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2021 Budget Law

published on 24 March 2021 | reading time approx. 17 minutes

Published on the Ordinary Supplement no. 46 to the Official Gazette no. 322 of 30 December 2020, the 2021 Budget Law (Law no. 178/2020), already in force since the 1 January 2021, introduces some important and interesting news concerning tax benefits and incentives, which will be briefly summarised below.

Facilitation measures

Building Bonus Extension

The benefits related to building renovation interventions according to the art. 16 bis of Italian Income Tax Law (TUIR), building energy requalification interventions, and deductions for the purchase of new furniture and large household appliances, as well as renovating interventions on the facades of buildings, are extended for the year 2021 as well.

Building renovation interventions for the recovery of the building heritage are provided for up to a maximum expenditure limit of Euro 96,000 per real estate unit. The maximum deductible expenditure limit for the purchase of new furniture and large household appliances is also raised to Euro 16,000.

The so-called "Bonus verde" is also extended through 2021.

New 110 per cent Superbonus

The 110 per cent deduction (the so-called Superbonus) for energy requalification works and reduction of seismic risk has now been granted for expenses incurred until 30 June 2022 (exceptions apply for its extension until 31 December 2022).

The deduction will be divided into four, instead of five, annual instalments, only for the portion of expenditure recognised in that year.

The beneficiaries of the relief also include natural persons, who are not carrying out business/self-employment activities, with reference to interventions carried out on buildings consisting of 2 to 4 real estate units separately registered, even if possessed by a single owner or co-owned by several individuals.

On the other hand, due to the new regulations, the possibility to receive the whole 110 per cent Superbonus is also extended to the following interventions:

roof insulation to be counted among the so-called "driving" interventions of thermal insulation of the opaque vertical, horizontal and inclined surfaces that affect the building envelope;
architectural barriers demolition, according to Article 16 bis letter e of TUIR, to be included among the so-called " pulled" interventions, even if carried out in favour of people aged over 65 installation of solar photovoltaic systems on structures appurtenant to buildings.

Among the new provisions concerning the types of buildings eligible for assistance, it is now provided that:

a real estate unit can be considered functionally independent if it is provided with, at least, three of the following installations or manufactures of exclusive ownership: water supply system, gas system, electricity system, winter air conditioning system;
buildings without an Energy Performance Certificate can benefit as well from the Superbonus, provided that Energy Class A is reached at the end of the interventions, which must also include those of thermal surfaces insulation as described in letter a of Article 119, paragraph 1 of Law Decree 34/2020.

In the case of interventions that are eligible for the Superbonus, the possibility of opting for the discount on the invoice or alternatively for the assignment of the credit, instead of the direct use of the deduction in the tax return, is also extended to the deductions granted in relation to expenses incurred in 2022.

Tax credit for investments in capital goods

A new tax credit has been introduced for investments in new tangible and intangible assets, made from 16 November 2020 until 2022, with the "long" term extended to 30 June 2023.

The tax credit is provided for investments in tangible and intangible assets not qualified as “4.0”, made by companies and those carrying out arts and professions according to the percentages defined below:

10 per cent of the cost incurred, up to a maximum limit of Euro 2 million for investments made from 16 November 2020 to 31 December 2021, raised to 15 per cent for technological tools and devices aimed at implementing forms of agile work.
6 per cent of the cost incurred, up to a maximum of Euro 2 million, for investments made in 2022.
at the same time, for investments made from 16 November 2020 until 2022, the tax credit for investments in "4.0" tangible assets referred to in Annex A of Law 232/2016 is extended, at a differentiated rate according to the time of the investment and its size, as illustrated below.

In case of investments made from 16 November 2020 until 31 December 2021 (or until 30 June 2022, if by 31 December 2021 the order has been accepted by the seller and at least 20 per cent of the price has been paid), the tax credit is recognised as follow:

50 per cent of the acquisition cost, for the portion of investments up to EUR 2.5 million;
30 per cent of the acquisition cost, for the portion of investments exceeding EUR 2.5 million up to EUR 10 million;
10 per cent of the acquisition cost, for the portion of investments exceeding Euro 10 million up to Euro 20 million.

