Prepared by Vitalba Passarelli, Giovanni Marra and Concetta Trombetta
With Circular letter 9/E, published on 23 July 2021, the Revenue Agency provided the first important clarifications on various questions arising from Article 1, paragraphs 1051 to 1063, of Law 178 of 30 December 2020 (so-called Budget Law 2021), which reformulated the tax credit discipline for investments in new tangible and intangible capital assets, both “ordinary” and “4.0”, intended for production facilities located in the territory of the State.
Before providing clarifications to the specific questions, the Circular provides important information, confirming the exclusion of the subordination constraint of the investment in an asset included in Annex B (intangible assets 4.0) with respect to the acquisition of tangible assets 4.0 (referred to in Annex A) and underlying that the tax credit for investments in non-4.0 tangible assets, made from November 16, 2020 until December 31, 2021, can be used in compensation a single installment also by subjects with a volume of revenues or fees exceeding 5 million euros, a change introduced by art. 20 of Legislative Decree 25 May 2021, n. 73 (so-called Sostegni-bis decree).
The main clarifications provided by the Agency are summarized below:
- Time frame and documentary burdens
For investments made between November 16, 2020 and June 30, 2021, there is a partial overlap of the new regulation with the previous one under article 1, paragraphs 184 to 197 of Law 160/2019 (Budget Law 2020). In this case, if the binding order for the supplier and the advance payment of at least 20% (so-called “reservation”) have been carried out by 15 November 2020, provided that the investment is completed by 30 June 2021, the investments follow the rules set out in the 2020 Budget Law. Otherwise, when at least one of the two requirements is missing by November 15, the rules set out in the 2021 Budget Law will be applied.
The documentation required in the event of audit by the tax authorities (purchase orders, invoices and other related documents) must contain the necessary references to the provisions of the law that provide for the applicable tax credit. In case of documents already issued, it cannot be excluded that the wrong regulatory reference has been indicated, i.e. the paragraphs of the 2020 budget law instead of those of the budget law 2021, and vice versa. In these cases, the interested parties can integrate (rectius, regularize) the documents already issued with the wrong reference, before the control activities by the tax administration begin, according to the methods indicated in the resolution no. 438 of 5 October 2020. For paper invoices, the purchaser can report on the original of each invoice the reference to the tax credit provisions; for electronic invoices it is possible both an electronic integration to combine the amended version with the original one or proceed with the printing of the electronic invoice and affixing the amended reference before the electronic conservation.
- Determination of the subsidy: VAT relevance
It is a cost eligible for the purpose of the tax credit the VAT that is totally non-deductible pursuant to art. 19-bis of the VAT Decree or that is paid by the subjects referred to in the art. 36-bis regime, while the partially deductible VAT is not considered eligible due to the pro-rata effect, as in the latter case it qualifies as a general cost.
- Purchases through a leasing contract
In the case of purchases of assets with a financial leasing contract, the parameter of calculation of the tax credit due to the lessee is represented by the “cost for the purchase of the asset” incurred by the lessor, as the redemption price paid when exercising the option right is not relevant for the purpose of the tax credit.
- Utilization of the tax credit
- Access to tax credit: compliance with the legislation on safety in the workplace and the correct fulfillment of the social security and welfare contributions in favor of workers are essentials. The so-called DURC updated at the time of utilization of the tax credit constitutes proof of the correct fulfillment of social security and contribution obligations, while if it is “irregular” it precludes the possibility to utilize the tax credit.
- Use beyond the third year: if the annual credit quota – or part of it – is not utilized, the residual amount can be carried forward in the declarations of subsequent tax periods without any time limit, it being understood that for the purposes of using the tax credit, the subjective, objective, and procedural conditions must exist.
- Dimensional limit: for taxpayers who do not exceed the dimensional limits provided for by the law (5-million-euro turnover), an exception is made to the split of the tax credit into three annual installments of equal amount and therefore the utilization of the credit in a single installment represents an option for these taxpayers.
- Delay in interconnection: if the interconnection occurs in a tax period after the one in which the asset becomes operational, the utilization of the tax credit is shifted to the fiscal year or the interconnection (provided that the appraisal is released whereas the assets costs 300K euro or more), similarly to what has already been specified in circular no. 4/E of 2017 with reference to hyper-amortization. If the asset comes into operation without interconnection with the ERP, the taxpayer can benefit from the “reduced” tax credit up to the year preceding the one in which the interconnection takes place or can decide to wait for year of the interconnection and benefitting from the tax credit “in full” from that moment. Furthermore, if the interconnection takes place in a year following to the one of the investments and the entry into operation of the asset, only for the need to acquire or adapt the IT infrastructure necessary for the interconnection, in this case the credit is still due but the asset must possess, already at its first use, the characteristics required by the law to be considered 4.0 and these must remain for the entire period in which the taxpayer benefits from the tax credit.
- Extraordinary transactions: the transfer of ownership is admissible only in cases in which specific legal regulations provide, upon the occurrence of the transaction, a confusion of rights and obligations of the various legal entities involved, including for example: merger, succession due to the death of the individual entrepreneur, spin-off or sale of the business unit that generated the tax credit. Therefore, in the event of extraordinary transactions that involve the transfer of the company or one of its branches and if the subsidized asset from which the tax credit derives is transferred with the company / branch, the successor will continue to benefit from the credit even if it was accrued in the hands of the assignor. Furthermore, the credit exclusively accrues to the taxpayers making the investment and cannot be transferred to third parties as a result of disposal deeds.
- Cumulation with other subsidies
It is possible to combine the tax credit with other subsidies, both fiscal and of other nature, insisting on the same eligible costs, unless the other subsidies do not provide for incompatibility, within the limit of 100% of the cost incurred, considering all the gross benefits. In the sum of the benefits to be considered, account must also be taken of the tax saving deriving from the circumstance that the tax credit is exempt both for CIT and regional tax purposes.
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PwC TLS Avvocati e Commercialisti
PwC TLS Avvocati e Commercialisti