Edited by Carlo Romano and Marco Longobardi
The Italian Revenue Agency – with the opinion no. 51 of February 28, 2025 – provided clarification on the tax treatment of the income arising from the exploitation, by a non-commercial entity, of patents resulting from the research activities of its employees.
Request for Ruling. Taxpayer’s Interpretation
A public interest research foundation asked the Revenue Agency for tax guidance on patent transfers from employee research. The foundation stated that these patent transfers were exempt from taxation. These transfers were classified as “employment income” not covered by Article 143 of the Consolidated Income Tax Act (“TUIR”), which pertains to the taxable income of non-commercial entities.
Reply of the Revenue Agency
According to Article 64 of the Intellectual Property Code and the Foundation’s Statute, the Revenue Agency classified patent transfers from employee research and royalty distributions as “other income” (“redditi diversi”).
The Revenue Agency stated that:
- Self-employment income is irrelevant because patent transfers are managed by the employer (foundation) and taxed as “other income”.
- Only employees, as natural persons, can be designated as authors of a patent. Employers cannot be recognized as authors or inventors of an employee’s invention.
- Article 67 of the Consolidated Income Tax Act (TUIR) defines “other income” as income from exploiting intellectual property, industrial patents, and acquired processes, formulas, and industry, commerce, or science experiences, unless classified as capital income or earned through a commercial enterprise.
Conclusions
The Revenue Agency states that income from patents exploited by non-commercial entities, based on employee research, is classified as “other income” under Article 64 of Legislative Decree no. 30/2005 (Intellectual Property Code). This law provision grants employees who create an invention as part of a contract or employment relationship, the right to be acknowledged as inventors and to receive royalties from the patents’ disposal. Employees can receive a 25% reduction in the taxable base on royalties from patent transfers from non-commercial entities (Article 67, paragraph 1, letter g, and Article 71, paragraph 1 of the Consolidated Income Tax Act – TUIR).
The Revenue Agency clarifies that “the acquisition of rights by the foundation for valuable consideration is necessary to recognize the inventor’s share of the revenues from the patent’s disposal.” Such clarification is crucial for assessing reimbursement requests due to incorrect tax withholdings on employees’ royalties. Accurate evaluation by the Revenue Agency is required for reimbursement requests from patent authors whose employers have withheld taxes on the full taxable base (100%) instead of the correct taxable base (75%) on royalties from patent disposal.
The Italian team effectively resolved multiple tax matters on the reimbursements for royalties from patent transfers.
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