Prepared by Vitalba Passarelli, Giovanni Marra and Francesca Fraioli
The Revenue Agency and Ragioneria Generale dello Stato (hereinafter “RGS”) recently provided several clarifications to facilitate understanding of the complex regulatory framework and the related procedures concerning tax incentives for businesses. Below is reported a brief review of the main clarifications.
Circular no. 14 / E of May 17, 2022 – Comment on tax changes – Law December 30, 2021, n. 234 – Tax credits
With Circular no. 14 /E, the Revenue Agency comments on the tax changes relating to tax credits provided for by the 2022 Budget Law. In particular, with reference to the tax credit for investments in capital goods, mentioned the regulations relating to the credit, regarding the paragraph 1057-bis, the Agency pointed out, first of all, that article 10, paragraph 1, of the decree-law no. 4/2022, has included the following provision in said paragraph: “For the share exceeding 10 million euros of investments included in the PNRR, aimed at achieving ecological transition objectives identified by decree of the Minister of Economic Development, in agreement with the Minister of ecological transition and with the Minister of Economy and Finance, the tax credit is recognized to the extent of 5 per cent of the cost up to the maximum limit of total eligible costs equal to 50 million euros “.
Furthermore, the Agency clarified that the ceiling envisaged for investments in tangible capital goods included in Annex A Budget Law 2017 is to be understood as referring to the single annuity and not to the entire three-year period. In this sense, in fact, the technical report to the Budget Law 2022 indicates the maximum limit of 20 million euros separately for each fiscal year affected by the extension (i.e. 2023, 2024 and 2025).
Answer no. 90/2022 – Tax credit for R&D – Research commissioned by the foreign parent company and merger by incorporation – Article 1, paragraphs 198 and following, of law no. 160/2019
With Answer no. 90/2022, the Revenue Agency, mentioned the regulations relating to the tax credit for R&D, points out that, with the changes made by the law no. 160/2019, starting from 1st January 2020, expenses relating to research commissioned from abroad are no longer eligible.
In particular, in the presence of a merger operation between a non-resident company (the client) and a resident company (commission agent), the costs of research and development, incurred between January 2020 and the date of legal effectiveness of the merger, are not eligible for the tax credit because, prior to the merger, the same companies could not have benefited from the subsidy for these costs due to the lack of the prerequisite of territoriality for the client and the qualification of “investor” for the commission agent.
Answer no. 71/2022 – Tax credit for investments in new capital assets (included in Annex A of Law 232/2016) – Delay in interconnection
With Answer no. 71/2022, the Revenue Agency clarifies that, in the event of a delay in the interconnection of the assets, tax incentive does not cease, if the technical characteristics required by “industry 4.0” are already present before the moment of first use (or commissioning) and provided that the satisfaction of all the technological and interconnection characteristics persists for the entire period of time in which the taxpayer benefits from the tax incentive.
Therefore, the “delayed” interconnection of the asset to the ERP system does not lead to the loss of tax incentive but determines the shift forward the enjoyment of the greater incentive, with consequent postponement also of the final term of utilization of the tax credit.
In any case, the Revenue Agency specifies that the circumstance that the interconnection can also take place in a subsequent tax period cannot extend to include “any” tax period. This is because the late interconnection must depend on objective conditions that must be documented and demonstrated by the taxpayer and they should not depend on discretionary and instrumental behavior of the taxpayer.
Answer no. 68/2022 and Answer no. 69 / 2022– Article 1, paragraphs 98-108, of law no. 208/2015 (Tax credit for investments in new capital assets in South of Italy). Qualification of “operational headquarters” as “production site” for the purposes of accessing the tax credit
In terms of tax credit for investments in new capital assets in South of Italy, the Revenue Agency returns to providing clarifications regarding the qualification of “operational headquarters” as “production site” for the purposes of accessing the tax credit.
First, in order to consider the investment eligible for this tax incentive, there must be “productive structures” set up in the territories of the “assisted” regions.
A “Production structure” is a “local unit” or an “autonomous branch office” which is able to decide autonomously about costs and profits, or an “autonomous territorial branch” of the company, or a mere production line, which is endowed with “organizational autonomy” and constitutes in itself an “autonomous costing center” and does not represent an integral part of the production process of the local unit located in the same municipal area.
Basically, to identify the “production structure”, it is important to assess whether or not any territorial branches are an “integral part” of the same “production process”.
