Italy clarifies tax credit for R&D activities

by Davide Anghileri

The Italian Revenue Agency has clarified aspects of Italy’s tax credit regime for research and development activities in Circular n. 13/E, released on 27 April.

Italy’s tax credit for R&D expenses is available from the fiscal year that was ongoing on 31 December 2015 to the fiscal year that is ongoing on 31 December 2020 (2015 to 2020 for enterprises that follow the calendar year). It was introduced by law decree n. 145 of 23 December 2013 and recently amended by law n. 232 of 11 December 2016 (the Budget law for 2017).

Some aspects of this regime have already been clarified; however, many questions have arisen regarding the practical application of the measure.

In the new circular, the Italian Revenue agency describes and analyzes changes to the regime made by the Budget law for 2017, giving practical examples of the calculation of the credit depending on the tax year of application and the type of R&D activities performed.

The circular provides questions and answers regarding the application of the regime, covering topics such as qualifying expenses for personnel engaged in eligible R&D activities, intragroup expenses, and how to determine and use the credit.

The circular also points out that if a taxpayer adopted a different interpretative solution that gave a greater benefit for the tax period 2015 and if this credit has already been used in compensation from 2016, the taxpayer can regularize its position according to ordinary rules, without penalties, by paying the amount of credit incorrectly used without interest and by submitting a supplementary declaration.

Davide Anghileri

Davide Anghileri is a PhD candidate at the University of Lausanne, where he is writing his thesis on the attribution of profits to PEs. He researches transfer pricing issues and lectures for the Master of Advanced Studies in International Taxation and Executive Program on Transfer Pricing.

Anghileri, a Contributing Editor at MNE Tax, previously worked as a policy advisor to the Swiss government on BEPS issues. He can be reached at danghileri@yahoo.it.

Davide Anghileri


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