Tracking and tracing - Global fashion brand

R&D cost reporting and calculation of the Nexus Ratio for each year of the Patent Box scheme.

Need

This Italian group is a leading name in the fashion industry (over €2 billion turnover) and a world-renowned brand which produces and distributes not only clothing and accessories, but also make-up and fragrances.
Since its decision to apply the Patent Box tax scheme, the company has found itself needing to report the research and development costs incurred annually and the calculation of the Nexus Ratio values (which are essential in order to determine the tax benefit for each year of the five year period).

Solutions

WIL's contribution involved, first of all, verifying the reconstruction of the R&D costs incurred, linked to the intangible assets eligible for the tax relief for the three years prior to the first year of application of the scheme. The analysis then moved on to the expenses relating to R&D projects incurred in all subsequent years of application of the scheme and eligible for the relief.
This analysis led to the preparation of a detailed technical report for each year of application of the concessional scheme, containing a clear description of the research and development activities carried out by the company and their connection with developing, maintaining, and increasing the value of the eligible intangible assets. Furthermore, detailed reporting was prepared on R&D costs relevant for tax purposes in relation to eligible intangible assets and the Nexus Ratio for each tax year was calculated.

Benefits

• Implementation of a Track and Trace system for R&D and of the revenues linked to the individual intangible assets eligible for the tax relief for the years during which the scheme is applied and for the three years prior thereto.
  
• Verification of reporting by the beneficiary company used to calculate the Nexus Ratio for each year of duration of the relief.