Whereas, if the investments is made from 1 January until 31 December 2022 (or until 30 June 2023, if by 31 December 2022 the order has been accepted by the seller and at least 20 per cent of the price has been paid), then the tax credit is recognised as follows:

40 per cent of the acquisition cost, for the portion of investments up to EUR 2.5 million;
20 per cent of the cost, for investments exceeding Euro 2.5 million and up to Euro 10 million.

With reference to the intangible assets referred to in Annex B of Law 232/2016, the tax credit, for the entire agevolated period, is recognised to the extent of 20 per cent of the incurred cost, up to a maximum limit of eligible costs of Euro 1 million.

At the same time, it is compulsory to indicate the regulatory reference to the facilitation in question on the invoice in order to benefit from the tax credit, as well as the need to submit a sworn appraisal of the "4.0" assets with a unit cost exceeding 300,000 Euro.

Tax credit for research, development and innovation

The Budget Law has extended, from 2020 to 2022, the credit for investments in research and development, green transition, technological innovation 4.0 and other innovative activities.

The facility is now provided for:

eligible research and development activities, to the extent of 20 per cent of the relevant calculation basis, up to a maximum limit of Euro 4 million (except, as will be seen, for investments made in certain areas of the South, for which this credit is provided to an increased extent);
technological innovation activities, to the extent of 10 per cent of the relevant basis, or to the extent of 15 per cent in the case of projects aimed at achieving an objective of ecological transition or digital innovation 4.0, up to a maximum of 2 million Euro;
design and aesthetic conception activities, to the extent of 10 per cent of the relevant calculation basis, up to a maximum of Euro 2 million.

With reference to the type of companies benefiting from the relief, the same is now extended to all companies regardless of the tax regime for determining income, therefore overcoming the interpretative issue concerning the exclusion of agricultural companies carrying out activities falling under agricultural income.

As far as documentation is concerned, the Budget Law 2021 introduces the obligation to certify the technical report that companies benefiting from the facilitation are required to draw up and keep.

Tax credit for investments in Southern Italy and enhanced tax credit for R&D activities in Southern Italy

The extension to 2022 is also envisaged for the tax credit granted for the purchase of new capital goods forming part of an initial investment project and intended for production facilities located in certain regions (Campania, Puglia, Calabria, Basilicata, Sicily, Molise, Sardinia and Abruzzo) in Southern Italy.

At the same time, the tax credit for R&D activities, introduced by the 2020 Budget Law, is confirmed for 2021 and 2022 for companies operating in the same regions of Southern Italy as above. The R&D credit is granted at the following percentages, which differ according to the size of the applicant company:

25 per cent for large enterprises;
35 per cent for medium-sized enterprises;
45 per cent for small enterprises.

Tax credit for the listing of SMEs

The tax benefit on consultancy costs incurred in connection with the listing of SMEs has also been extended to 2021.

Introduced with the 2018 Finance Act, the tax credit for the listing of SMEs allows small and medium-sized enterprises, as defined pursuant to EU Recommendation 361/2003, which intend to start the process of admission to trading on a regulated market or multilateral trading systems of a Member State of the European Union or the European Economic Area, to benefit from a tax credit of 50 per cent of the consulting costs incurred from 1 January 2018 until the date of listing and in any case by 31 December 2021, up to a maximum limit of Euro 500,000.

Consultancy activities eligible for tax credit include, for instance but not limited to, all activities incurred in view of the listing process and aimed at it; consultancy provided in order to certify the company's admission to listing, also with reference to legal, tax and contractual issues strictly related to the listing procedure; support provided for the placement of the listed shares with investors.

In order to take advantage of the benefit, it is in any case necessary to:

prepare a certificate attesting the actual incurrence of costs and their eligibility, to be issued by the chairman of the board of statutory auditors, by a statutory auditor or by a professional registered at the Register of Chartered Accountants and Experts;
submission of a specific application, containing, among other things, the certification of the expenses incurred as described in the former point, to be electronically transmitted to the Ministry of Economic Development at the PEC address (dgpicpmi.div05@pec.mise.gov.ita) set up for this purpose.

New "Sabatini" TER

The 2021 Budget Law introduced a number of changes in the way how the state contribution (known as the "Sabatini-Ter") is granted, aimed at supporting SMEs in the purchase/leaseback of new capital goods. The novelty concerns the elimination of the Euro 200,000 threshold under which the grant was to be paid in a single instalment, rather than in six annual instalments. Following this change, the contribution will, in any case be granted in a single instalment, in accordance with procedures to be determined by a ministerial decree.

