Starting from this year, a simpler procedure for the quantification of the portion of the eligible income is planned. Taxpayers could proceed with the self-quantification of this income by providing appropriate supporting documentation whose characteristics will be defined in the Decision of the Commissioner of Italian Revenue Agency to be issued within ninety days from the date of entry into force of the decree. Among the advantages achievable with the preparation of the documentation, there is the penalty protection from unfaithful tax return in the case tax authorities adjust the eligible income.

Among the economic measures provided in the Decree-Law No 34/2019, known as ”Decreto Crescita” (Growth Decree) an important procedural simplification is envisaged for the Patent Box regime. Starting from fiscal year 2019, the holders of business income who opt for this new procedure may choose, as an alternative to the ruling procedure, to determine and declare the eligible income indicating the necessary information to the aforementioned determination in a suitable documentation (whose possession will have to be ticked in the tax return, as already is required for the transfer pricing documentation). In practice, with this new procedure, the taxpayer will independently determine his benefit without any prior agreement with the Italian Tax Authorities. Taxpayers that want to apply for the tax relief must divide the decreasing variation to their taxable income into three annual quotas of the same amount 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.

In addition to the timing reduction, another significant advantage for the taxpayer is the grant of the penalty protection for unfaithful tax return in the event that during accesses, inspections, audits or other investigative activities, from which adjustments to the eligible income result, the taxpayer delivers to Tax authorities the mentioned documentation.

Access to the tax relief (and to the related penalty protection benefit) is not particularly "restrictive" since the new procedure:

  • it is also applicable if the ruling procedures are already underway, provided that the agreement has not yet been reached. In such a case, the taxpayer must send a specific communication of renunciation to the Italian Revenue Agency.
  • It is not precluded even to taxpayers who decide to submit a supplementary tax return concerning the possession of the appropriate documentation for each previous fiscal year subject to integration. The only condition to be respected is that this has to be presented before any formal knowledge about the beginning of any control activity related to the Patent Box.

This new legislation represents a significant simplification of the process of accessing to the Patent Box, since allows the taxpayer to give certain times for the use of the tax relief and also provides a bureaucratic advantage to the Financial Administration, which is no longer forced to preventive negotiations with all taxpayers, often considered long and expensive for both parties.

Now the remaining step is represented by the implementing act in order to understand the operating instructions for the proper preparation of the documentation; it is expected that it will be consistent with the instructions already provided by the Italian Revenue Agency concerning the submission of the instances relating to the ruling.


Dott. Matteo Coppola  
Transfer Pricing Manager - Milano