At the end of December, Salvatore Ferragamo reached an agreement with the Italian tax authorities allowing it to take advantage of a favorable tax regime for the 2015-2019 period. The new program, known as the “patent box,” is designed to benefit Italian companies producing income through the direct use or the licensing to third parties of intellectual property rights.
Noting that it is eligible for tax relief for its brand, trademarks and designs, the company feels that its tax benefit for 2015 fiscal year will be substantial. The tax benefit for 2016 shall be quantifiable after the financial statements for the year are complete. While the tax benefit for 2015 will exempt 30 percent of the income stemming from its patents, the ratio will rise to 40 percent for 2016 and 50 percent for next three financial years. Ferragamo said it would be entitled to file a request for renewal for a further five-year term, starting from 2020.
The Equita brokerage firm estimates an annual tax benefit of €80-100 million in the five years of the agreement for Ferragamo. It believes the agreement will almost certainly be extended for a further five years when it expires.
Ferragamo is one of the first Italian companies to have reached an agreement on the use of the new regime. Only four other companies signed up before the end of 2016, including two in the fashion industry, but their names have not been disclosed.
According to an influential Italian investment bank, Mediobanca, the patent box will enable producers of luxury goods to obtain tax reliefs representing about 10 percent of their earnings. Mediobanca estimated the aggregate earnings of the Italian luxury groups it covers will amount to €4.4 billion over the period running from 2015 to 2019 and that the combined tax relief could reach €450 million. Among the companies on Mediobanca's panel are Prada and Tod's, as well as Ferragamo.