The final version of the regulations now provides for an extra deduction of 110% (instead of 90% as per the Decree) of the R&D costs incurred in relation to certain types of intangible assets. In this respect, the final version of the law excludes the applicability of the extra deduction not only to R&D costs connected to trademarks (included by the Decree but excluded by the last version of the previous regime, in line with the provisions of Action 5 of the Base Erosion and Profit Shifting project) but also to knowhow (eligible up to now). In a nutshell, the only eligible costs that remain are those incurred in relation to the development of software protected by copyright, patents, designs and models.
Other amendments to the text of the Decree include the following:
- The applicability of the new regime to the five-year periods starting with the fiscal year (FY) ongoing on 22 October 2021 (therefore clearly excluding FY 2020)
- The possibility of combining the benefits from the "new" Patent Box with those deriving from the R&D tax credit
Finally, a mechanism aimed at recapturing costs incurred in the past has been introduced. From a timing perspective, it is now possible to benefit from the extra deduction not only for R&D expenses incurred from the FY in which the intangible asset obtains an industrial property title onwards, but also for those costs incurred in the previous eight FYs.
Despite the criticisms raised in recent months, the 2022 Budget Law substantially confirms the mechanisms provided by the Decree (albeit with some corrections aimed at eliminating the most evident inaccuracies, such as the timing of the transition from the old to the new regime), with a clear reduction in the attractiveness of the incentive compared to its original version introduced in 2015.
