The budget law 2021 (Law No. 178, published in the Italian Official Gazette on December 30, 2020) attempts to introduce significant tax incentives especially for businesses. Some of the key provisions applicable for employees and companies/corporate taxpayers are as follows:
- Research and development tax credit:
The tax credit for investments in research and development, technical and other innovative activities is extended until December 31, 2022 as under:
- The tax credit for research and development has been increased from 12% to 20%, and the expense limit has been raised from EUR 3 million to EUR 4 million.
- The tax credit for technological innovation design or aesthetic growth has been increased from 6% to 10%, and the spending limit has been raised from EUR 1.5 million to EUR 2 million.
- Industry investments tax credit:
Businesses resident in Italy, including permanent establishments of non-residents, that make investments in:
- New capital goods used on production facilities located in Italy;
- Starting on November 16, 2020 and until December 31, 2022, (or by June 30, 2023, subject to terms and conditions for relevant purchase orders and its part payments), are entitled to a tax credit for several types of eligible goods.
- Research and development tax credits for southern Italy:
For 2021 and 2022, the following tax credit is granted for research and development investments made in accordance with section 1 (200) of Italian Law No. 160/2019, including COVID-19 research and development projects directly related to production facilities in the Italian regions of Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia, and Sicily:
|Percentage||Type of enterprise||Criteria to fulfill|
|25||large enterprises||employ at least 250 people with an annual turnover of at least EUR 50 million or an annual balance sheet total of at least EUR 43 million|
|35||medium-sized enterprises||employ at least 50 people and with an annual turnover of at least EUR 10 million;|
|45||small enterprises||that employ less than 50 people and with an annual turnover or an annual balance sheet total of no more than EUR 10 million|
- Tax credit for advertising investments:
In 2021 and 2022, a uniform tax credit of 50% of advertising investments made in daily newspapers and monthly magazines (either online or manual), is granted up to a maximum of EUR 50 million in 2021 and 2022, respectively.
- Tax credit for training on technical know-how:
The tax credit for training intended to develop or boost the technical know-how specified in the 4.0 Industry National Plan is awarded for the expenses listed in Article 31 (3) of Commission regulation (EU) 651/2014 dated June 17, 2014 for the tax period beginning December 31, 2020, and ending December 31, 2022.
- Special economic zones (SEZs)
For businesses starting new economic activities in special economic zones (SEZs), income tax from such economic activity carried out in SEZs is reduced by 50% as of the tax period in which such new economic activity was started and for the six subsequent tax periods.
- Tax credit for the capitalisation of companies:
The tax incentives for the capitalisation of companies are extended for transferees only to capital increases made until June 30 2021. The tax credit is increased from 30% to 50% for capital increases resolved upon and effected in the first half-year of 2021 subject to restrictions on profits distribution and set-off post approval of the financial statements for business year 2020 and by November 30, 2021.
- Fees for APAs applications for internationally acting companies:
For filing an advance pricing agreement (APA) ruling request before the Italian tax authorities, the taxpayer shall pay a fee equal to:
- €10,000 if the total turnover of the group to which the applicant taxpayer belongs is less than €100 million;
- €30,000 if the total turnover of the group to which the applicant taxpayer belongs is in the range between €100 million and €750 million;
- €50,000 if the total turnover of the group to which the applicant taxpayer belongs exceeds €750 million.
- Paternity leave:
Paternity leave has been increased to ten days in the event of a child’s birth or adoption (previously it was seven days).