New tax benefits for the technological innovation of Italian enterprises

The new Italian Budget Law 2020 provides a new tax benefit for Italian companies, of any size, aimed at promoting technological innovation.

The law, in particular, foresees a tax credit which can be claimed for costs relating to the performance of activities aimed at the production of new or substantially improved products (i.e., tangible or intangible assets or services) or production processes, meaning those that differ, with respect to those already carried out or applied by the company, in terms of technological characteristics, performance, eco-compatibility, ergonomics or for other substantial elements relevant to the various production sectors. On the contrary, routine activities in order to improve product quality and activities generally aimed at differentiating the company’s products from similar products in the same competitive market for aesthetic or secondary elements are not considered as eligible technological innovation activities.

Eligible costs, within certain quantitative limits laid down by the budget law, are those relating to (a) employment or self-employment cooperation relationships for staff directly employed to perform technological innovation activities within the company; (b) depreciation, leasing or rent payments and other expenditure relating to movable tangible assets and software used in technological innovation projects; (c) contracts for eligible technological innovation activities to be personally performed by contractors, provided that these contractors are resident or located in other EU countries, or alternatively in States party to the Agreement on the European Economic Area; (d) consultancy and equivalent services relating to eligible technological innovation activities, provided that the relevant contracts are concluded with entities resident in the Italian territory or with entities resident or located in other Member States of the EU for tax purposes; (e) materials, supplies and other similar products used in technological innovation activities eligible for the tax credit, including prototypes or pilot plants.

For the above activities, a tax credit of 6% of the eligible expenses, up to a maximum of EUR 1.5 million, will be granted.

This measure was introduced within the context of other tax benefits also provided by the Budget Law in the form of tax credits, recognized for expenses relating to research and development activities and for design and aesthetic-related activities.