Pirelli to use ‘Patent Box’ tax breaks to further shift high value/standard balance
Pirelli is looking forward to tax concessions worth millions through its participation in the ‘Patent Box’ tax regime. Yesterday the tyre maker signed an agreement with the Italian tax office covering the 2015 to 2019 fiscal years; it estimates that the tax benefit for the three fiscal years to 2017 alone will amount to approximately 54 million euros.
This benefit will be booked into Pirelli’s financial statement for the current year, taking into account the exact benefit for 2018 (this is now being determined). At the Pirelli Board of Directors meeting scheduled for 14 November, chief executive officer Marco Tronchetti Provera will propose utilising these extra funds towards reducing its standard segment business and covering related costs.
The benefit for 2019 will be calculated when the results for this period are prepared. The average consolidated tax rate expected for the period 2018-2020 will be in the 26 to 28 per cent range, in line with the average consolidated rate for the period of the 2017-2020 industrial plan presented for Pirelli’s IPO.
The Patent Box is system of tax breaks benefitting companies that use, directly or under license, intellectual property assets that can be protected by law, such as industrial patents, trademarks, designs, models and processes, formulae and information relative to experience acquired in the industrial, commercial or scientific fields. Pirelli stands to benefit from concessions for the five fiscal years from 2015 to 2019 under the new agreement, and this can be renewed at the end of the period through the signing of a new agreement.