Following said clarifications, in Answer no. 68/2022, the Revenue Agency observes that a “local unit” that performs exclusively “coordination functions”, even if located in one of the regions eligible for the tax credit, cannot be qualified as an autonomous “production structure” in the meaning described above.
In Answer no. 69/2022, the Revenue Agency further clarifies that the “Operational Structures”, identified with the Pop stations (acronym of “Point of Presence”, in the telecommunications sector, identifies a “technical site”, in which a set of hardware and software components that represent a network access node capable of routing traffic to the end users connected to it) located in the southern regions are not qualifiable as autonomous “production structures”, in the sense described above and elaborated for the purposes of eligibility for the benefit.
Answer no. 895/2021 – “Hyper-depreciation” and tax credit for investments in new capital assets: determine when the investment has been carried out
With Answer no. 829/2021, the Revenue Agency clarifies how to determine when the investment was carried out even in the case of “complex” contracts.
First, the Revenue Agency specifies that there is a “complex” contract if the supplier undertakes to sell an asset to the buyer and to carry out further and relevant activities in favor of the latter.
For this reason, to determine when the investment has been carried out, the “delivery” of the asset in the meaning of art. 109, paragraph 2, of CIT is not sufficient but it is necessary to carry out the further activities as so to concretize the requirement of “certainty” provided by paragraph 1 of the article 109.
In Answer no. 895/2021, the question concerns the analysis of the acquisition of the following assets:
- Asset 1: order to the supplier and 20% down payment on December 19, 2018; delivery on June 24, 2019 and acceptance on June 28, 2019; interconnection not occurred. The Revenue Agency clarifies that, regarding to this asset, must be applied the article 1, paragraphs 30 and following, of law no. 205/2017.
- Asset 2: order to the supplier and 20% down payment on December 19, 2018; testing at the supplier on 22 July 2019; delivery at the end of October 2019; testing at the company on December 9, 2019; acceptance on 24 June 2020; interconnection not occurred. As regards this situation, the operator with the (advance) payment of the balance seems to be issued to the supplier also two bank guarantees to cover any contractual violations. If the bank guarantees had actually been issued, the “certainty” relating to the final acceptance of the Asset 2 by the operator would no longer be configured on 15 October 2019, but on 24 June 2020. The Revenue Agency clarifies that, regarding to this asset, must be applied the article 1, paragraphs 60 and following, of law no. 145/2018.
- Asset 3: order to the supplier and 20% down payment on June 20, 2019; testing at the supplier on February 18, 2020; delivery at the end of February 2020; acceptance on March 19, 2021; interconnection not occurred. The Revenue Agency clarifies that, regarding to this asset, must be applied the article 1, paragraphs 185 and following, of law no. 160/2019.
Answer no. 874 / 2021 – Tax credit for R&D referred to in article 1, paragraphs 198 and following, of law no. 160/2019 – Research commissioned by non-resident entities
With Answer no. 874/2021, the Revenue Agency has clarified that, for investments made from 1st January 2017 to 31st December 2019, the resident operators that “carries out research and development activities” on behalf of non-resident customer is be equated, for the purposes of the facilitation, to the resident operators who “makes investments” in research and development activities.
Instead, the new discipline introduced by law no. 160/2019, applicable to investments made starting from 1st January 2020, which replaced the previous one, does not propose any provision which extends the application of the tax credit for R&D carried out by the resident operator on behalf of non-resident customer.
Therefore, the costs incurred by the company during the tax periods subsequent to the one in progress on 31st December 2019 by virtue of contracts stipulated with non-resident customers, related to R&D, must in any case be considered excluded from the scope of the new tax credit.
Answer no. 829/2021 – Article 1, paragraphs 1051-1063, of law no. 178/2020. Tax credit for investments in new capital assets: use at foreign construction sites
With Answer no. 829/2021, the Revenue Agency clarifies that the use of an asset with also a temporary use of means and workers at foreign construction sites, even outside Italy, does not constitute a hypothesis of relocation pursuant to art. 1, paragraph 1060 of Law no. 178/2020 where this asset belongs to the Italian production structure from an organizational, economic, and managerial point of view and it is used in the activity ordinarily carried out by the same.
Furthermore, the Revenue Agency specifies that in the event of rental of the asset to customers (Italian and foreign) who intend to use it to carry out the work directly on the foreign network, the company can benefit from the tax credit pursuant to art. 1, paragraphs 1051-1063 of law no. 178/2020 provided that the use abroad of the asset does not prevail in terms of time and resources compared to its use in Italy.
