4.0 Industry Plan for 2022: opportunities and tax breaks

On October 28, the Cabinet approved the 2022 Draft Budget Bill, which provides, except for changes that may occur during the parliamentary procedure, the tax credit extension for investment in capital goods and software «Transition 4.0» until 2023 and following; we talk about it with Simone Baldini of Leyton.

Can you explain to us how you can use the tax advantage with regard to the latest updates to the new 2022 Budget Act?

The 4.0 Transition Plan, a document on which the structuring of the three main measures relating to Research & Development & Innovation and Industry 4.0 is based, replaces the previous 4.0 Business Plan and 4.0 Industry, representing a real industrial plan for the Italian economic fabric.

It promotes and follows companies in the technological transition process and environmental sustainability, relaunching investments penalised by the emergency linked to COVID-19.

The 4.0 Transition paradigm is based on two basic concepts: interconnection and integration. Interconnection means the ability to send instructions or programs remotely, using open or standard protocols. Integration means the machine ability to communicate automatically with the information system.

PNRR first mission is «Digitalisation, innovation and competitiveness in the production system» with a reserved budget of 9.72 billion to facilitate Italian production system Digital Transition.

Just under this component the 4.0 Transition Plan has found the resources to give a multiannual and structural perspective to the measures that are part of it (time frame will be confirmed with the next Budget Law).

What are the benefits for companies that purchase software?

The advantages are mainly represented by tax incentives aimed at the Italian industrial fabric finalised in bridging the gap between Italy and the rest of the European Union countries, as our country is ranked at 24 place among the 27 European countries by DESI index (digitisation of the economy and society).

An integrated mechanism of tax breaks has been created, which directly finance a software purchase, through the software tax credit and all the collateral activities that involve the employees of the company, engaged in the development and implementation of this project, such as the technological innovation tax credit and the training tax credit 4.0.

This concept is very important and is often underestimated by companies: those who make the investment will not only have the benefit related to the intangible asset, but will also be able to recover all the personnel costs that will have participated in the project both in the customisation phase and in the training phase.

We do not go into the merits of the different facilitation rates, but it is plausible to say that even on an investment in software you can recover from a 40% to a 60% of the initial investment. The facility is granted to all enterprises resident in the territory of the State.

Do you believe that the incentives extension provided by the 4.0 Transition plan has been carried out to allow, once again, companies to transform into Smart Factory?

For almost five years now, companies have had several opportunities to transform into 4.0 Industry and digitise their production plant.

Perhaps the real success factor, which really allows the owners and managers of manufacturing companies to abandon the slow path of development and invest in real growth opportunities, is represented by training. Knowing the different advantages and observing that outside the national territory the factories carry out the same productive phases obtaining however greater benefits is synonymous of awareness and inevitably of growth.

With half the tax credits available, what prospects do you envisage for 2023 and the following years?

The concession rates from 2023 onwards will be almost halved, but the 4.0 Transition Plan 

measures will be complemented by the NRPN with other sources of public funding. This will ensure the possibility of planning the activity over several years but above all the possibility of access to new incentives made available thanks to the increased resources deployed. And then we still have a year, all 2022, to take advantage of the increased tax credit rates: so we absolutely take advantage of the huge benefits still outstanding for the year 2022 that is coming.

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