CORPORATE FISCAL INCENTIVES

In 2016, the Italian Government introduced a bundle of reforms aimed at making the country more competitive and attractive in terms of investment. As a result, Italy now has a very generous accelerated depreciation rules, R&D tax credits, and a patents box with wide coverage. It also has a flat-tax rate for citizens who transfer their residence to Italy and The Italian corporation tax rate has also been reduced to 22.5%. 

 

Thanks to these reforms and to the strength of its industry, Italy ranks 8th in the Global FDI Confidence Index, 2019. 

 

FISCAL INCENTIVES AIMED AT COMPANIES INCLUDE : 

 

  • PATENT BOX – a tax break on IP-related income that since 2019 has been extended until a 50% depreciation
     
  • R&D TAX CREDIT – aiming at encouraging investments in the R&D sector, it is a tax credit up to 50% of the increase of annual R&D expenses which can be used in order to reduce the amount of income tax or Regional Tax on Productive Activities, as well as of social security contributions.
     
  • CORPORATE INCOME TAX – reduction of the Corporate Income Tax to 22.5%. Further reductions are expected in 2022 (20.5%). 
     
  • SUPER & HYPER DEPRECIATION – aimed at facilitating business investments by allowing an extra-amortization on the purchase of qualified tangible assets.An over-valuation is applied to investments in newly purchased or leased tangible assets up to 170% and not exceeding the limit of € 20 millions. 
     
  • INDUSTRY 4.0 TRAINING – the reform provides for a 40% tax credit on the cost of personnel employed in training courses for the acquisition and consolidation of skills in “4.0” fields. This is expected to enhance new development of 4.0 skills, as well as diffusion of new technologies and expansion of R&D activities. 
     
  • EMPLOYMENT – a reform aimed at boosting the employment of young talents. Firms that employ workers under the age of 35 in 2019 and 2020 are granted a reduction in the labor taxes for the first three years of their employment, up to a maximum of 3,000 euros per year.
     
  • STARTUPS – This reform works on two levels. Newborn starups – less than 5 years old – with revenues lower that €5m receive an exemption from some taxes and access to flexible employee contracts. On the other side investors in innovative startups enjoy a 30% tax relief (Cap at €1m for individuals, €1.8 for companies). 

 

Many are also the Personal Fiscal Incentives introduced by the Italian Government. Among those, a 6 years 70% income tax exemption for new residents in the Country and a 90% tax exemption for Teachers and Researchers