Answer no. 826/2021 – Article 1, paragraphs 184-197, of law no. 160/2019. Tax credit for investments in new capital assets: subject to a financial lease
With Answer no. 826/2021, the Revenue Agency confirms once again the equal treatment, in terms of tax incentives, of the purchase of asset subject to a financial lease.
In particular, the question is inherent in the application of the “recapture” mechanism provided by art. 7, paragraph 2, of Legislative Decree no. 87/2018.
This mechanism concerns the obligation to repay the fiscal incentives in cases where, during the period of use of the “hyper-depreciation”, the subsidized asset is: i) sold for consideration, in Italy or abroad, or ii) intended for production facilities located abroad, even if belonging to the same company if the asset is sold after being redeemed but before the end of the payback period.
In fact, taxpayer must apply the “recapture” mechanism to the lease payments and to the amortization quotas calculated and deducted on the subsidized asset in the case of the asset is sold (or relocated abroad) during the theoretical period of use of the hyper-depreciation.
Resolution no. 77 / E of December 31, 2021 – “Super-depreciation” pursuant to article 1, paragraphs 91 et seq., of law no. 208/2015 and subsequent amendments – Effects produced by the “tacit” acceptance of work contracts
With Resolution no. 77 / E of December 31, 2021, the Revenue Agency clarifies the effects produced by a “tacit” acceptance of work contracts on so-called “super-depreciation” referred to in article 1, paragraphs 91 and following, of law no. 205/2015.
This hypothesis of tacit acceptance is not expressly governed by the legislative provisions concerning “super-depreciation”, nor do specific indications have been provided by the Revenue Agency.
In this regard, Revenue Agency agrees with the established case-law expressed by the Supreme Court (see the decision no. 10582/2015 issued by the Supreme Court) in the field of “tacit” acceptance – which is considered suitable to produce the same effects of an explicit acceptance – and retains that this principle must also be applied to “super-depreciation”.
The Revenue Agency points out that “tacit” acceptance must result in an incontrovertible way from the behavior put in place by the negotiating parties. The behavior must be incompatible with the non-acceptance. Therefore, it retains that acceptance per facta conclusentia cannot be an obstacle to access to “super-depreciation”, as if the taxpayer acquired – from the outset – the asset in ownership (rather than leased).
Principle no. 17/2021: Tax credit for R&D referred to in article 3 of the decree-law no. 145/2013, converted, with amendments, by law no. 9/2014 – Clarifications on the notion of “investor” operator
With Principle no. 17/2021, the Revenue Agency clarifies that if there is a regulatory framework which provides the charging of a “tariff” to the consumers as the unique consideration, the operator institutionally delegated to carry out the activities subject to that framework cannot be considered an “investor” for the purposes of the tax credit for R&D, referred to in article 3 of decree-law no. 145/2013, with amendments,converted by law no. 9/2014.
The tax credit in question, in fact, is aimed at operators that make investments in R&D, sustain the related costs, assuming the risk and making use of any results while it is not up to the operators that, while carrying out the activities, do not remain affected by the related costs and do not bear the risk of investments or acquire the benefits of the research carried out.
Circular no. 33 of December 31, 2021 issued by the RGS: National Recovery and Resilience Plan (NRRP) – Clarification note on the Circular no. 21 of October 14, 2021 – Technical Instructions for the selection of investment projects under the NRRP – Additionality, complementary financing, and prohibition of “double financing”
With Circular no. 33, RGS clarifies the question which involves the “cumulation” of the measures financed within the NRRP with other tax incentives. RGS specifies that the concept of “double funding” and “cumulation” refer to two distinct and non-overlapping principles.
On the one hand, there is a prohibition of double financing, expressly provided for by European legislation – which requires that the same cost of an intervention cannot be reimbursed twice from public sources of financing, including of different nature.
On the other hand, there is the possibility to drawn on different financial resources for different costs within the same project or different portions of the cost of the same asset.
Notwithstanding distinction between the two principles mentioned above, the investment projects under the NRRP can be cumulated with other incentives, obviously except for the limits existing by the national and European legislation in force, including that relating to state aid.
For a deeper discussion, please contact:
PwC TLS Avvocati e Commercialisti
PwC TLS Avvocati e Commercialisti