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Italy: Tax ruling clarifies research and development (R&D) tax credit

Italy: Tax ruling clarifies R&D tax credit

A tax ruling (no. 58 of 2 November 2018) offers some clarification of research and development (R&D) investments made by foreign companies and specifically those that have R&D activities in Italy (or for those foreign companies that are considering establishing an R&D center in Italy).

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The tax ruling addresses the treatment of R&D investments made in the three fiscal years before the year in progress on 31 December 2015. The tax ruling implicitly confirms that R&D expenses incurred when conducting research on behalf of a foreign company are within the scope of the R&D tax credit mechanism.

Background

In Italy, a tax credit is available for Italian companies and Italian permanent establishments (PEs) of foreign companies investing in R&D from the fiscal year following the year that is in progress on 31 December 2014 and up to the fiscal year in progress on 31 December 2020.

Also, the 2019 budget bill includes changes to the R&D regime.

 

Read a November 2018 report [PDF 172 KB] prepared by the KPMG member firm in Italy

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