New tax credits are available in Italy following the enactment of a law which includes benefits for those investing in advertising campaigns.
The 2017 corrective measures (Decree no. 50 of 24 April 2017) introduced a 75% tax credit on the incremental value of investments in certain forms of advertising in Italy by companies, independent workers, and non-commercial entities. The advertising campaigns must be:
- in the daily press or periodical publications
- published on online channels
- broadcast on analogue or digital local television or radio stations.
The tax credit amount is increased to 90% for micro-enterprises, small and medium enterprises and innovative start-ups.
These tax credits can be applied for this year, as they are recognised for incremental advertising investments made in 2018, provided that their value exceeds the amounts spent on similar advertising campaigns via the same channels during 2017 by 1%.
Also, for a first application, tax payers who advertised in daily press or periodicals, including online channels, from June 24 to December 31 in 2017, can claim the tax benefit provided their 2017 spend was 1% greater than in 2016. However, this doesn't apply to advertising spend with local analogue and digital television and radio broadcasters.
As an example, looking at a company which spent €15,000 on eligible advertising during 2017, to qualify for the tax credit, the company's spend during 2018 must be at least €15,150 (€15,000 + 1%).
Assuming the company's advertising expenditure during 2018 totals €25,000, it will be due a €7,500 tax credit (75% of €25,000 less €15,000 spend). If the company happens to be an innovative start-up, micro-enterprise or a small or medium enterprise, then it could claim 90% rather than 75%, which would give a tax credit of €9,000.
Such tax credits must be applied for electronically via the relevant Tax Authority's platform, using the form provided by the Authority itself, within a time frame (which could be from 1 March to 31 March of each year) specifying:
- details identifying the applicant tax payer
- the overall cost for advertising investments made, or to be made during the year
- the overall cost for investments made in respect of similar media during the previous year ('similar media' refers to the press on the one hand, and radio-television broadcasters on the other; not a single newspaper or single broadcaster)
- details of the increase in investments for each media channel, in percentage and absolute terms
- the tax credit amount applied for each of the media channels
- an affidavit stating there are no impediments or disqualification conditions contemplated by Anti-Mafia regulations, to be able to benefit from contributions and public funding.
After application, tax credits can only be used on an 'offset basis' using form F24, sent to the Department for Information and Publishing under the Presidency of the Council of Ministers.
To accurately identify the incremental portion of advertising costs on which the tax credit is calculated, it is reasonable to apply Art. 109, paragraph 2) letter b) of TUIR. This explains that the purchase costs are deemed to have been incurred at the date when the service was completed, and states that these expenses must be quantified from appropriate certification issued by parties authorised to issue a compliance declaration regarding figures appearing in tax declarations, or by parties that conduct statutory audits.
If the tax credit requested exceeds the €150,000 threshold, for the purposes of payment, prior clearance must be applied for from the National Anti-Mafia Database held with the Ministry of the Interior. The applicant can only benefit from the credit on condition that they are registered (or have forwarded the relevant registration application to the relevant Prefecture) in the list of suppliers, service providers and work contractors not subject to Mafia infiltration (the 'White List').
The Government has allocated €62.5m for this benefit during 2018, of which €50m is earmarked for investments in the press (€20m for investments made during the second half of 2017 and €30m for those carried out in 2018) and €12.5m for investments made during 2018 in radio-television broadcasters. Consequently, tax payers may receive less than they applied for, should available funds not be sufficient to fully cover all eligible applications. The maximum ceiling for expenditure is set annually through a Decree issued by the Prime Minister.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.