Tax Incentives for Foreign Companies in Italy 2026
Beyond the standard IRES and IRAP corporate taxes, Italy maintains a suite of targeted tax incentives designed to attract foreign investment in capital equipment, intellectual property, and innovation. These programs are among the most generous in Europe, and foreign companies that understand how to access them can reduce their effective tax rate by a significant margin. The challenge is not a lack of available incentives but rather knowing which ones apply to your specific situation and how to navigate the documentation requirements that each program demands. For a comprehensive overview of the baseline IRES and IRAP framework, see our guide to Italian corporate tax for foreign companies.
This guide covers the two most impactful incentive programs available to foreign companies in 2026: iper-ammortamento (super-depreciation) for capital investments and the Patent Box regime for income derived from intellectual property. These programs operate independently, and in many cases they can be combined, which is where the real tax savings emerge. We will walk through how each one works, who qualifies, and how to structure your Italian operations to maximize the benefit.
Iper-Ammortamento (Super-Depreciation) 2026
The 2026 Budget Law reintroduced the iper-ammortamento regime, replacing the previous crediti d'imposta Industria 4.0 and Transizione 5.0 programs. This is a significant development for any foreign company planning capital investments in Italy, as it allows you to deduct more than 100% of the cost of qualifying assets from your IRES base. The regime applies to investments in automated and intelligent machinery, advanced software, and hardware for artificial intelligence made from January 1, 2026 onwards.
The types of companies that benefit most from iper-ammortamento are those making substantial capital expenditures in qualifying equipment. Manufacturing companies investing in automated production lines, technology firms purchasing advanced servers and AI hardware, and logistics businesses acquiring intelligent sorting systems are the primary beneficiaries. The regime is particularly attractive for foreign companies because the requirement for European origin of assets has been removed under the new rules, meaning you can source equipment from any supplier worldwide and still qualify.
The deduction rates are tiered by investment amount, with higher rates for smaller investments and additional bonuses for green and sustainable assets:
| Investment Amount | Ordinary Assets | Green/Sustainable Assets |
|---|
| Up to EUR 2.5 million | 180% | 220% |
| EUR 2.5 - 10 million | 100% | 140% |
| EUR 10 - 20 million | 50% | 90% |
| Over EUR 20 million | 0% | 0% |
The mechanics are straightforward. If your SRL invests EUR 200,000 in qualifying digital equipment, the deductible cost becomes EUR 360,000 (180% of EUR 200,000), meaning you can deduct EUR 360,000 from your taxable income over the asset's depreciation period instead of the actual EUR 200,000 spent. At the 24% IRES rate, this generates a tax saving of approximately EUR 38,400 over the asset's useful life compared to standard depreciation. For green assets, the same EUR 200,000 investment yields a EUR 440,000 deduction and roughly EUR 57,600 in tax savings.
Expert Insight — Giovanni Emmi, Dottore Commercialista
The removal of the EU-origin requirement for iper-ammortamento is a game-changer for foreign companies. Previously, many of my clients were forced to source from European suppliers to qualify, even when a cheaper or better option existed overseas. Now, the playing field is level, and the decision can be based purely on commercial merit rather than tax-driven procurement.
Patent Box
The Patent Box regime is Italy's elective tax incentive for companies that generate income from intellectual property assets. Under this program, companies can exclude a portion of their income attributable to qualifying IP from both IRES and IRAP, effectively reducing the tax burden on revenue streams that depend on patents, software, designs, or other protected intangibles. For a complete analysis of the regime, including eligibility criteria and the Nexus calculation methodology, see our dedicated Patent Box guide for foreign companies.
The Patent Box applies to income derived from patents (including European and international patents registered in Italy), software protected by copyright, and designs and models. Note that trademarks and know-how, which were previously eligible under the original regime, have been excluded from the list of qualifying assets under current rules. The calculation is based on a formula that allocates income between the routine return on tangible assets and the extra return attributable to the IP asset, known as the Nexus approach mandated by EU state aid rules.
Under the Nexus approach, you determine the incremental income generated by the qualifying IP and then apply a ratio based on qualifying R&D expenditures. The key feature of the 2026 rules is that the eligible expenditure used in the Nexus calculation is increased by 110%, meaning you effectively get more deduction than the actual R&D costs you incurred. This multiplier applies to research personnel costs, subcontracted research, and depreciation of instruments directly used in R&D activities. The result is a substantial exclusion from both IRES and IRAP on income that your IP generates.
To benefit from the Patent Box, companies must file a specific option in their annual tax return and maintain detailed documentation of R&D expenditures, including personnel costs, subcontracted research, and depreciation of instruments used in research activities. The documentation requirement is often cited as the main barrier to entry, but for companies that are already investing in R&D, the administrative effort is usually worth the substantial tax savings.
