Tax credit for investments in capital goods
The Tax Credit for Investments in Capital Goods is the incentive already known in Italy as 'Super/Hyper-depreciation', which is intended for companies with production facilities located in the country, which aims to support and incentivise them to invest in new capital goods, whether tangible or intangible.
The Italian 2020 budget law (Law n. 160 dated 27 December 2019) has modified certain unusual aspects of this mechanism.
The tax credit will be applicable to companies that make investments from 16 November 2020 through to 31 December 2021 (or by 30 June 2022, provided that the relative order is accepted by the seller and advance payments of at least 20% of the acquisition cost have been made by 31 December 2020).
It is aimed at all businesses residing in Italy, including permanent establishments of non-resident entities, regardless of their legal status, industry, size, and the system used to calculate taxable income and eligible investments include:
- investments involving 'ordinary' assets, i.e. those which are not eligible for the 4.0 plan (former super-depreciation mechanism), for which tax credit is applied at a rate of 10% of the cost, within a maximum limit of eligible costs of €2 million.
- investments relating to the 4.0 eligible tangible assets set out in Annex A (formerly the hyper-depreciation mechanism), for which tax credit is applicable at a rate of 50% of the cost for the portion of investments up to €2.5 million, 30% for the part of investments falling into the eligible costs bracket ranging from €2.5 million to €10 million, and 10% of the cost of €10 million and up to the maximum limit of total eligible costs of €20 million.
- investments relating to intangible assets included in Annex B, for which tax credit is applied at a rate of 20% of the cost, within an upper limit of eligible costs of €1.000.000.
The tax credit can only be used for offsetting, in three equal annual installments.
As far as 4.0 eligible tangible and intangible investments are concerned, companies are required to produce a technical report issued by an engineer or an industrial expert or a certificate of conformity issued by an accredited certifying body (compulsory for amounts below €300,000) demonstrating that the technical specifications of the goods meet the requirements for inclusion in the lists in the said Annexes A and B and are interconnected within the company management of production system or connected to the supply network.
CONSULTING AND ASSISTANCE SERVICE
What we can do for you
- We can introduce you, with an initial orientation session, to the concept of "Enterprise 4.0" and the relative incentive plan;
- we map out the qualifying technologies already present in your production process;
- as part of your investment plan, we identify the assets whose technical characteristics mean they could qualify as eligible and which could be interconnected with the company information system;
- we analyse your investment plan and identify "hyper-depreciable" assets;
- we carry out a technical analysis of assets qualifying for hyper-depreciation, we report on the costs qualifying for tax relief, and we certify their compliance with legal requirements for the use of the tax benefit;
- as regards the interconnection requirement envisaged by the legislation, our activity includes verifying whether the company already meets the specified conditions and if it does not, we advice clients on the action to take to meet the requirement; see (link to the service) to seek our advice on digital transformation;
- as an accredited company, we draw up the sworn appraisals/certifications required by law;
- we deliver a file containing the regulatory references concerning the 'hyper-depreciation' mechanism, as well as supporting documents of a tax and technical nature;
- we have professional liability cover in place which offers your company guarantees up to the specified policy limits;
AUDIT SERVICE FOR VERIFYING MAINTENANCE OF THE HYPER-DEPRECIATION REQUIREMENTS
What we can do for you
The consulting and assistance service concerns all the activities necessary to check that assets which are eligible under the law remain compliant in terms of technical specifications, with provision of a compliance report.
- we plan an annual technical visit to your company in order to check the condition of the assets qualifying for the relief;
- we verify their technical compliance for hyper-depreciation purposes;
- we prepare a report examining compliance with the technical specification requirements in order to maintain the tax relief envisaged by the said legislation;
- in the event that not all the technical specification requirements are met with regards to maintaining the tax relief envisaged by the legislation, a non-compliance report will be issued, including guidance on whether or not a new sworn technical appraisal should be carried out.
How we do it
By putting a team of specialists at your disposal to accompany you through the management and use of this complex incentive, and more specifically:
- a commercial consultant with specific expertise, who - after running an initial check to establish the possibility of accessing the hyper-depreciation scheme - will coordinate subsequent activities and be responsible for your satisfaction;
- our research department, which investigates every aspect of the legislation and monitors all updates; the research department studies the circulars, FAQs, resolutions, and interpretations of the inspection authorities, updates the commercial and technical consultants and discusses the issues with the internal team that specialises in the measure in question;
- the hyper-depreciation technical team, which monitors the progress of the applications to ensure every form is filled in on time and provides the technician assigned to the company with support for the more complex aspects;
- a dedicated technician (usually an engineer), who liaises with the client in the handling of the application; the technician is also in charge of preparing the relative interconnection report/certificate or audit report;
- a customer services department, for administrative aspects and the collection of paperwork.
Did you know that there are certain concessions that can be combined with the hyper-depreciation mechanism?