FINANCIAL & TAX INCENTIVES IN ITALY

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The so called “Legge di Bilancio 2018”, has extended to the fiscal year 2018 the “super- amortization” relief and the “hyper- amortization” relief.
The super- amortization relief
The “super- amortization” discipline consists in overestimating, for tax purposes, the investments in tangible fixed assets, finalized between January 1st and December 31st 2018, of 30%. In order to benefit from the relief, the assets could be owned or leased by the company.

As mentioned above, the so called “Legge di Bilancio 2018” has extended the relief, for the investments made:
• by December 31st 2018;
• or by June 30th 2019, provided that by December 31st 2018 the order is accepted by the seller and the advance payments of at least 20% of the acquisition cost has taken place.
In this regard, please note that in order to identify the period in which the investment is realized - and, therefore, whether or not it falls within the facilitated period - the referring rule is art. 109 of the Italian Tax Code. In this respect, please note the company can benefit from the fiscal relief from the entry into operation of the asset pursuant to art. 102 of the Italian Tax Code.
This tax benefit lead to an increase in the capital expenditures incurred by the company, exclusively for tax pur- poses. This leads to a greater annual deductible depreciation, or a greater annual deductible leasing fees, thus, a decrease in taxable income.
In this regard, please note that if during the tax period the benefit is used less than the maximum limit allowed, the unallocated difference cannot be recovered in any way during subsequent tax periods; this differential can only be recovered by using ordinary instruments allowed by the Italian Tax Law such as the CIT return amen- dment.
Subjects benefiting from "super-depreciation" relief are:
• companies and permanent establishment of foreign companies regardless of the legal nature, the size of the business or the economic sector in which they operate;
• professions, even if they carry out their activity in associative form.
The assets subject to relief must be:
• materials;
• instrumental;
• new;
• owned or leased by the company.
Vehicles are not included in the relief.
The hyper- amortization relief
The “hyper-amortization” discipline consists in overestimating the investments in tangible fixed assets, finalized between January 1st and December 31st 2018, of 150%. In order to benefit from the relief, the assets, acquired or leased by the company, must be functional to the company's technological and/or digital improvement.
As for the “super- amortization” this tax benefit leads to an increase in the capital expenditures incurred by the company, exclusively for tax purposes, which results in a greater annual deductible depreciation, or a greater annual deductible leasing fees, thus, a decrease in taxable income.
In this regard if during the tax period the benefit is used less than the maximum limit allowed, the unallocated difference cannot be recovered in any way during subsequent tax periods; this differential can only be recovered by using ordinary instruments allowed by the Italian Tax Law such as the CIT return amendment.
Subjects benefiting from "super-depreciation" relief are companies and permanent establishment of foreign companies regardless of the legal nature, the size of the business or the economic sector in which they ope- rate.
As anticipated at the beginning of the paragraph, the so called “Legge di Stabilità 2018” has extended the relief for the investments made:
• by December 31st 2018;
• or by December 31st 2019, provided that by December 31st 2018 the order is accepted by the seller and the advance payments of at
least 20% of the acquisition cost has taken place.
The acquisition cost is increased by 150% only for investments in new instrumental assets. These are functional assets for the technological and / or digital transformation of the companies such as:
• instrumental assets whose operation is controlled by computerized and / or managed systems through appropriate sensors and actuation;
• quality assurance and sustainability systems;
For companies benefiting from the above-mentioned relief, the ss.cc. “Legge di Bilancio 2018” has provided the “super- amortization” (30%) discipline also for intangible fixed assets included in the Annex B (such as soft- ware and IT systems).
This tax relief is recognized for companies benefiting from a 150% increase (hyper-amortization relief). The rule, therefore, relates the intangible asset to the "subject" that benefits from the depreciation and not to a spe- cific material asset.
For the benefit of hyper-depreciation and related super amortization of intangible assets, the company must produce:
• a statement by the legal representative pursuant to Presidential Decree 445/2000;
• for assets with purchase price of over 500,000 euros, a technical legalized report.
This documentation must attest that:
• the assets can be included in the list set out in Annex A and / or B of the ss.cc. “Legge di Bilancio 2018”;
• the asset is interconnected to the production management system or to the supply network.