Corporate liquidity support

Measures granted to companies to support their liquidity include:

the extension of the duration of loans of up to EUR 30,000, guaranteed by the SME Guarantee Fund, to 15 years;
the extension to 30 June 2021 of Sace's extraordinary guarantee intervention;
the extension to 30 June 2021 of the standstill granted to micro, small and medium-sized enterprises;
the suspension, until 31 January 2021 of expiry dates for promissory notes, bills of exchange and other credit instruments falling in the period 01 September 2020 – 31 December 2021.

Measures to strengthen SMEs

The 2021 Budget Law extends certain measures introduced by the “Rilancio” Decree to encourage the strengthening of small and medium-sized enterprises.

Among these, the possibility of benefiting from the tax credit to the extent of 50 per cent of the losses exceeding 10 per cent of the shareholders' equity, within the limit of 30 per cent of the capital increase, is extended to capital increases carried out by 30 June 2021; this limit is increased to 50 per cent only for capital increases resolved and executed in 2021.

As a result of this temporal extension, for capital increases carried out in 2021 only, the distribution of reserves before 1 January 2025 entails the termination of the benefit, with the consequent obligation to repay it.

Non-application of the provisions of the Italian Civil Code on business losses

The non-application of the provisions of the Italian Civil Code concerning the obligations and fulfilments required of corporations in the presence of losses in progress as of 31 December 2020 is envisaged.

In particular, the 2021 Budget Law introduces:

a suspension from the application of the rules set forth in Article 2446, paragraph 2, and Article 2482-bis, paragraph 4, regarding the conduct to be taken in the event that the loss is not reduced to less than 1/3 by the end of the following financial year. The deadline by which the loss must be reduced to that limit is now postponed to the fifth subsequent financial year. It will therefore be up to the shareholders' meeting approving such balance sheet to reduce the capital in proportion to the established losses.
a suspension of the application of the provisions of Articles 2447 and 2482-ter regarding the conduct to be adopted in the presence of losses of more than 1/3 with a reduction of the capital below the legal minimum. The possibility of postponing decisions on the reduction of capital and the simultaneous increase above the legal minimum is provided for until the end of the fifth subsequent financial year.

Until that date, therefore, the causes of dissolution provided for the reduction/loss of share capital do not apply.

In all cases, suspended losses must be separately disclosed in the Notes to the Financial Statements by means of statements showing the year of their formation as well as the movements occurred during the year, in order to meet the information requirements of third parties.

Realignment of values of goodwill and other intangible assets

The possibility of realigning the civil and fiscal values of goodwill as well as other intangible assets (trademarks, patents, know-how, concession rights, licenses, etc.) recognised in the financial statements for the year ending on 31 December 2019 has been envisaged, by paying a 3 per cent substitute tax.

The Legislator has therefore extended, with the introduction of paragraph 8-bis of Article 110 of Decree-Law No. 104/2020, the possibility, hitherto provided only for business assets and equity investments, of realigning the values recognised for tax purposes of goodwill and other intangible assets without legal protection, by paying a 3 per cent substitute tax, calculated on the difference between the statutory value and the value recognised for tax purposes of the intangible asset being revalued.

This option, which is available only for companies that prepare their financial statements in accordance with Italian GAAPs, applies only to intangible assets and goodwill, generally arising from extraordinary merger or business contribution transactions, recognised in the financial statements in progress as of 31 December 2019.

However, any goodwill arising from extraordinary transactions carried out in 2020 is not included in the benefit.

In addition, a special reserve must be set aside for the revaluation, under the tax suspension regime, for an amount equal to the amount of the revaluation net of the substitute tax due, and, if there are no available reserves, part of the share capital may be set aside for this purpose. This reserve may also be, in whole or in part, redeemed by paying a 10 per cent substitute tax, thus avoiding further taxation of the Company at the time of its distribution.

Revaluation of participations and land owned as of 1 January 2021

The possibility of revaluing the purchase value of equity investments not listed on regulated markets as well as land suitable for building and agricultural use is confirmed also for 2021, in the light of the provisions of Article 1, paragraphs 693 and 394 of Law 160/2019 (Budget Law 2020) and more recently of Law Decree 34/2020 ("Rilancio" Decree).

