ITALIAN BUDGET LAW 2021
please find below the most important tax measures introduced under the Italian law no. 178 as of 30.12.2020 (2021 Italian Budget Law), as published in the Italian Official Gazette no. 322 as of 30.12.2020.
DEDUCTION FROM TAX OF ENERGY-EFFICIENCY IMPROVEMENTS AND REGENERATION OF HISTORICAL HOUSING STOCK, PURCHASE OF FURNITURE AND LARGE HOME APPLIANCES, FACADE RENOVATIONS
Deductions from tax of:
- energy-efficiency improvements (section 14 of the Italian law-decree 63/2013);
- regeneration of historical housing stock (section 16 of the Italian law-decree 63/2013);
- the purchase of furniture and large home appliances, with an increase in expenditure of up to EUR 16,000 (section 16 of the Italian law-decree 63/2013);
- façade renovations (section 1 (2019) of the Italian law 160/2019) are extended to 2021.
Furthermore, deductions from tax for the regeneration of historical housing stock and energy-efficiency improvements on the buildings specified under section 16-bis of the Italian Tax Code (TUIR) are extended to the extent of 50 percent to the replacement of existing emergency generators with state-of-the-art natural gas emergency generators.
Individuals resident in Italy are entitled to a "water bonus" of EUR 1,000 to be used, by the end of 2021, for the replacement of ceramic sanitary ware with new reduced flushing and water-saving devices and sanitary tap ware, existing shower-heads and shower columns with new devices with water flow restrictions, on existing buildings, parts of existing buildings or on single property units.
This tax bonus is granted until funds are exhausted.
110 PERCENT SUPERBONUS
The 110-percent superbonus under section 119 of the Italian law-decree 34/2020 is extended until 30 June 2022 and for the portion of expenditure incurred in 2022 must be repartitioned in 4 instead of 5 equal annual instalments.
Moreover, please note that:
- roof insulation is covered by the tax incentive, without limiting the concept of dispersing surface to the attic space (rooms under the roof) that may exist;
- a property unit may be deemed "functionally independent", if it is equipped with at least of three of the following, solely owned installations or artefacts: water supply installations; gas installations; electricity installations; heating installations;
- buildings that lack an energy efficiency certificate because they do not have a roof, or one or more external walls, or both, are also included amongst the buildings eligible for deductions from tax, provided that upon completion of the works, that must include even the works specified under (1a), they achieve an A-level energy efficiency class, even if they are demolished and rebuild or if they are rebuild on existing sites;
- deduction from tax is extended to the barrier-free design works under section 16-bis (e) of the Italian Tax Code (TUIR), where carried out in favour of people aged over 65 years.
- deduction from tax is increased to 110 percent for expenses incurred from 1 July 2020 until 30 June 2022 in relation to the works specified under section 16 (1-bis - 1-septies) of the Italian law-decree 63/2013; deduction from tax is repartitioned in 4 annual instalments of equal amount for the portion of expenditure incurred in 2022.
- the tax incentives for energy saving and earthquake resistant constructions under section 16 (4-ter) are extended until 30 June 2022 as well as to the municipalities affected by any of the earthquakes occurred after 2008, where a state of emergency has been declared.
- in the municipalities affected by earthquakes after 1 April 2009, where a state of emergency has been declared, the tax incentives under section 16 (4) are granted for the amount exceeding the reconstruction aid.
Deduction from tax is recognized at 110 percent for documented expenses borne by taxpayers, incurred from 1 July 2020 until 30 June 2022, for the installation of charging infrastructure for e-vehicles in buildings referred to under section 16-ter of the Italian law-decree 63/2013 and must be repartitioned among those entitled in 5 annual instalments of equal amount and in 4 annual instalments of equal amount for the portion of expenditure incurred in 2022, provided that the installation is performed jointly with one of the driving interventions and in any case in accordance with the following expenditure limits:
- EUR 2,000 for one-family houses or for property units located in multi-family buildings that are functionally independent and have one or more independent entrances from the outside;
- EUR 1,500 for multi-family buildings or apartment blocks that install no more than eight charging stations;
- EUR 1,200 for multi-family buildings or apartment blocks that install more than eight charging stations.
The tax incentive refers to a single charging station per property unit.
Works carried out by property owners and individuals not acting as entrepreneurs, artists or professionals on buildings comprising from two to four separately registered property units, even if owned by one individual only, or co-owned by several individuals, and on which at least 60 percent of the total intervention have been carried out by 30 June 2022, a 110 percent deduction from tax is granted even for expenses incurred until 31 December 2022.
Works carried out by public housing associations (IACP) are eligible for the 110 percent deduction from income tax also for expenses incurred by 30 June 2023, provided that at least 60 percent of the overall intervention is completed by 31 December 2022.
