New 5.0 transition tax credit in Italy: focus on photovoltaic system

published on 20 Mai 2024 | reading time approx. 3 minutes

The publication in Official Gazette No.52, General Series, of March 2, 2024, of Decree No. 19/2024 and the implementing provisions of the NRP contained therein, gives the green light to the new tax credit for investments made in the two-year period 2024-2025 in connection with the “Transition 5.0 Plan”. The purpose of the measure is to support the process of digital and energy transformation of enterprises.

According to the provisions of Art. 38 of DL. 2.03.2024 No. 19, a new tax credit is recognized for investments made in 2024 and 2025 related to the Transition 5.0 plan, as part of innovation projects that achieve a reduction in energy consumption. Below are more details. It:

is aimed at all companies resident in Italy and permanent establishments of foreign companies;
for the years 2024 and 2025;
for production facilities located in Italy;
with reference to new tangible and intangible assets, instrumental to business operations, as per Annexes A and B of Law 232/2016 (so-called “4.0” assets) interconnected to the company’s production management system or supply network;
with a request for a reduction in energy consumption of the production structure located in Italy, to which the innovation project refers, of no less than 3 percent, or alternatively, a reduction in energy consumption of the process involved in the investment of no less than 5 percent. For newly established companies, the energy savings are calculated with respect to average annual energy consumption referable to a hypothesized scenario.

A soon-to-be-issued Ministerial Decree will define the implementing provisions of the tax credit. But how might photovoltaic systems fall under this tax break?

The goods listed in Annex B, where specifically provided for by the innovation project, also include:

software, systems, platforms or applications for plant intelligence that ensure the continuous monitoring and visualization of energy consumption and self-produced and self-consumed energy, or introduce energy efficiency mechanisms, through the collection and processing of data including from IoT field sensors (Energy Dashboarding);
software related to enterprise management if purchased together with the software, systems or platforms mentioned in the previous point.

In addition, as part of the innovation projects that achieve a reduction in energy consumption as outlined above, investments in new tangible assets instrumental to business operations aimed at the self-production of energy from renewable sources for self-consumption, with the exception of biomass, including facilities for storing the energy produced, are eligible for aid. With reference to self-production and self-consumption of energy from solar sources, only systems with photovoltaic modules referred to in Article 12.1 letters a), b) and c) of DL 9.12.2023 No. 181 are considered eligible, namely:

photovoltaic modules produced in EU member states with a module-level efficiency of at least 21.5 percent;
photovoltaic modules with cells, produced in EU member states with a cell-level efficiency of at least to 23.5 per cent;
modules produced in EU member states consisting of bifacial silicon heterojunction or tandem cells produced in the EU with a cell-level efficiency of at least to 24 per cent.

The subsidy is designed for investments intended for self-consumption, but in general, excess energy produced should still be allowed to be fed into the grid (this is a marginal share). For such confirmation, it will be necessary to wait for the soon-to-be-issued ministerial decree and/or other specifications from the revenue agency.

Expenditures for personnel training aimed at acquiring or consolidating skills in technologies relevant to the digital and energy transition of production processes are also eligible for aid.

To conclude, below there is a summary table of the tax credit measure, which varies depending on the level of energy consumption reduction achieved through the eligible investments.

Measure of tax credit	Reducing energy consumption of production	Reduced energy consumption of processes affected by the investment
35 per cent for the share of investments up to 2.5 million; 15 per cent for investments over 2.5 and up to 10 million; 5 per cent for investments over 10 and up to 50 million.	Not less than 3 per cent	Not less than 5 per cent
40 per cent for the share of investments up to 2.5 million; 20 per cent for investments between 2.5 and 10 million; 10 per cent for investments between 10 and 50 million.	Higher than 6 per cent	Higher than 10 per cent
45 per cent for the share of investments up to 2.5 million; 25 per cent for investments between 2.5 and 10 million; 15 per cent for investments between 10 and 50 million.	Higher than 10 per cent	Higher than 15 per cent

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