|The 2020 Italian Budget Law (Legge di Bilancio 2020) introduced several changes to the existing tax credit regime: by way of example, a new calculation method (from incremental to volumetric) as well as two new tax credits to
encourage investments in technological innovation/ecological transition and design. The 2020 Budget law also reconfirmed tax credits for R&D expenses.The 2021 Italian Budget Law (Legge di Bilancio 2021) has renewed the tax credit on a two-year base – FYs 2021 and 2022 – and increased the rates applicable:
20% for R&D; 10% for Technological Innovation, 15% for ecological transition and 4.0 technological innovation projects, 10% for Design for Design.
Compared to the previous regime, investments do not require a minimum expense to be eligible for tax credits. However, with the newly introduced measures, the tax credits’ maximum amount is now capped at €4 million for R&D projects and at €2 million for both for Innovation and Design ones.
The new method does not foresee an incremental calculation on a baseline. Rather, it is now based on a direct calculation on the total eligible costs in the fiscal year.
The new tax credit, by changing the calculation method, also encourages investment in skilled labour. In particular, it prizes qualified personnel with subordinate employment contract (or in a self-employment relationship with the
company) and, in particular, under-35s holding a PhD or a scientific degree. Furthermore, expenses relating to extra muros contracts with universities, research centres and innovative startups are also promoted.
Although no pre-approval is required, it is important that the company is able to provide in-depth technical and
financial documentation in case of a tax authority inspection.