OECD-Style ‘Patent Box’ to Remove Protection for Italian Brands
Italy June 30 will apply OECD guidelines for “patent box” rules, a new version of the tax break for intangible property that will remove protections for brand identities originally put in place to protect iconic Italian fashion brands, observers told Bloomberg BNA.
The new regime is substantially similar to the rules Italy put in place in 2015, offering an exemption against the 27.5 percent corporate income tax, known as IRES, and the 3.9 percent tax on productive activities, known as IRAP, for intangible Italian assets.
But a former tax collection official said the new patent box, unlike the Italian rules it will replace, doesn’t specifically cover the value of brand identities and thus won’t include protection for assets tied to a company’s brand.
The treatment of brand identities is “the main difference between the outgoing Italian rules and the new rules,” Francesco Brandi, now an economist with Rome’s Sapienza University, told Bloomberg BNA June 8.
Roberto Lenzi, founder and president of finance consultancy Studio R.M., said the brand identity protection had been put into place at least to a large extent to protect the dozens of Italian fashion brands.
‘Level Playing Field’
“Obviously, the giants of the fashion brands are more important in Italy than elsewhere,” Lenzi said in an interview June 9, adding that he doesn’t expect the change to have a major impact on the way those companies operate.
“This creates a level playing field across all the OECD countries,” Lenzi said, referring to the industrialized economies that make up the Organization for Economic Cooperation and Development.
Italy has some of the world’s best-known fashion brands, including Giorgio Armani, Bulgari, Dolce & Gabbana, Fendi, Gucci, Prada, Valentino, and Versace.