The amendments to the 110-percent deduction from income tax continue to be subject to approval by the Council of the European Union.
The so-called "green bonus" under section 1 (12) of the Italian law 205/2017 is extended to 2021 for the following interventions:
- the cultivation of open air private green spaces located in existing buildings, property units, appurtenances or fences, irrigation systems and construction of water reservoirs;
- the cultivation of green roofs and roof top gardens.
The realignment of the tax values to the higher statutory values recorded in the financial statements pursuant to section 14 of the Italian law 342/2000, as specified under section 110 of the Italian law-decree 104/2020 (August decree) through payment of a 3 percent substitute tax, is extended even to goodwill and other intangible fixed assets recorded in the financial statements of the financial year as of 31 December 2019.
TAX CREDIT FOR PROFESSIONAL COOKS
In order to support the restaurant industry, people working as professional cooks in hotels and restaurants, either as employees or as self-employed individuals with a VAT identification number, even if they do not use the ATECO 22.214.171.124.0 code, are entitled to a tax credit of up to 40 percent of the expenses incurred between 1 January 2021 and 30 June 2021, for:
- the purchase of durable equipment such as: highly energy-efficient machines for the storage, the processing, the transformation and the cooking of food products; professional equipment and devices for the restaurant business;
- attendance of professional training courses, strictly functional to the exercise of the activity.
The tax credit is available up to no more than EUR 6,000 (within an overall expenditure limit of EUR 1 million in 2021, 2022 and 2023 respectively).
The tax credit can be set off as provided for under section 17 of the Italian legislative decree 241/1997, and may be transferred to other entities, including financial intermediaries. The tax credit does not add to taxable income for income tax and regional tax on productive activities (IRAP) purposes.
The tax credit implementation modalities and criteria that continue to be subject to the terms and conditions as specified in the European Commission Communication C(2020) 1863 as of 19 March 2020 on the "Amendment to the Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak" are specified in a decree released by the Italian Ministry of Economic Development (MISE) to be adopted within 60 days from entry into force of this Italian Budget Law.
TAX CREDIT FOR PRODUCTS AND SERVICES MADE IN ITALY
The tax credit aimed at supporting products and services made in Italy, as specified under section 3 of the Italian law-decree 91/2014 - equal to 40 percent of the expenses incurred for new investments and for no more than EUR 50,000 anyway - is extended in the 2021-2023 period to networks of agricultural and agri-food businesses incorporated in accordance with section 3 of the Italian law-decree 5/2009, even as cooperatives or grouped in consortia or adhering to the "Wine Route" guidelines pursuant to section 2 (1a) of the Italian law no. 268/1999, for:
- the creation or the extension of IT infrastructure aimed at strengthening e-commerce, with a special focus on improving online sales to final consumers resident abroad,
- the creation of virtual tax deposits abroad, if any, managed by the same associations,
- encouraging the execution of agreements with customs agents, also for the purpose of discharging tax obligations,
- activities and projects aimed at increasing exports.
The implementation criteria and modes and the use of the tax credit shall be set forth in a decision of director of the Italian tax authority to be adopted within 30 days from the entry into force of this Italian Budget Law.
SPECIAL ECONOMIC ZONES (SEZs)
For businesses starting new economic initiatives in special economic zones (SEZs), created pursuant to the Italian law-decree 91/2017, income tax from such economic activity carried out in a special economic zone (SEZ) is reduced by 50 percent as of the tax period in which such new economic activity was started and for the six subsequent tax periods.
In order to be entitled to such tax benefit, failing which they lose their right to the benefit and must reimburse it, the beneficiaries must:
- continue their business activity in the special economic zone (SEZ) for at least ten years;
- maintain the jobs created due to the business started in the special economic zone (SEZ) for at least ten years;
Furthermore, the beneficiaries must not liquidate or wind up their businesses.
The tax benefit is recognized within the terms and conditions set forth by the EU regulations on the application of article 107 and article 108 of the Treaty on the Functioning of the European Union to de minimis aid.
RESEARCH AND DEVELOPMENT TAX CREDIT FOR SOUTHERN ITALY
The tax credit for research and development investments pursuant to section 1 (200) of the Italian law no. 160/2019, including COVID-19 research and development projects, directly related to production facilities in the Italian regions of Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia and Sicily is recognized for 2021 and for 2022 as follows:
- at 25 percent to large enterprises that employ at least 250 people and with an annual turnover of at least EUR 50 million or an annual balance sheet total of at least EUR 43 million;
- at 35 percent to medium-sized enterprises that employ at least 50 people and with an annual turnover of at least EUR 10 million;
- at 45 percent to small enterprises that employ less than 50 people and with an annual turnover or an annual balance sheet total of no more than EUR 10 million.
