Italy Expands Incentives to Encourage Corporate R&D Spending

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By Eric Lyman

Italy’s tax agency has unveiled an array of new incentives aimed at encouraging companies to spend more on research and development: doubling the percentage of expenses that can be claimed, allowing personnel costs to be figured into the calculations, raising the cap on benefits, and allowing the incentives to be added on top of public aid.

Practitioners said the changes, issued Jan. 25 in Resolution No. 12/E from Italy’s Agenzia Entrate, are “very significant,” adding that they may be able to help Italy close the gap with other European countries, where private R&D spending levels are higher.

“Italy has always trailed the European Union as a whole when it comes to research and development spending,” Maurizio Villani, head of the Studio Tributario Villani in the southern Italian city of Lecce, told Bloomberg BNA. “This new set of policies could help close that gap a little.”

Among the specifics in the rules, which update and extend a 2013 standard for R&D tax credits and incentives, the amount eligible for the incentives is doubled to 50 percent of the average of R&D spending over the previous three years.

The new rules also allow personnel costs for workers employed by the R&D branch of a company to be calculated as part of the incentives—previously, wages could be included in the calculations if they were for dependents specifically employed in the R&D process—and they quadruple the cap on the total value of incentives to 20 million euro ($21.4 million) from 5 million euro ($5.3 million).

Perhaps most importantly, according to Villani, the calculations are to be made independent of other public incentives the company receives.

“That means that if a company gets grants or loans or other incentives from the Italian state or the European Union or other public entities, that will not have an impact on the new incentives as long as the total amount doesn’t exceed 100 percent of the total research and development spending,” Villani said.

The tax credit and incentives will remain in effect until Dec. 31, 2020, and are eligible to be extended beyond that date.

According to a statement from the Agenzia Entrate, all companies operating in Italy, whether Italian or foreign, can access the benefits “regardless of sector, accounting system used, or size” as long as the company is engaged in research and development.

To contact the reporter on this story: Eric Lyman in Rome at

To contact the editor responsible for this story: Penny Sukhraj at

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