Research and Development Tax Credit 2024: How It Works, Who Is Eligible, and What’s New

The 2024 Research and Development Tax Credit: How It Works, Who Is Eligible, and Updates

The Research and Development (R&D) tax credit is part of the “Industry 4.0 transition” package, aimed at increasing the competitiveness of the Italian industry in Europe and worldwide by providing financial support to companies in their technological innovation journey.

How the 2024 R&D Tax Credit Works

The R&D tax credit is designed to support companies investing in technological innovation, research and development, design, and ecological innovation.
It provides a tax credit of up to 20% of the eligible expenses incurred and is essentially a non-repayable grant.

The recent renewal of this tax credit extends it until December 31, 2025, and in some sectors until December 31, 2031.
The credit amount varies based on the type of investment, and different percentages apply for different sectors.

For fundamental research activities, the credit is 20% with a maximum eligible expenditure of 4 million euros until December 31, 2022, and 10% with a ceiling of 5 million euros from January 1, 2023, to December 31, 2031.

Who Is Eligible for the R&D Tax Credit

The R&D tax credit is available to all companies based in Italy, including stable organizations of non-resident entities, regardless of their economic sector, accounting regime, income determination system, size, or legal nature.
However, certain exclusion criteria apply, such as companies in bankruptcy or liquidation.

Types of Research and Development Investments

Eligible expenses for the R&D tax credit include depreciation, leasing fees, personnel costs, third-party purchases, supplies, consultancy services, and research contracts related to the R&D activities.

Types of Research and Development Activities

The R&D activities covered by the tax credit include fundamental research, industrial research, and technological and scientific experimentation.

Calculating the R&D Tax Credit

The R&D tax credit is calculated based on the expenses incurred by companies in eligible activities.
It can be used by beneficiaries to offset taxes owed horizontally.

Utilizing the R&D Tax Credit

To utilize the R&D tax credit, beneficiaries must indicate it in their tax returns for the fiscal year in which the expenses were incurred and subsequent years.
The credit is used through offsetting and starts from the fiscal year following the eligible expenses, paid in equal annual installments.

2024 Updates for the R&D Tax Credit

Important updates for the R&D tax credit in 2024 include a deadline extension for the first installment payment and the possibility to revoke pending requests.
This flexibility aims to facilitate companies in obtaining certification for their R&D activities.