The add-on on the tax credit amount applies in accordance with the limits and the conditions laid down in article 25 of regulation (EU) 651/2014 adopted by the Commission on 17 June 2014 stating that some types of aid are compliant with the internal market, as specified in article 107 and article 108 of the Treaty on the functioning of the European Union.
4.0 RESEARCH AND DEVELOPMENT TAX CREDIT
The tax credit for investments in research and development, ecological transition, 4.0 technological innovation and other innovative activities pursuant to the Italian law 160/2019 is extended until 31 December 2022.
The tax credit for research and development is increased from 12 percent to 20 percent, and the expenses limit is increased from EUR 3 million to EUR 4 million.
The tax credit for technological innovation is increased from 6 percent to 10 percent, and the expenditure limit is increased from EUR 1.5 million to EUR 2 million.
The tax credit for design and aesthetic development is increased from 6 percent to 10 percent, and the expenditure limit is increased from EUR 1.5 million to EUR 2 million.
For technological innovation activities aimed at product manufacturing or at the introduction of new or substantially better production processes in order to achieve an ecological transition or 4.0 digital innovation goal, the tax credit is increased from 6 percent to 10 percent, and the expenditure limit is increased from EUR 1.5 million to EUR 2 million.
A sworn technical report is required.
The SACE guarantee under the Italian law-decree 23/2020 intended to ensure businesses located in Italy and hit by the Covid-19 epidemiological crisis the necessary liquidity, is extended until 30 June 2021.
The loan secured by such guarantee may be used to repay loans under a debt rescheduling scheme, provided that such loan provides for additional credit of at least 25 percent of the amount of the rescheduled loan and that the guarantee granted is likely to result in a lower cost or a longer duration than the rescheduled loan.
From 1 March 2021 until 30 June 2021 the SACE guarantees are granted at the same terms and conditions as those set forth under section 13 (1a, 1b, 1c and 1d) of the Italian law-decree 23/2020 and for the same maximum guaranteed amounts provided for therein, taking into account the unreimbursed principal amount of any loans secured by the guarantee provided for under section 2 (100) of the Italian law 662/1996, in favour of enterprises with a number of employees not exceeding 499, determined on the basis of annual work units and not falling within the categories of enterprises set out in Commission Recommendation 2003/361/EC dated 6 May 2003 on the definition of micro, small and medium-sized enterprises.
GUARANTEE FUND FOR SMEs (FONDO GARANZIA PMI)
The measures relating to the centralized guarantee fund for SMEs under section 13 of the Italian law-decree 23/2020 apply until 30 June 2021.
For businesses with no less than 250 and no more than 499 employees such measures apply until 28 February 2021.
TAX CREDIT FOR LOSSES FROM INDIVIDUAL SAVING PLANS (PIR)
Individuals holding a long-term individual saving plan (PIR) incorporated pursuant to section 13-bis (2bis) of the Italian law-decree 124/2019 are entitled to a tax credit equal to the capital losses, the losses and negative differences yielded pursuant to section 67 of the Italian Tax Code (TUIR) in relation to qualified financial instruments, provided that such financial instruments are held for at least five years and the tax credit does not exceed 20 percent of the sums invested in the financial instruments themselves.
The tax credit may be used in 10 annual instalments of equal amount:
- in the income tax returns starting from the income tax return relating to the tax period in which the capital losses, the losses and negative differences are deemed yielded for income tax purposes
- by set-off pursuant to section 17 of the Italian legislative decree 241/1997, without any limits of amount.
The tax credit does not add to taxable income for income tax purposes.
The capital losses, the losses or the negative differences for which a tax credit is granted cannot be deducted or carried forward.
The provisions apply to individual savings plans incorporated as of 1 January 2021 for investments made by 31 December 2021.
ELECTRONIC PLATFORM FOR THE SET-OFF BETWEEN ACCOUNTS PAYABLE AND RECEIVABLE
The Italian tax authority provides taxpayers with an electronic platform to be used for the set-off between trade accounts payable and receivable, as they result from e-invoices. Public authorities are excluded from the use of this platform.
The set-off through the electronic platform has the same effects as the payment of the obligation up to the same value and provided that none of the adhering parties is subject to insolvency procedures or debt restructuring schemes authorized by the court or to an authorized recovery plan registered with the Companies Register.
Nonetheless, the provisions under the Italian legislative decree 231/2002 on late payment of trade transaction shall apply to the original unpaid debt.
The implementation modalities shall be set forth by a decree to be issued by the Italian Ministry of Justice.
TAX CREDIT FOR SME STOCKLISTINGS
The tax credit recognized for the stock-listing of SMEs is extended to 2021.
