Patent box Italy: how the 110% deduction works (2026)

Think of a company that pays its developers €100,000 in a year and walks away with working software. The tax office treats that €100,000 as an ordinary business cost. Fine. The patent box then hands you a bonus deduction worth 110% of it.

So who gets to claim it? Which assets and costs count? How do you opt in, and what does it really save? The answers are below, with a worked example (invented numbers) and a look at how the patent box Italy offers fits with the R&D tax credit. Never met IRES or IRAP? Read our beginner’s map from zero to a first round first and come back.

What is the patent box in Italy?

Most tax breaks reward what a company earns. The patent box rewards what it spends building intangible assets. The text sits in Article 6 of Decree-Law 146/2021, which Law 215/2021 converted. Put R&D money into certain kinds of intellectual property and you can deduct a further 110% of it from the base of IRES (corporate income tax) and from the base of IRAP (the regional production tax). The original text said 90%. It now says 110%.

It’s a deduction, not a refund. It lowers the income you pay tax on, so you need taxable income for it to be worth anything. A company still in loss gets no saving this year.

Which assets and costs qualify?

The assets are software protected by copyright, industrial patents (our guide to how to patent an idea in Italy covers how you get one), designs and models, with utility models in the same group according to law firm Andersen’s reading of the rules. They have to be used, directly or indirectly, in your business. Trademarks and know-how are out. Brand names don’t count, however much you spent on them.

The costs are R&D costs linked to those assets. The work can be done in-house, or contracted out to independent third parties, universities or research bodies. R&D bought from companies in your own group, or from companies that control you or that you control, doesn’t count, as a regional agency’s guide spells out. What passes as R&D follows the OECD’s Frascati Manual, the same yardstick the R&D tax credit uses.

Who can use it, and how do you opt in?

In principle, anyone with business income, whatever the legal form: an SRL, a sole trader, a consortium. Foreign companies can use it too if they have a permanent establishment in Italy. So an innovative startup uses it on the same terms as a manufacturer founded in 1975.

You opt in inside your tax return. The option runs for five tax years, it can’t be revoked and you can renew it afterwards. Pick the year with care, because you’re locked in.

One practical point for startups: it saves tax only when there’s tax to save. If the company is still in loss, the extra deduction makes the loss bigger but puts no money back in your pocket this year.

How much can you save? A worked example

Imagine an SRL that spends €100,000 in one year on its own developers to build a software product it owns. Assume all of it qualifies as R&D and the company has enough taxable income to use the whole deduction. The example is invented, and it uses the ordinary rates quoted in the Region of Basilicata’s guide: 24% IRES and 3.9% IRAP.

Step	Amount
Qualifying R&D cost	€100,000
Extra deduction (110% of the cost)	€110,000
IRES saved (24%)	€26,400
IRAP saved (3.9%)	€4,290
Total tax saved	€30,690, or 30.69% of the cost

Compare that with the R&D tax credit, which pays 10% of qualifying research costs, or €10,000 here. The two don’t simply add up, and that’s the next section.

Patent box and R&D tax credit: can you have both?

Yes, since the 2022 budget law (Law 234/2021) removed the ban that Article 6 originally contained. There’s a price. The Agenzia delle Entrate’s Circolare 5/E of 24 February 2023, as summarised by Andersen, says the credit must be calculated net of the income tax and IRAP that the patent box saves on the same costs.

Run the numbers from the example. Take the €30,690 of tax you saved off the €100,000 cost and the credit’s base is €69,310. Ten percent of that is about €6,931, not €10,000. Add the two benefits and you get roughly €37,600: better than either one alone, and still short of the plain sum.

If you used the credit in earlier years on costs you now cover with the patent box, you have to recalculate it and pay back any excess through form F24. One professional guide describes that repayment as free of penalties and interest when done on time. It’s a job for your accountant, and it’s the best argument for opting in with a plan rather than at the last minute. Our R&D tax credit guide covers the rates and the paperwork on the credit side.

What documents protect you from penalties?

You work out and claim the deduction yourself, and the Agenzia can check it later. The protection is documentation. The Agenzia’s provvedimento n. 48243 of 15 February 2022 describes what to keep. For software, the Basilicata guide says that means a sworn statement that you own the exclusive rights and that the work is original and creative. For unregistered designs it’s a similar statement, with the date the design became public.

The tax return is where you signal that you hold this file. Start the file when the money goes out. Rebuilding it from memory after a letter arrives is the expensive way.

Your checklist

• Write down your assets: the software, patents, designs and utility models. Cross out anything that’s only a trademark or know-how.
• Separate each project’s R&D costs from ordinary running costs, and note who did the work.
• Do you have taxable income to absorb the deduction, or when will you?
• Your accountant models the patent box and the R&D credit together, netting included.
• Sworn statements on ownership and originality, written while the work is fresh.
• The option year: it binds you for five tax years.

Planning to buy machinery rather than fund research? The Nuova Sabatini guide covers the interest contribution on equipment loans. If you’re comparing every public option for a young company, start from the Smart&Start Italia guide.

This article is general information, not legal or tax advice. Rules change and the Agenzia delle Entrate keeps issuing clarifications: check the official guidance or ask your accountant before you opt in.