How does the 2016 Budget Law regime work?
According to par. 91 of 2016 Budget Law, the price of acquisition of new instrumental assets bought between October 15th, 2015 and December 31st, 2016 is increased by 40%. This increase (named "superammortamento") affects the amortization deduction only from a tax point of view resulting in a higher amortization deduction in UNICO SC form. While in the Balance Sheet the new asset are booked at its historical value (without 40% increase).
The extension of the tax amortization regime (with some differences)
According to art. 3, par. 1 of the draft of 2017 Budget Law, the increasing of 40% of the tax amortization price of new instrumental assets is extended also to the new assets purchased:
- until 31 December 2017; or
- until 30 June 2018 if - as of 31 December 2017 - the purchase order of the new asset has been accepted by the seller and 20% of the sale price has been already paid.
As stated in 2016 Budget Law, the tax advantage is applicable for all the new instrumental assets including industrial equipment and machinery in general, except for:
- buildings and constructions;
- assets with an amortization rate lower than 6,5%;
- all the specific assets included in 2016 Budget Law Attachment n. 3.
Draft of 2017 Budget Law, however, excludes from superammortamento cars and vehicles included in art. 164, par. 1, letters b) and b-bis) of the Italian Income Tax Code (Presidential Decree n. 917 issued on 22 December 1986).
Art. 3, par. 2 of the Draft includes a new tax amortization advantage aiming to support the current trend of automation and data exchange in manufacturing technologies known as Industry 4.0.
Industry 4.0 main objective consists in creating "smart factory" by including cyber-physical systems, the Internet of things and cloud computing in the production management.
According to art. 3, par. 2 of the Draft, the price of acquisition of new high technological assets included in Attachment A of the Draft, purchased in the same period as the one stated in par. 1, is increased by 150%. This increase (named "iperammortamento") affects the amortization deduction only from a tax point of view, while in the Balance Sheet the new assets are booked at their historical values.
The mentioned Attachment A includes the following main areas of eligible assets:
- assets activated, controlled and/or managed by computer systems;
- assets aiming at assessing product quality and sustainability;
- specific devices aiming at increasing the human-machine interaction and the health and safety of the workplace.
In order to support the companies involved in the Industry 4.0 investments, according to art.3, par. 3 of the Draft, the price of acquisition of new intangible assets included in Attachment B of the Draft is increased by 40%. This increase, as already outlined, affects the amortization deduction only from a tax point of view, while in the Balance Sheet the new assets are booked at their historical values.
Attachment B includes intangible assets (such as software, system integrations and applications) which are linked to the mentioned new high technological ones included in Attachment A. I
In order to benefit from the tax advantages related to Industry 4.0 (i.e. par. 2 and 3 of art. 3 of the Draft) the company has to file:
- a statutory declaration in lieu of an oath (according to Presidential Decree n. 445, issued on 28 December 2000) - if the purchase price of each asset is lower than 500.000 Euro; or
- a technical valuation conducted by an engineer or an industrial expert - if the purchase price of each asset is higher than 500.000 Euro.
According to art. 3 , par. 4 of the Draft, the statutory declaration or the technical valuation has to assess:
a) that the assets are eligible for the tax amortization benefit since they are included in the mentioned Attachment A or B;
b) that the assets are linked to the production management system or to the supply chain.
Please note that the tax advantage cannot be considered for the purpose of determining the first and the second corporate tax (IRES) 2017 installment.