BUSINESS COMBINATIONS AND CONVERSION OF DTA INTO TAX CREDITS
In the event of a merger, a division or the transfer of a business decided in 2021, the entity resulting from the merger or the acquiring company, the beneficiary of the division or the transferee may convert into a tax credit DTA relating to the following items:
- tax losses accrued up to the tax period prior to the one in course at the date of legal effectiveness of the transaction and not yet deducted at that date;
- Notional Interest Deduction (NID) exceeding the total net income accrued up to the tax period prior to the one in course at the date of legal effectiveness of the transaction and not yet deducted or converted into a tax credit at that date.
DTA attributable to the above items may be converted into a tax credit even if not recorded in the financial statements.
Conversion into a tax credit occurs as follows:
- ¼ at the date of legal effectiveness of the transaction;
- ¾ on the first day of the business year following the one in course at the date of legal effectiveness of the transaction;
for a total amount of no more than 2 percent of the sum of the assets held by those adhering to the merger or the division, as resulting from the balance sheet pursuant to section 2501-quater of the Italian Civil Code, without taking into account the entity holding the asset with the highest value, or of no more than 2 percent of the assets transferred.
In the event of business combinations effected by way of business transfer, the transferee's items are taken into account for conversion in accordance with the same limits and under the same conditions as those provided for losses that may be deducted from the income of the company resulting from the merger or the acquiring company pursuant to section 172 (7) of the Italian Tax Code (TUIR).
As of the date on which the business combination takes legal effect:
- losses relating to deferred tax assets that have been converted into tax credits cannot be subtracted from taxable income;
- total excess notional interest deduction (NID) that is converted into a tax credit is not deductible or otherwise convertible into a tax credit.
In the event of a tax consolidation option, excess NID of the adhering entity and its tax losses relating to years prior to the commencement of group taxation, if any, are the first to be converted into a tax credit; thereafter, the losses transferred to the controlling entity and not yet subtracted are converted.
In the case of a tax transparency option, excess NID and the tax losses relating to business years prior to the commencement of transparency, jointly with those not assigned to shareholders, if any, are the first to be converted into a tax credit, followed by the losses and excess NID attributed to adhering shareholders and not yet subtracted from their incomes or converted into tax credit.
In order to be eligible for the tax benefit, the companies adhering to the transaction
- must have been operative for at least two years;
- must not belong to the same group nor be linked by a shareholding relationship of more than 20 percent or controlled, even indirectly by the same entity pursuant to section 2359 (1) of the Italian Civil Code, on the date on which the transaction is performed and in the two previous years;
- must not be under financial distress or risk financial distress pursuant to section 17 of the Italian legislative decree 180/2015 or be insolvent.
The tax benefit applies even to entities subject to a relationship of control pursuant to section 2359 (1.1) of the Italian Civil Code, if control is acquired in 2021 through other transactions than those eligible for the tax benefit and if an eligible transaction occurs within one year from the date on which the acquisition such control is legally effective. In such case, the convertible losses and NID are those accrued until the tax period prior to the one in course on the date on which control was acquired.
The tax credit resulting from conversion may be used, without any limits of amount, for set-off pursuant to section 17 of the Italian legislative decree 241/1997 or may be transferred pursuant to section 43-bis or section 43-ter of the Italian DPR 602/1973 or claimed for refund.
The tax credit must be recorded in the income tax return, does not add to business income and is not relevant for regional tax on productive activities (IRAP) purposes.
The tax benefit is subject to the payment of a fee of 25 percent of the total DTA converted. The fee is paid at 40 percent within 30 days from the date of legal effectiveness of the transaction and the remaining 60 percent is paid within the first 30 days from the business year subsequent to the one in course at the date of legal effectiveness of the transaction. The fee is deductible from income tax and from regional tax on productive activities (IRAP) in the year in which payment occurs.
TAX CREDIT FOR THE CAPITALISATION OF COMPANIES
The tax incentives for the capitalisation of companies pursuant to section 26 of the Italian law-decree 34/2020 are extended - for transferees only - to capital increases made until 30 June 2021.
The tax credit is increased from 30 percent to 50 percent for capital increases resolved upon and effected in the first half-year of 2021. In such case, no profits must be distributed until 1 January 2025.
The tax credit may be used as set-off only, as of the tenth day following the one on which the investment was made, after approval of the financial statements for business year 2020 and by 30 November 2021.
To this end, the transferee must not be subject to or admitted to an insolvency proceeding or be bankrupt or winded up or subjected to any other insolvency proceeding, and, in any case, must not be listed as a company under distress pursuant to regulation (EU) 651/2014 dated 17 June 2014, regulation (EU) 702/2014 dated 25 June 2014 and regulation (EU) 1388/2014 dated 16 December 2014.
