The 2021 budget law approved the new MISE National Transition Plan 4.0 (Industry 4.0) worth 24 billion euros whose main objective is to support economic recovery and stability by stimulating private investments and supporting companies as they move through technological transition with a key emphasis on environmental sustainability.

Stefano Patuanelli, Minister of Economic Development said that; “The new National Plan 4.0 is the first brick on which the Italian Recovery Fund is founded”. The new national transition plan proposes a new timeline for all the existing measures on the economy to strengthen deduction rates and advances.

The Duration of the new measures proposed by the new transition plan 4.0

A new tax credit relieves included in the 2021 budget law will be in force for two years starting from 2021 to the end of 2022. The commencement date for the new measures was November 14th, 2020.

There is a high possibility of all contracts relating to the purchase of capital goods as defined up to 12/31/2022 stand a chance of benefiting from the credit. If the plan succeeds, it will require a sole payment of a deposit that is equivalent to or more than 20% and the delivery of goods to be done within 6 months meaning, not later than June 2023.

The expectation of the times of use

The capital goods and any other non 4.0 intangible assets investments made in 2021 but with revenues of less than 5 million euros, they will benefit from a tax credit of 1 year. Also, investors are moreover eligible for compensation for receivables that are related to capital goods from the current year. For all the tangible capital goods that attract tax credits, the new law has reduced the credits durations to 3 years from the previous 5 years.

The benefits that the new national transition 4.0 will provide as outlined in the 2021 budget law

The introduction of the new national transition 4.0 has come at a timely manner to replace the Enterprise 4.0 together with other control measures that were ending in 2020. Some of the notable measures that were envisaged until last year include the I for amortization and also super-amortization.

The new transition plan 4.0 is offering tax credits for investments that fall under the following categories;

All the Non-4.0 tangible and intangible assets- The new plan has raised the depreciation rate to 10% with a ceiling of up to 2 million euros for the tangible assets. There will be a 15% tax credit for all investments done in 2021 for technological tools and devices that were aimed at implementing agile forms of work (Smart Working 4.0). Starting from next year, depreciation will be calculated at a new rate of 6%. For all the non-tangible assets, they will attract amortization at the rate of 10% for assets worth 1 million euros for the months until December 2021. From next year all the way to June 2023, the amortization will be revised to 6%.

Investments relating to research, development, innovation, design, and Green- According to the new plan, all investments under research & development will have an increase in tax credit from 12-20%, and the ceiling will rise from 3 million to 4 million euros. All investments relating to technological innovation, design, and aesthetics will operate at anew tax credit of 10% while the ceiling will be revised to 2 million euros. However, investments for technological innovation that are designed for creating new products or production processes relating to ecological and digital transformation will work with a tax credit of 15% and the ceiling bracket will be 2 million euros.

All the tangible assets 4.0- All tangible assets 4.0 for investments will be grouped by 2.5 million euros at 50% in 2021 and 40% in 2022. In 2021, the value will change from 2.5 million to 10 million and attract a rate of 30%. For 2022, the rate will be 20% and from 10 to 20 million euros will come at a rate of 10% in 2021 and 2022 respectively. To certify the official purchase of material goods 4.0, there are instances where buyers will be required to produce a technical report or sworn expertise document.

Intangible assets 4.0- It will cater for tax credit of assets that fall under this category including software 4.0 and it will be in use for two years 2021 to 2022. The tax credit will rise to 20% and the ceiling to 1 million euros from 700 thousand.

The Training 4.0 tax credit- According to the new plan, a company is permitted to use the new training 4.0 tax credit when highlighting costs incurred during employees’ and entrepreneurs’ training for a period of two years starting 2021 and 2022.

Who is the target for this new national transition plan 4.0?

As clearly stated in Article 185 of the 2021 budget law, the new national transition plan is targeting all businesses that are residents in Italy. This covers permanent businesses of non-resident entities without consideration of either their legal form, size or tax regime, type of economic sector, and businesses that will invest in the new capital goods that are designed for production facilities that are located in the State beginning November 2020 to December 2022. There is also a possibility of extending the deadline by 6 months up to June 2023 provided the order is accepted by the seller and the payments of advances not less than 20% of the cost of purchase.

Who is not included in the new tax credit national transition 4.0?

The proposed new tax credit is not without exceptions. According to article 185 paragraph 2 of  2021 budget law,  the proposed new tax credits do not apply to companies that are in a state of either; voluntary liquidation, mandatory administrative liquidation, bankruptcy,  composition with creditors, or involvement in other insolvency proceedings.

Also, all companies that are subject to disqualification sanctions subject to article 9, paragraph 2, of the legislative decree no-8 June 2001.

However, all companies that meet the requirements to benefits from the new tax credit must meet the minimum compliance conditions. They should adhere to regulations relating to safety in the workplace as applicable in each sector and commit to payment of social security contributions for all workers to cater for their welfare.