With the Decision of the Commissioner of Italian Revenue Agency no° 658445/2019 published on 30 July 2019 (“the Act”), the changes introduced by Article 4 of the "Growth" Decree (Decree-Law No 34/2019) are implemented for those who decide to proceed directly with the determination of the eligible income, in place of the ruling procedure. The act identifies the structure and contents of the Documentation to be produced and sets the requirements for accessing to the related reward regime. In particular, the option for the self-determination has to be communicated in the tax return relating to the tax period to which it refers. Moreover, the same is irrevocable, renewable and lasts for a term of one year (unlike the procedure with rulings whose validity is equal to a five-year period).
The taxpayer is required to divide the decreasing variation, referring to the portion of income excluded, in three annual quotas, of the same amount, to be indicated in the IRES (corporate tax) and IRAP (regional tax on productive activities) tax returns relating to the fiscal year in which the option is exercised and in those relating to the two next ones.
With reference to the Documentation to be prepared, the act identifies two sections (A and B) in which, in particular in the second, information is provided concerning the elements that led to self-quantification. To facilitate the preparation of the document, the taxpayer is given the opportunity to refer to the contents contained in the transfer pricing documentation in the case a part of the information required in the aforementioned sections is already contained in the latter.
The Documentation must be signed by the legal representative of the taxpayer or by his delegate by electronic signature with a time stamp to be affixed within the date of submission of the tax return.
The Act states the mandatory nature of the Documentation in order to access to the benefit, clarifying that the total absence of this document entails the full recovery of the tax relief, with the consequent application of the relative interest and imposition of sanctions. Similar consequences are envisaged in the event of the absence of the electronic signature with the time stamp or misalignment, in whole or in part, of the information provided in the Documentation provided, which would entail, even separately, the full recovery of the tax relief, and with it the application of interests and the imposition of sanctions. The relevance of the “quality of the contents provided” within the Documentation remains, therefore the Documentation must be adequate to allow the Revenue Agency to carry out its own evaluations, providing a valid support and a clear and complete set of information that complies with the provisions of the Act.
A simplified approach is reserved for small companies: micro, small and medium-sized companies are given the possibility to use, within the application of the Residual Profit Split method, the benchmark analysis prepared for several sectors by the Revenue Agency and that is made available on request.
It is also possible for those who have a pending Patent Box procedure on the date of entry into force of the Growth Decree to be able to exercise the option for self-determination by communicating the irrevocable intention to renounce with the continuation of the same by giving appropriate notification to the Office of the Agency to which the application was submitted. This communication must be made via certified e-mail (“PEC”) or registered letter with return receipt.
Lastly, always in order to facilitate taxpayers, it is envisaged, for those who have determined autonomously the eligible income by indicating it in the tax return for the years prior to the date of entry into force of the Growth Decree, to disclose the possession of Documentation provided for in this Act by sending a specific notification to the competent Office, via PEC or registered letter with return receipt, provided that it takes place before the taxpayer's formal knowledge of the start of any control activity related to Patent Box.
With the publication of the Act, the economic operators have the possibility now of accessing to an interesting opportunity as Patent Box in a way which is definitely streamlined and clearer compared to the past.