TEMPORARY PROVISIONS ON CAPITAL REDUCTION
The following provisions, i.e.
- section 2446 (2) and section 2446 (3) of the Italian Civil Code,
- section 2447 of the Italian Civil Code,
- section 2482-bis (4-6) of the Italian Civil Code,
- section 2482-ter of the Italian Civil Code
do not apply to losses incurred in the business year closed on 31 December 2020 and the reason for company termination under section 2484 (1.4) and under section 2545-duodecies of the Italian Civil Code shall be invalid.
The deadline, by which the loss must be reduced to less than a third pursuant to section 2446 (2) and section 2482-bis (4) of the Italian Civil Code is postponed to the fifth subsequent business year.
CONTRIBUTIONS TO LOSSES ON RESIDENTIAL PROPERTY LEASES
In 2021 the landlord of a residential property
- located in a densely populated municipality,
- used as the tenant's main residence,
is entitled to a contribution to losses of up to 50 percent of the rental fee deduction, within the annual limit of EUR 1,200 per landlord.
In order to be entitled to the contribution, the landlord must inform the Italian tax authority electronically of the re-negotiated rental fees and provide any other information deemed useful for the contribution to be disbursed.
The implementation modalities and the percentage of rental fee deduction through proportional repartition in accordance with the applications filed and the expenditure limit, shall be set forth in a decision by the director of the Italian tax authority to be adopted within 60 days from the date of entry into force of this Italian Budget Law.
COVID-19 VACCINES AND EQUIPMENT
- The transfer of COVID-19 diagnostic equipment compliant with the requirements under directive 98/73/EC of the European Parliament and of the Council dated 27 October 1998 or regulation (EU) 2017/745 of the European Parliament and of the Council dated 5 April 2017, and with Community law;
- the supply of services strictly connected to such equipment;
- the sale of COVID-19 vaccines, authorized by the EC or the member states;
- the supply of services strictly connected to such vaccines, shall be exempt from VAT, but with the right to deduct the tax paid on purchases, until 31 December 2022.
FLAT TAX (CEDOLARE SECCA) ON SHORT-TERM RENTALS
As of 2021, the flat tax on short-term rentals applies to the short-term use for rental of no more than 4 flats in each tax period only.
In all other cases, due to consumer protection and competition reasons, property rented out by anyone is deemed a business in accordance with section 2082 of the Italian Civil Code, even if the rental agreements are executed through real estate intermediaries, or through entities managing electronic portals that bring together people looking for properties and landlords available to rent out their properties.
IMU (MUNICIPAL PROPERTY TAX)
In 2021 the first IMU instalment relating to:
- properties used as seaside, lakeside and riverside resorts and thermal baths properties;
- category D/2 real estate properties and their respective appurtenances,
- farm holiday properties, holiday resorts, youth hostels, mountain huts, summer sea and mountain camps, short-term room lettings, vacation homes and houses, bed-and-breakfast facilities, holiday residences and camping sites, provided that the respective owners also operate the businesses carried out therein;
- category D real estate properties used by businesses providing for exhibition solutions at trade fairs or events;
- properties used as clubs, dancing halls, night clubs and similar, provided that the respective taxpayers also operate the businesses carried out therein, shall not be due.
The provisions apply in accordance with the limits and upon the conditions set out in Commission Communication C(2020) 1863 final on the "Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak".
IMU (MUNICIPAL PROPERTY TAX) FOR NON-RESIDENTS
As of 2021 non-residents in Italy holding a pension accrued pursuant to an international agreement with Italy, resident in an insured state other than Italy, pay municipal property tax (IMU) at a rate reduced by 50 percent and the Italian waste tax (TARI) reduced to 2/3 for each residential property unit not rented out or made available for use for free, held in Italy under an ownership or usufruct right.
TAX CREDIT FOR NON-RESIDENTIAL PROPERTY RENTALS AND BUSINESS LEASES
Accommodation and tourism businesses, travel agencies and tour operators are entitled to the tax credit for non-residential property rentals and business leases under section 28 of the Italian law-decree 34/2020 until 30 April 2021.
TAX CREDIT FOR ADVERTISING
A uniform tax credit amounting to 50 percent of the advertising investments made on daily newspapers and monthly magazines, including online newspapers and magazines, up to a maximum amount of EUR 50 million in 2021 and 2022 respectively, is granted in 2021 and in 2022.
In 2021 and in 2022 the advertising tax credit also applies to:
- trade businesses operating in the newspapers, magazines and periodicals retail sector only,
- press distribution companies providing daily newspapers and periodicals to sellers located in municipalities with less than 5,000 inhabitants and in municipalities with one selling point only.
