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Tax incentives for investments in innovative startups and SMEs

The tax relief provided for subjects investing in innovative start-ups and SMEs includes:

• for individuals, an IRPEF deduction of 30% of the sum invested in the share capital, up to a maximum investment of 1,000,000 euros per year;
• for legal entities, an IRES deduction of 30% of the investment, with a maximum annual investment ceiling of € 1,800,000.

As an alternative to the ordinary deduction, for investments carried out from 1.1.2020, an IRPEF deduction equal to 50% of the sum invested by the taxpayer in the share capital of one or more innovative start-ups and SMEs is recognized, up to a maximum annual investment of 100,000 euros.

Tax credit for R&D

For research and development activities, a tax credit is granted:

• in an amount equal to 20% of the expenses carried out;
• up to a maximum limit of 4 million euros.

The eligible expenses are related to:

• workers involved in the above-mentioned R&D activities;
• depreciation charges related to the assets employed to carry out the activities/projects;
• R&D “extra-muros”, i.e. activities carried out jointly with universities, research institutes and equivalent bodies and other enterprises;
• technical expertise, industrial and biotechnological patents.

The tax facility operates for the tax period subsequent to 31.12.2019 (2020 for “solar” subjects) and up to the one in progress at 31.12.2022.

Patent Box

The Patent box regime is a type of tax bonus that was introduced to improve the development of intellectual property, granting tax benefits to resident and non-resident taxpayers, who are engaged in research and development activities. The main goal of the Patent box is to promote investments in research and development of intangible assets.

The eligible intangible assets are:

• Software protected by copyright;
• Technical-industrial and business know how;
• Patents (which can be granted or in process of being granted);
• Other legally protected IP, such as designs and models.

There are multiple benefits that Patent box regime offers. The main benefit for the Patent box businesses is a partial tax deduction up to 50% from Corporate tax for incomes from direct use or licensing of intangible assets included in the list above. Under the Patent box regime, taxpayers can partially deduct from their tax income the qualified incomes that are derived from the direct exploitation of intangibles or from licensing of the IP, such as royalties earned by the taxpayer, net of all IP-relating costs.

Tax credit for investments in capital goods

The tax credit is recognized in different ways in relation to the type of investments and the time they are carried out.

There are two different “window period”:

1. From 16.11.2020 to 31.12.2021
   • Purchase of tangible assets, a tax credit of 10% is recognized up to a maximum cost of 2 million euros;
   • Purchase of intangible assets, a tax credit of 10% is recognized up to a maximum cost of 1 million euros;
2. From 01.01.2022 to 31.12.2022
   • Purchase of tangible assets, a tax credit of 6% is recognized up to a maximum cost of 2 million euros;
   • Purchase of intangible assets, a tax credit of 6% is recognized up to a maximum cost of 1 million euros

For 4.0 goods:

1. From 16.11.2020 to 31.12.2021
   • Purchase of tangible assets 4.0, a tax credit of 50% is recognized up to a maximum cost of 2,5 million euros – tax credit of 30% for cost from 2,5 million to 10 million – tax credit of 10% for cost over 10 million;

2. From 01.01.2022 to 31.12.2022
   • Purchase of tangible assets 4.0, a tax credit of 40% is recognized up to a maximum cost of 2,5 million euros – tax credit of 20% for cost from 2,5 million to 10 million – tax credit of 10% for cost over 10 million;

For Purchase of intangible assets 4.0, a tax credit of 20% is recognized up to a maximum cost of 1 million euros.

Italian special tax regime for individuals who move their residency in Italy

Since the tax year 2017, Italy has introduced a special regime for individuals who transfer their tax residency to Italy. Such regime provides for a flat tax (i. e. substitutive tax) of 100.000,00 Euro (due each year) on the income sourced abroad, if particular conditions are met. Furthermore, the optional regime can be “extended” to other members of the family (i.e. spouse, sons, parents etc.) of the “principal” individual who opted for the regime. For the additional members of the family, the annual amount of the flat tax is of 25.000,00 Euro.

What are the strengths of your branch? What do your customers value most about your cooperation?

LDP’s strength point is its multidisciplinary expertise: Tax & Accounting, Legal, Payroll, Transfer Pricing, Global Mobility, Permanent Establishment M&A and Corporate Finance.

Working exclusively with multinational clients allowed us to understand their need to have professional Italian partners who work in English, respect the deadlines, are proactive and always available.

LDP is a very innovative Professional Firm offering always new digital solutions for its Client.

Choosing LDP means:

• Incorporate a company and employer registration in 3-4 days from the company formation;
• Integrate the newco under the group reporting;
• Smooth payroll migration from the previous payroll provider;
• Be compliant with Transfer Pricing rules;
• Full Tax, Legal support during the M&A process;
• Domicile the company or have a desk in LDP coworking area;
• Data visualization service, 24/24h access to data and kpi_s updated both for financial and payroll purposes;
• Be always updated on the law changes
• Delegate the cash movement activity

What makes the Accace Circle community different from other associations?

LDP decided to join Accace Circle because it believes in the power of being part of a large network of relationships.

Indeed, being part of a global business community like Accace means having the possibility to connect closely with trusted and expert BPO providers and advisors from various sectors, to share its own know-how to best serve the business needs of other Partners. Such a synergy becomes the key for mutual business growth. Indeed, these partnerships allows LDP to offer the same Tax, Legal and Labour services provided in Italy, also to clients whose branches are located abroad.

Accace Circle allowed LDP to be approached with Accace clients’ requests for development or initiation of business in Italy, and vice versa, thus fostering new international business relationships.

Beside this, Accace Circle is extremely online. Its Community forum and webinars foster debates on several business-specific subjects, thus encouraging the exchange of ideas, business models and practices among its members.

Moreover, thanks to its marketing team, Accace Circle succeeds in promoting its members, thus boosting their visibility and credibility, for example by publishing international news and success stories. Nowadays, this is essential for a given company in order to reach a wider clientele.