological innovation; and • other innovative activities (such as design and aes - thetic conception). Eligible enterprises must comply with several stringent requirements (eg, certification of accounting, a certi - fied technical report on the R&D activities performed, notification to the Ministry of Enterprises and Made in Italy). The tax credit can only be offset against other taxes and social security contributions. Patent box regime The current patent box regime, as reshaped in 2021, provides for an increase in deductible research and development costs for specific intangible assets. In particular, the patent box regime allows: • a 110% increase in the expenses incurred in carry - ing out research and development activities aimed
at maintaining, enhancing, protecting, and increas - ing the value of eligible intangible assets; and • the recovery, starting from the tax period in which an eligible intangible asset obtains industrial prop - erty rights, of the higher deduction on the 110% increase of research and development expenses that contributed to its creation incurred in the pre - ceding eight years. Hyper-depreciation incentive Investments made in the period 2026-2028 in relation to certain new tangible and intangible capital goods are eligible for the so-called hyper-depreciation incen - tive. The incentive consists of a notional increase in the acquisition cost of the assets, relevant exclusively for calculating tax depreciation quotas and finance lease instalments deductible from the taxable base. The applicable increase varies depending on the amount invested and can range from 50% to 180%. Single ZES (Special Economic Zone) tax credit Since 2024, a tax credit, whose amount varies depend - ing on the Italian region, the size of the enterprise and the amount of the investment made, is granted to enterprises, already operating or establishing in the Single ZES (including all the Regions of the South of Italy and other specifically designated geographic areas), that carry out eligible investments. In particular, eligible investments are (provided that they are part of an initial investment project) those involving: • the purchase, including through finance lease agreements, of new machinery, plants, and equip - ment intended for existing production facilities or those to be established in the Single ZES; or • the purchase of land and the acquisition, construc - tion, or expansion of real estate assets are instru - mental to the investments (the value of land and buildings may not exceed 50% of the total value of the eligible investment).
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