VAT - NAVIGATION ON THE HIGH SEAS
For VAT exemption purposes, a ship is deemed to be used for navigation on the high seas, if it has made more than 70 percent of its journeys in the high seas in the previous calendar year or if it makes more than 70 percent of its journeys in the high seas in the current year (if such year is its first year of use). High seas navigation means a journey from one landing point to another during which the borders of territorial waters are crossed, calculated based on the low tide line, regardless of the route taken.
Those who intend to make use of the possibility to purchase or to import ships without paying VAT must confirm their high seas navigation status by delivering a statement to be drawn up in compliance with the template authorized by the director of the Italian tax authority and submitted electronically to the Italian tax authority.
The template to be used for filing such statement is authorized by a decision to be adopted by the director of the Italian tax authority within 60 day from the date of entry into force of this Italian Budget Law.
VAT - RECREATIONAL CRAFT
For the purposes of section 7-sexies of the Italian DPR 633/1972 the statement rendered by the user on the use of EU rental services, including financial leases, boat rentals and similar long-term leases of recreational craft is drafted in compliance with the template authorized by the decision of the director of the Italian tax authority and is submitted electronically to the Italian tax authority. The statement may be referred even to several transactions between the same parties. The details of the protocol of receipt of the statement must be shown on the invoice for the services provided.
At the end of the year, the users that declare a temporarily percentage based on the envisaged use of the craft verify whether the condition for actual use of the service on EU territory are met and supplement the statement by the end of the first month of the subsequent year. The service provider issues a VAT adjustment note on the higher or the lower amount of tax owed pursuant to section 26 of the Italian DPR 633/1972, without any penalties and interest applying.
In the event of misstatement, the Italian tax authority claims the difference between VAT owed on the basis of the actual use of the service and VAT shown on the invoice based on such misstatement, imposes a penalty of 30 percent on the difference to the user and requests the payment of late interest, calculated at the legal interest rate, accruing on a day-by-day basis.
The service provider that provides services without having first ascertained electronically whether the statement has been filed with the Italian tax authority is liable for VAT owed in relation to the actual use made of the rental services, including financial lease, boat rental and similar long-term rentals for recreational craft on EU territory as well as for penalties and interest, if any.
The template to be used for filing such statement is authorized by a decision of the director of the Italian tax authority to be adopted within 60 days from the date of entry into force of this Italian Budget Law.
4.0 INDUSTRY INVESTMENTS TAX CREDIT
Businesses resident in Italy, including permanent establishments of non-residents, as well as artists and professionals, that make investments in:
- new capital goods used on production facilities located in Italy,
- starting on 16 November 2020 and until 31 December 2022, or by 30 June 2023, provided that the relevant purchase order is accepted by the seller and a prepayment of at least 20 percent of the purchase cost is made by 31 December 2022,
are entitled to a tax credit for several types of eligible goods.
Business under voluntary liquidation, insolvency, compulsory administrative liquidation, that have taken arrangements with creditor or a subject to other insolvency proceedings, as specified under the Italian royal decree 267/1942, the Italian financial distress and insolvency law, the Italian legislative decree 14/2019 or other special laws or that are subjected to a proceeding on the declaration of one of the above conditions, are not entitled to the tax credit. Furthermore, businesses subject to prohibitory sanctions laid down in section 9 (2) of the Italian legislative decree 231/2001 are excluded from the tax credit.
Eligible businesses may benefit from the tax credit provided that they are compliant with the provisions on workplace safety applicable to each industry and that social security contributions in favour of the employees are duly paid up.
A tax benefit is granted for investments in new tangible and intangible assets used for business purposes, excluding the following goods:
- goods pursuant to section 164 (1) of the Italian Tax Code (TUIR - means of transport);
- goods with a depreciation rate for tax purposes of less than 6.5 percent;
- buildings and constructions, goods pursuant to annex 3 of the Italian law 208/2015;
- non-compensated revertible assets of public utilities operating under concession and at regulated tariff in the electricity, water, transport, infrastructure, postal services, telecommunications, waste water collection and purification and waste collection and management industries.
The tax credit is granted for investments in tangible capital goods other than those specified in annex A to the Italian law 232/2016 up to the maximum amount of eligible costs of EUR 2 million and for investments in intangible fixed assets other than those specified in annex B to the Italian law 232/2026 up to the maximum amount of eligible costs of EUR 1 million in the period from:
- 16 November 2020 until 31 December 2021, or until 30 June 2022, provided that the relevant order is accepted by the seller and a prepayment of at least 20 percent of the purchase cost is made by 31 December 2021, and amounts to 10 percent of the cost (increased to 15 percent for investments in technological equipment and devices used by the company to implement smart working solutions as provided for under section 18 of the Italian law 81/2017);
- 1 January 2022 until 31 December 2022, or until 30 June 2023, provided that the relevant order is accepted by the seller and a prepayment of at least 20 percent of the cost is made by 31 December 2022, and amounts to 6 percent.