Therefore, also for the current year, taxpayers who are natural persons and do not carry out business activities, simple companies, companies and similar associations pursuant to art. 5 of the TUIR, non-commercial entities as well as entities not having a permanent establishment in Italy, are able to recalculate the value of the shareholdings as well as land suitable for building and agricultural use held on 1 January 2021 by paying a substitute tax set at 11 per cent; recalling the fact that such revaluation produces effects only for the purposes of determining the income situation referred to in Article 67 paragraph 1 letters a, b, c and c-bis, so that the value redetermined following the enfranchisement will be taken as the basis for calculating the capital gain at the time of the subsequent sale.

In any case, the redetermined value must result from a special appraisal, the deadline for the preparation of which is set at 30 June 2021, whilst mentioning that the redetermination of the value is considered finalized with the total payment of the substitute tax or, in the event of payment by instalments, with the payment of the first instalment thereof.

With Circular 1/E of 22 January 2021, the Tax Authority clarified the taxpayer's right to request a new appraisal of the assets in his possession, even if in the past he has already benefited from similar facilitating provisions, with the option in this case of deducting from the substitute tax due for the year 2021 the amounts already paid in previous procedures for the redetermination of the value. As an alternative to the deduction, the option of claiming a reimbursement of the substitute tax already paid in the past seems possible, although this reimbursement cannot exceed the tax due and determined on the basis of the latest appraisal report.

The above-mentioned circular incorporates the policy expressed by the United Sections of the Supreme Court regarding the redetermination of values, in the event that the deed of sale of the revalued assets sets a lower price than that determined by the expert appraisal. On this point, therefore, the Tax Authority follows the Supreme Court's ruling, considering that in this case there is no forfeiture of the benefit, nor the power of the tax authorities to recalculate the capital gain on the basis of the historical value of the asset.

The taxpayer is responsible for providing evidence of the benefit when filling in the tax return form (RT form in the case of recalculation of the value of investments, RM form in the case of recalculation of the value of land).

Incentives for business combinations

Specific incentives have been introduced to encourage business combinations so that the entity resulting from the merger/beneficiary/conferring party is allowed to transform into a tax credit a portion of the deferred tax assets (DTA), even if not recorded in the financial statements, referring to tax losses and ACE surpluses, in the case of mergers, demergers or transfers of businesses resolved between 1 January and 31 December 2021.

IRPEF/IRES reduction for businesses starting a new economic activity in the areas most affected by the pandemic

Measures are to be introduced to encourage economic recovery and reduce the tax burden on businesses operating in areas most affected by the pandemic.

In this sense, the Budget Law 2021 introduced a 50 per cent reduction in income tax for companies that undertake a new economic initiative within the so-called Special Economic Zones, established pursuant to Decree-Law 91/2017 (geographically delimited and clearly identified zones established in underdeveloped regions, with a per capita GDP below 75 per cent of the European average, and in transition regions, with per capita GDP between 75 per cent and 90 per cent of the European average). This relief is granted starting from the tax period during which the activity was undertaken and for the following six tax periods and is subject to compliance with the following conditions (under penalty of forfeiture):

beneficiary companies must maintain their activity in the SEZ for at least 10 years;
preservation of the jobs created within the activity carried out within the SEZ for at least 10 years.

Other interesting tax provisions introduced by the Budget Law 2021:

Changes to international ruling procedures

The Budget Law also covers the international ruling procedure provided for by Article 31-ter of Presidential Decree 600/73, introducing the right to rely on the unilateral or bilateral/multilateral agreement also for prior years not yet verifiable, while complying with certain conditions provided for by law and differentiated according to the type of agreement.

In order to be eligible for prior bilateral/multilateral agreements, a commission fee is now charged, to be established in the amount according to the turnover of the requesting company.