Combining Incentives: A Practical Example
Understanding each incentive in isolation is useful, but the real value emerges when you see how they work together. Consider a foreign technology company, based outside the EU, that decides to establish an SRL in Lombardy in 2026 to serve the Italian and Southern European markets. In its first year, the company plans to invest EUR 500,000 in qualifying automated machinery and AI hardware (classified as ordinary assets under iper-ammortamento) and EUR 300,000 in qualifying R&D expenditures to develop proprietary software that will be sold under license.
Starting with the iper-ammortamento: the EUR 500,000 investment falls within the first tier (up to EUR 2.5 million), so it qualifies for the 180% deduction rate. The deductible cost becomes EUR 900,000. Over the asset's 5-year depreciation period, this generates an additional EUR 400,000 in deductions compared to standard depreciation. At the 24% IRES rate, that translates to approximately EUR 96,000 in IRES savings over five years, or roughly EUR 19,200 per year.
For the Patent Box: once the proprietary software is developed and begins generating licensing income, the company can elect the Patent Box regime. If the software generates EUR 200,000 in annual licensing income and the Nexus ratio determines that 40% of that income is attributable to the qualifying IP, the company can exclude EUR 80,000 from both IRES and IRAP each year. With the 110% expenditure multiplier, the effective exclusion is even higher. The combined IRES and IRAP savings on that EUR 80,000 exclusion would be approximately EUR 22,320 per year (24% IRES + 3.9% IRAP).
Taken together, in the first year of operation, this company saves approximately EUR 19,200 from iper-ammortamento and, once licensing income begins flowing, an additional EUR 22,320 per year from the Patent Box. Over a five-year horizon, the combined benefit from both incentives exceeds EUR 150,000. Without these incentives, the same company would pay significantly more in combined IRES and IRAP. This is the power of understanding and combining Italy's incentive programs from the start of your Italian operation.
YourBusinessInItaly Consiglia
At YourBusinessInItaly, we have seen many foreign companies enter Italy without a clear picture of which tax incentives they qualify for, leaving substantial savings on the table. In one recent case, a French manufacturing company had already incorporated an SRL and invested EUR 1.2 million in new production equipment before consulting us. By identifying that their equipment qualified for iper-ammortamento at the 180% rate, we were able to retroactively adjust their depreciation schedule in the first available tax return, generating an additional EUR 57,600 in IRES deductions over the equipment's useful life. In a separate engagement, a US software company was not claiming the Patent Box on EUR 500,000 of annual licensing income from proprietary software developed by their Italian team. After we documented the qualifying IP and prepared the Nexus calculation, the company began excluding approximately EUR 200,000 per year from their combined IRES and IRAP base.
The common thread in both cases is that the incentives were available from day one but were not being claimed because the company did not know they applied to their situation. Identifying eligible incentives requires a detailed review of your business activities, expenditure categories, and investment plans, ideally before or shortly after incorporation. Our network of commercialisti and tax advisors specializes in this analysis and can ensure that your Italian operation benefits from every program it qualifies for.
Frequently Asked Questions
Can I combine iper-ammortamento with the Patent Box?
Yes, you can combine iper-ammortamento and the Patent Box because they apply to different tax bases. Iper-ammortamento increases the deductible cost of qualifying capital assets, which reduces your taxable income through higher depreciation deductions. The Patent Box, on the other hand, excludes income attributable to qualifying intellectual property from your IRES and IRAP base. Since one operates on the cost side (depreciation) and the other on the income side (revenue exclusion), there is no overlap or conflict. Many foreign companies in manufacturing and technology sectors use both simultaneously to achieve a significantly lower effective tax rate.
Does iper-ammortamento require EU origin of investments?
No. The EU origin requirement that existed under previous Italian tax credit regimes has been removed under the 2026 rules. You can purchase qualifying equipment from any supplier worldwide and still benefit from the super-depreciation deduction. What matters is that the asset falls within the eligible categories of automated machinery, digital equipment, and AI hardware as defined by the MEF guidelines.
What documentation do I need for the Patent Box?
To claim the Patent Box, you must maintain three categories of documentation. First, an annual option must be filed in your corporate tax return (Modello REDDITI SC) each year you wish to benefit from the regime. Second, you need detailed R&D documentation showing the qualifying expenditures by category: personnel costs allocated to research activities, costs of subcontracted research, and depreciation of instruments used directly in R&D. Third, you must prepare a Nexus calculation that quantifies the income attributable to the qualifying IP using the formula prescribed by Italian law, which compares qualifying R&D expenditures (increased by 110%) to total expenditures related to the IP asset. The Agenzia delle Entrate provides specific guidelines on the Nexus methodology, and your commercialista will prepare this calculation as part of the annual tax filing process.
Giovanni Emmi|March 24, 2026