The tax credit for new capital goods investments, as specified under annex A to the Italian law no. 232/2016, effected between:
- 16 November 2020 and 31 December 2021, or by 30 June 2022, provided that the relevant order is accepted by the seller and a prepayment of at least 20 percent of the costs is made by 31 December 2021, is granted
- at 50 percent of the cost for the portion of investment up to EUR 2.5 million,
- at 30 percent of the cost for the portion of investment exceeding EUR 2.5 million and up to EUR 10 million,
- at 10 percent of the cost for the portion of investment exceeding EUR 10 million and up to the maximum amount of total eligible costs of EUR 20 million.
- 1 November 2022 and 31 December 2022, or by 30 June 2023, provided that the relevant order is accepted by the seller and a prepayment of at least 20 percent of the costs is made by 31 December 2022, is granted
- at 40 percent of the cost for the portion of investments up to EUR 2.5 million,
- at 20 percent of the cost for the portion of investment exceeding EUR 2.5 million and up to EUR 10 million,
- at 10 percent of the cost for the portion of investment exceeding EUR 10 million and up to a maximum total eligible cost of EUR 20 million.
The tax credit is recognized for investments in the intangible fixed assets specified under annex B of the Italian law 232/2016 effected from:
- 16 November 2020 until 31 December 2022, or by 30 June 2023 provided that the respective order is accepted by the seller b and a prepayment of at least 20 percent of the cost is made by 31 December 2022, at 20 percent of the cost, up to a maximum of EUR 1 million in eligible costs (including the costs of services incurred in connection with the use of the assets referred to in Annex B through cloud computing solutions, for the portion attributable on an accrual basis).
The tax credit may be used as set-off pursuant to section 17 of the Italian legislative decree 241/1997 only, without any limitations, in three annual instalments of equal amount, starting from the year in which the assets come into operation or the year in which the assets referred to in annexes A and B to the Italian law 232/2016 are interconnected.
For investments in capital goods made from 16 November 2020 until 31 December 2021, the tax credit granted to entities with a volume of proceeds or income of less than EUR 5 million for investments in tangible capital goods other than those listed in annex A can be offset as a single annual instalment.
If interconnection of the assets listed in annex A takes place in a tax period subsequent to their entry into operation, it is still possible to start benefiting from the tax credit for the portion applicable to the other tangible assets.
The tax credit does not add to the taxable income, nor to the tax base for regional tax on productive activities (IRAP) purposes, and may be cumulated with other tax incentives for the same costs, provided that such combination does not lead to the cost incurred being exceeded, taking into account also the fact that it does not add to taxable income and to the IRAP tax base.
The tax credit is correspondingly reduced if, by 31 December of the second year following the year of entry into operation or the year of interconnection, the subsidised assets are sold for consideration or are allocated to production facilities abroad, even if they belong to the same entity.
Any higher tax credit already offset must be directly returned by the person within the deadline for payment of the income tax balance due for the tax period in which the above-mentioned events occur. No penalties and interest apply.
The provisions under section 1 (35-36) of the Italian law 205/2017 on replacement investments apply mutatis mutandis.
Those availing themselves of the tax credit are required to keep, under penalty of revocation of the benefit, appropriate documentation to prove the actual incurrence and correct determination of the eligible costs. To this end, invoices and other documents relating to the acquisition of the subsidised goods must contain express statutory reference.
As to investments in assets listed in annexes A and B, companies are also required to provide a sworn report by an engineer or an industrial expert registered in their respective professional registers or a certificate of conformity issued by an accredited certification body, showing that the assets comply with the technical requirements needed in order to be included in lists of the assets listed in annexes A and B of the Italian law 232/2016 and are interconnected to the company's production system or supply network.
For goods with a unit purchase cost of no more than EUR 300,000, the burden of proof may be accomplished through a statement in lieu of an oath by the legal representative pursuant to the Italian DPR 445/2000.
TAX CREDIT FOR TRAINING
The tax credit for training aimed at acquiring or consolidating the technological know-how specified in the 4.0 Industry National Plan, as provided for under the Italian law 205/2017 (46-56) is granted for the costs set out in article 31 (3) of Commission regulation (EU) 651/2014 dated 17 June 2014 for the tax period as of 31 December 2020 until the tax period as of 31 December 2022.
TAX CREDIT FOR FILTERING SYSTEMS
In order to rationalise the use of water and to reduce the consumption of plastic containers for water intended for drinking, individuals as well as entrepreneurs, artists and professionals, non-commercial entities, including Third Sector entities, are entitled to a tax credit of 50 percent of the expenses incurred for the purchase and installation of filtering, mineralisation, cooling and addition of food-grade carbon dioxide E 290 systems to improve the quality of water intended for human consumption supplied by aqueducts, up to a total amount not exceeding EUR 1,000 for individuals outside their business activity and EUR 5,000 for other entities, and for each property, from 1 January 2021 until 31 December 2022.
