Green Light for the Transition 5.0 Tax Credit
March 4, 2024
Article 38 of Legislative Decree 19/2024 (known as the PNRR Decree), published in the Official Gazette No. 52 on March 2, 2024, outlines a new, complex, and enhanced tax credit for investments made in 2024 and 2025. These investments are part of innovation projects aimed at reducing energy consumption, in line with Investment 15 of Mission 7 "REPowerEU," to which €6.3 billion has been allocated.
The "Transition 5.0" plan can be described as the green evolution of the 4.0 Plan. The incentive targets investments in new digital assets, provided that they collectively result in a reduction in energy consumption at the level of either the production facility located in Italy or the affected process. This creates a dual track for investments in new capital goods made within the state, precluding the possibility of combining the 4.0 and 5.0 tax credits for the same investment:
- Digital Transition 4.0, eligible for the established tax credit provided in Article 1, paragraphs 1057-bis and following, of Law 178/2020, applicable to investments made from January 1, 2023, to December 31, 2025, or by June 30, 2026, with a valid reservation by December 31, 2025;
- Digital and Energy Transition 5.0, eligible for the new tax credit provided in Article 38 of Legislative Decree 19/2024.
The basis for the tax incentive is achieving, through investments in 4.0 goods, one of the following energy efficiency goals, measured "against the energy consumption recorded in the year preceding the start of the investments, net of changes in production volumes and external conditions affecting energy consumption" (for startups, the implementing decree will define criteria for determining a "counterfactual scenario"):
- For production facilities, energy savings of at least 3%;
- For processes, energy savings of at least 5%.
Eligible investments under the innovation project include:
- Leading investments in 4.0 digital assets, through which energy consumption reductions are achieved;
- Additional investments in new tangible goods aimed at self-producing energy for self-consumption from renewable energy sources (so-called RES);
- Additional investments in staff training, within certain limits.
The implementing provisions for the incentive will be established by a dedicated ministerial decree (DM).
To access the incentive, companies must submit specific communications to the Ministry of Enterprise and Made in Italy (MIMIT) both before and after completing the investments, in the manner and terms to be defined by the DM.
The recognition of the tax credit is subject to the submission of specific certifications issued by an independent evaluator, who must certify, in advance, the energy savings achievable through the incentivized investments in goods and, afterward, the actual implementation of the investments in accordance with the pre-certification and the successful interconnection of the goods to the company's production management system or the supply network. For SMEs, certification expenses are added to the tax credit, up to a maximum amount of €10,000.
Certification by an auditor is also required, as well as indicating the regulatory citation on the invoice.
The tax credit can only be used as compensation in the F24 form in a single installment by December 31, 2025. Any amount not compensated by that date can be carried forward and used in five equal annual installments.
