With Ruling no. 956-343/2021 (not published) the Italian tax authorities (ITA) clarified that legally protected intangible assets, whose costs have not been capitalized in the balance sheet, can be stepped-up for Italian CIT purposes under Article 110 of Law Decree 104/2020 (August Decree) by paying a 3% substitute tax.

Uncertainty

The uncertainty derived essentially from the wording of the rule, which provides for the inclusion in the 2019 financial statements of the assets that benefit of the step-up.

Clarification

  • The Ruling makes explicit reference to the interpretative document no. 7 recently released by the Italian Accounting Board (OIC), which clarified that the step-up regime apply, for accounting purposes, also to legally protected intangible assets not booked in the balance sheet.
  • The OIC specified that this approach prevents a potential unjustified discrimination between companies that capitalised the costs of intangibles assets and the ones that did not.
  • In line with the OIC interpretation, the ITA clarified that the step-up executed for accounting purposes represents, per se, the condition for its recognition for CIT purposes, subject to the payment of the 3% substitutive tax.
Download Document