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A forthcoming revision to the OIC 24 accounting principle is poised to significantly impact fiscal strategies, especially concerning depreciation and the accounting treatment of goods acquired with resale options.This analysis, presented in a three-part series, delves into the key accounting and tax considerations surrounding these assets, with the first installments published on November 17th and 18th, 2025.
Italian Tax Regulations: A Foundation for Understanding
The Italian tax system, governed by the Unified Text of Income Taxes (TUIR – Testo Unico delle Imposte sui Redditi), provides the framework for deducting expenses related to assets. Article 103 specifically addresses the deductibility of intangible assets,while Article 108 regulates multi-year charges,requiring their deduction to be spread across multiple accounting periods.
Entertainment Expenses: A Historical Anomaly
Interestingly, Article 108 also encompasses entertainment expenses – those incurred to bolster a company’s brand image. However, these expenses are not treated as multi-year costs and are deductible only within the year they are incurred, subject to regulatory limits.This inclusion is described as a “historical legacy,” stemming from a prior finance law (Law No. 244/2007) that allowed for deductions in installments over five years. Accounting standards,however,do not classify entertainment expenses as multi-year.
Defining and Deducting Multi-Year Expenses
Multi-year charges are defined as costs that extend their benefits beyond a single fiscal year.From a tax perspective, article 108 of the TUIR governs their deduction, outlining various methods for offsetting these costs against business income. These expenses are distinct from those related to the acquisition of tangible or intangible assets, instead representing benefits that persist over time.Installation, expansion, and, where applicable, advertising costs are explicitly categorized as multi-year expenses, deductible through amortization over a maximum of five years. Development costs, incurred during advanced research stages, follow a similar deductibility criterion based on their useful accounting life, also capped at five years. For newly established companies, deductions begin in the first year revenues are generated, acknowledging the common experience of initial losses.
Intangible Assets and Goodwill: Deductibility Limits
Article 103 of the TUIR establishes maximum deductibility limits for various intangible asset categories, including industrial patents, intellectual property rights, concessions, licenses, trademarks, and goodwill. Tax deductibility is therefore constrained by legislative limits, regardless of the accounting amortization plan.Specifically:
- Amortization of intellectual works, patents, processes, and know-how is deductible up to 50% of the related cost.
- Trademark amortization is limited to 1/18th of the cost, effectively over 18 years.
- Concession rights are deductible based on the contractually defined duration of use.
- Goodwill amortization is capped at 1/18th of its value.
crucially, costs incurred for intangible assets still under development (“assets in progress”) are not promptly tax deductible; amortization can only commence once the asset is completed and categorized according to established rules.
Valuations and Their Fiscal Impact
Generally, revaluations and devaluations have no direct fiscal relevance, according to Articles 101 and 110 of the TUIR. A devaluation recorded in the income statement is not tax deductible, resulting in a higher tax value compared to the accounting value. this discrepancy is temporary, however, as the difference is recovered through future depreciation or, upon sale, as a reduced capital gain or increased capital loss.Revaluations, requiring specific legal authorization, are subject to a substitute tax, with the increased value similarly impacting future depreciation or capital gains/losses.
The OIC 24 Reform and Future Implications
The anticipated changes to OIC 24, particularly regarding depreciation methods and the accounting for goods with resale options, present new fiscal considerations. while changes to depreciation methods are unlikely to impact taxable income – as tax rules adhere to self-reliant percentage-based deductibility criteria – the accounting of goods with resale options coudl have a more notable effect. According to experts, derivation rules may require recognizing the representation in financial statements, potentially delaying tax deductions for the seller until the option for resale is definitively exercised, particularly if the buyer is not a microenterprise.
