|Barbara Scampuddu||Gian Luca Nieddu|
The Italian government recently released its "Industria 4.0" plan which, by offering tax incentives to the industrial sector, aims to encourage competitiveness, attract foreign investors and foster expenditures in innovation.
Moreover, this national plan, which was first launched in February 2017, provides companies with a unique opportunity to join the so called "fourth industrial revolution", leveraging four strategic guidelines:
1) Innovative investments to encourage private investments related to Industria 4.0 "enabling technologies" (including advanced and automated manufacturing solutions, clouding, cyber security and others) and enhanced commitment towards research, development and innovation;
2) Enabling infrastructures to ensure adequate network infrastructure, data security and protection, cooperate in defining international interoperability standards;
3) Increase research and know-how through specific training paths; and
4) Awareness and governance to spread knowledge, potential and applications of Industria 4.0 technologies and ensure public-private governance to achieve the set goals.
Key Industria 4.0 tax incentives include the following:
- Hyper and super-depreciation – this is available to companies investing in new assets, such as software and IT systems, for technological and digital transformation of production processes. Hyper-depreciation provides a 250% amortisation rate for investments in 4.0 technologies, while super-depreciation allows a 140% amortisation rate for new assets, either purchased or leased.
- Credit to innovation ("New Sabatini Law") – addressed to micro, small and medium enterprises operating in Italy, regardless their field of activity, willing to take out bank financing to invest in new assets, including capital goods, machinery, equipment and digital technologies (hardware and software). Those companies may benefit from a dedicated contribution to cover interest payment related to loans ranging between €20,000 ($23,700) and €2 million.
- R&D tax credit – aimed at stimulating private expenditure in R&D to innovate products and processes, it consists of a tax credit equal to 50% of R&D investments made between 2017 and 2020 not exceeding €20 million per year. In particular, this relief concerns expenditures related to basic research, industrial research and experimental development, including qualified personnel salary and other costs, amortisation of laboratory equipment, research agreements with universities and others.
- Patent box – A 50% deduction of the net income deriving from intangible property use, such as patents, industrial designs, know-how, copyrighted software and registered trademarks, these latter with reference to applications filed in 2015 and 2016 only. Therefore, income from registered trademarks shall no longer be covered by this tax benefit from 2017 onwards, as provided by Article 56 of Law Decree No. 50/2017. Patent box, besides encouraging R&D investments, is also intended to increase the Italian market appeal for both long-term national and foreign investment. It also aims to draw intangible assets currently held abroad by Italian or foreign companies to Italy and prevent those already in Italy from being relocated abroad.
- Tax deduction on investments in innovative start-ups – a 30% tax deduction on investments in venture capital is aimed at supporting innovative companies at all stages of their life cycle and promoting a new entrepreneurial culture dedicated to collaboration, innovation and internationalisation.
A relevant aspect concerning all the above mentioned tax incentives is that they can be benefited even all contemporaneously. Therefore, venture capitalists and start-up initiatives (especially those dedicated to innovative activities and operations to foster R&D developments) can take great advantage from an integrated exploitation of this set of rules.