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Italy

9 August 2021

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Italian Revenue Agency Provides Guidance on Tax Credit Incentive for Investment in New Assets

The Italian Revenue Agency has published Circular No. 9/E of 23 July 2021, which provides guidance on the new tax credit incentive for investment in new business assets as provided by the Budget Law for 2021 (Law No. 178 of 30 December 2020). This includes guidance on qualifying beneficiaries, qualifying assets and credit rates, and the offset of the tax credits.

As previously reported, the tax credit incentive is provided for investment in new business assets by resident companies and permanent establishments of foreign entities related to production facilities located in Italy from 16 November 2020 until 31 December 2022, which is extended to 30 June 2023 if at least 20% is paid by 31 December 2022). This applies for qualifying investment regardless of the legal form of the taxpayer, the economic sector in which they operate, the size of the taxpayer, or the account regime adopted.

The tax credit is provided at rates of 6% to 50% of eligible costs depending on the asset type, investment amount, and timing of the investment. For tangible and intangible assets that are not within the scope of assets under "National Business Plan 4.0":

  • Tangible asset investments:
    • a 10% credit is provided for investments of up to EUR 2 million from 16 November 2020 to 31 December 2021 (30 June 2022 if at least 20% is paid by 31 December 2021); and
    • a 6% credit is provided for investments of up to EUR 2 million from 1 January 2022 to 31 December 2022 (30 June 2023 if at least 20% is paid by 31 December 2022)
  • Intangible asset Investments:
    • a 10% credit is provided for investments of up to EUR 1 million from 16 November 2020 to 31 December 2021 (30 June 2022 if at least 20% is paid by 31 December 2021); and
    • a 6% credit is provided for investments of up to EUR 1 million from 1 January 2022 to 31 December 2022 (30 June 2023 if at least 20% is paid by 31 December 2022)

For tangible and intangible assets that are within the scope of assets under "National Business Plan 4.0":

  • Tangible asset investments:
    • for investments from 16 November 2020 to 31 December 2021 (30 June 2022 if at least 20% is paid by 31 December 2021):
      • a 50% credit for investments up to EUR 2.5 million;
      • a 30% credit for investments between EUR 2.5 and EUR 10 million; and
      • a 10% credit for investments between EUR 10 and EUR 20 million;
    • for investments from 1 January 2022 to 31 December 2022 (30 June 2023 if at least 20% is paid by 31 December 2022):
      • a 40% credit for investments up to EUR 2.5 million;
      • a 20% credit for investments between EUR 2.5 and EUR 10 million; and
      • a 10% credit for investments between EUR 10 and EUR 20 million;
  • Intangible asset investments: a 20% credit is provided for investments of up to EUR 1 million from 16 November 2020 to 31 December 2022 (30 June 2023 if at least 20% is paid by 31 December 2022).

In general, the tax credit for qualifying investments may be utilized for offsetting taxes in three annual equal installments, although in certain cases the tax credit may be utilized in a single annual installment.

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