PRELIMINARY AGREEMENTS FOR INTERNATIONALLY ACTING COMPANIES
The eligibility of an application for a preliminary agreement pursuant to section 31-ter of the Italian DPR no. 600/1973 is subject to the payment of a fee equal to:
- EUR 10,000 if the total turnover of the group to which the applicant taxpayer belongs is less than EUR 100 million;
- EUR 30,000 if the total turnover of the group to which the applicant taxpayer belongs is in the range between EUR 100 million and EUR 750 million;
- EUR 50,000 if the total turnover of the group to which the applicant taxpayer belongs exceeds EUR 750 million.
In the event of a renewal, the fee is halved.
VALUE ADJUSTMENT OF SHARES AND LAND
The possibility to provide for value adjustments of the cost of shares in unlisted companies and land by individuals is extended to shares and land held on 1 January 2021. The substitute tax is set at 11 percent.
LAND AND AGRICULTURAL INCOME
In 2021 land and agricultural income do not add to the income tax base of farmers and professional agricultural entrepreneurs pursuant to the Italian legislative decree 99/2004 registered with the agricultural social security scheme.
ADDITIONAL DEDUCTION FROM EMPLOYMENT INCOME
As of 2021 the gross deduction of no more than EUR 480 from income from employment, proportional to total income, as provided for under section 2 of the Italian law-decree 3/2020, shall come into full effect.
REDUCED VAT RATE FOR TAKE-AWAY
The reduced 10 percent VAT rate applies even to the sale of ready meals and meals which have been cooked, roasted, fried or otherwise prepared for immediate consumption, for home delivery or for take-away.
DIVIDENDS RECEIVED BY NON-TRADING ENTITIES
As of the business year starting on 1 January 2021, 50 percent of the dividends received by non-trading entities that exercise, exclusively or mainly,
one or more activities of public interest on a non-profit basis, in pursuit of civic, solidarity and socially useful purposes, shall not add to the taxable income. To this end the activity of public interest must be carried out in one of the following areas:
- family and related values; youth upbringing and training; education, training and professional development, including the purchase of editorial products for schools; volunteering, philanthropy and charity; religion and spiritual development; assistance to the elderly; civil rights;
- crime prevention and public safety; food safety and quality agriculture; local development and local social housing; consumer protection; civil protection; public health, preventive and rehabilitative medicine; sports activities; prevention and recovery of drug addiction; pathology and mental disorders;
- scientific and technological research; protection and quality of the environment;
- arts, activities and cultural heritage.
The entity must allocate an amount corresponding to the tax undue to finance the activities of general interest carried out in the above-mentioned areas, setting aside the amount not yet disbursed in an indivisible and non-distributable reserve for the entire duration of the entity.
BRAIN GAIN SCHEME
The brain gain tax advantages under section 5 of the Italian law-decree 34/2019 is supplemented as follows:
Individuals other than those specified under section 5 (2):
- who are registered as Italian Resident Abroad (AIRE) or a EU citizens,
- who already transferred their residence before 2020 and benefit from the scheme under section 16 of the Italian legislative decree 147/2015,
may opt for the application of the tax benefit (section 5 (1c)) prior to payment of:
- an amount of 10 percent of the income from employment and self-employment earned in Italy, which is subjected to the tax benefit under section 16 of the Italian legislative decree 147/2015 relating to the tax period prior to the one in which the option is exercised, if the individual has at least one child under the age of 18, including children in pre-adoptive placements, when the option is exercised,
- an amount of 5 percent of the income from employment and self-employment earned in Italy, which is subjected to the tax benefit under section 16 of the Italian legislative decree 147/2015 relating to the tax period prior to the one in which the option is exercised, if the individual has at least three children under the age of 18, including children in pre-adoptive placements, when the option is exercised,
and in both cases, provided that the individual becomes or has become owner of at least one residential property unit in Italy after relocation to Italy or in the 12 months preceding relocation or if he or she becomes such owner within 18 months from the date of exercising the option, failing which the additional tax benefit granted must be reimbursed, without any penalty applying. The property unit may be purchased directly by the employee or the spouse, by the partner or the children, even as co-ownership.
How to exercise the option is set forth in a decision by the director of the Italian tax authority to be adopted within 60 days from the date of entry into force of this provision.
The plastic tax shall not be effective before 1 July 2021.
The sugar tax shall not be effective before 1 January 2022.
HAGER & PARTNERS
- Contact us