Industry 4.0 and the Italia Budget Law 2017

In December 21, 2016, the 2017 Budget Law was published in the Official Gazette (Law December 11, 2016, no. 232). Please see below a selection of the main corporate income tax news.

Super-depreciation

The possibility to benefit of the so-called super deprecation for investments in new tangible assets has been extended up to December 31, 2017. The new provision states that the purchase cost for investments in new tangible assets is notionally increased by 40% (i.e. bringing the taxable base to 140%) for the determination of tax depreciation for corporate income tax purposes (i.e. IRES). The benefit is also applicable to investments made by June 30, 2018, provided that by December 31, 2017 the following conditions are met:

• the purchase order has been accepted by the seller;
• at least 20% of the purchase cost has been paid.

Differently from FY 2016, the benefit is not extended to investments in cars and other transport vehicles.

The advance payments related to corporate income tax due for the FYs 2017-2018 should be calculated not considering the effect of the super-depreciation.

Iper-depreciation

To encourage the technological transformation and digitalization processes, the “iper-depreciation” has been introduced. Specifically, for investments in hi-tech, cloud, ultra-broad band, industrial robotics, digital manufacturing, IT security, etc., it was introduced a notional increase of 150% (i.e. bringing the taxable base to 250%) for the determination of tax depreciation for corporate income tax purposes  (i.e. IRES).

The benefit applies to eligible investments made from January 1, 2017 until December 31, 2017 or by June 30, 2018, provided that, by December 31, 2017, the following conditions are met:

• the purchase order has been accepted by the seller;
• at least 20% of the purchase cost has been paid.

For the above-mentioned entities, it is also possible a notional increase of 40% of purchase cost of intangible assets (e.g. software, systems, platforms and applications connected to hi-tech investments, etc.). Depending on a defined threshold, it is necessary to provide specific supporting documentation to benefit for the provision at hand:

• a statutory declaration issued by the legal representative for the assets lower than 500.000 Euro;
• a sworn appraisal by professional for the assets higher more than 500.000 Euro.

The advance payments related to corporate income tax due for the FYs 2017-2018 should be calculated not considering the iper-depreciation.