Plastic tax and sugar tax: changes and deferrals

A number of changes have been made to the plastic and sugar taxes, as described below:

broadening of the range of subjects liable to pay the tax, which is now paid by the manufacturer as well as by the purchaser, i.e. the person who is willing to sell his products with a single use obtained on his behalf in a production plant; as regards the Sugar Tax, it will also be borne by the subject, whether or not a national resident, on whose behalf the sweetened beverages are obtained by a different subject, who is the operator of the production plant;
inclusion of "proforma" among the semi-finished products subject to the Plastic Tax;
mitigation of the sanctioning regime concerning the two taxes;
deferment of the effectiveness of the provisions to 1 July 2021 for the Plastic Tax and to 1 January 2022 for the Sugar Tax.

VAT exemption supplies to combat Covid-19

There is a VAT exemption scheme with the right to deduct tax until 31 December 2022 for:

supplies of equipment for Covid-19 diagnostics and services directly related to such equipment, until 31 December 2022;
supplies of Covid-19 vaccines and the provision of services closely related thereto, from 20 December 2020 to 31 December 2022.

News on the telematic transmission of receipts and redefinition of penalties for their non-transmission/incorrect transmission

The Budget Law 2021 introduces some interesting provisions also with regard to the telematic transmission of the receipts, at the same time mitigating, albeit partially, the sanctions regime provided for in case of non-transmission or incorrect transmission of the same.

As of 1 January 2021, retail traders and similar entities pursuant to Article 22 of Presidential Decree 633/72 are generally required to electronically store and send their receipts to the Italian Tax Authority. However, the possibility of using evolved collection systems (e.g. evolved POS) to fulfil the above obligations is postponed to 1 July 2021.

The electronic storage and sending of the document means that the obligation to issue a receipt no longer applies (these will be replaced by the issuance of the so-called "commercial document"), as well as the recording of receipts in the relevant registers.

However, it is required that the electronic storage and the possible delivery of the document to the customer, if requested, must take place no later than the time of completion of the transaction.

With the introduction, then, of the new paragraph 2-bis of Article 6 of Legislative Decree No. 471/97, there is also a reduction of the penalty imposed on retail traders and equivalent subjects, now equal to 90 per cent of the tax related to the amount not stored/transmitted, in case of:

non-transmission or incorrect transmission of receipts;
storage or transmission with incomplete or untrue data;
failure or irregular functioning of the telematic recorders. If, however, such malfunctioning does not lead to omitted annotations, the failure to promptly request the intervention for maintenance is punished with a sanction from Euro 250 to Euro 2,000.

This penalty system is less severe in the event that the omitted or late transmission of the receipts or their transmission with incomplete or untrue data does not affect the correct settlement of the tax. In this case, the administrative fine is set at Euro 100 for each transmission, with no possibility of invoking the provisions of Article 12 of Legislative Decree no. 472/1997 on the subject of legal cumulation.

The penalty applicable in the event of the following is also reduced to 90 per cent of the tax:

failure to issue tax receipts/tax slips/transport documents;
issue of such documents for amounts lower than the actual amounts;
failure to record in the relevant registers the receipts relating to each transaction in the event of failure or irregular functioning of the cash register. If, however, such malfunctioning does not lead to omitted annotations, the failure to promptly request intervention for maintenance is punished with a sanction from Euro 250 to Euro 2,000.

The Budget Law 2021 also introduces some interesting simplifications in tax matters.

Deadline for recording active invoices for quarterly taxpayers

For VAT taxpayers who carry out quarterly periodic settlements, on an optional basis, the possibility of recording the invoices issued by the end of the month following the quarter in which they are issued and with reference to the same month in which they are issued is recognised.

Changes to the Esterometer rules

For transactions carried out after 1 January 2022, it will be mandatory for the data on cross-border transactions to be reported via the Interchange System, using the same format as the electronic invoice.

The data relating to active transactions concluded with parties not established in the territory of the State must be transmitted electronically within the time limits for issuing the relevant invoices.

The data relating to purchases and services received, on the other hand, must be communicated by the fifteenth day of the month following that in which the document proving the transaction is received.

Fighting fraud related to the misuse of the VAT ceiling

Enhanced measures are envisaged to counter frauds through the use of the false VAT ceiling (“plafond”).

The definition of this new system gives the tax authorities the power to carry out audits and specific risk analyses aiming to reduce the occurrence of fraudulent conduct, through a careful assessment of taxpayers whose tax profile is not compatible with the status of habitual exporter.

If, following the audits carried out, irregularities emerge, the taxpayer will be prevented from issuing new declarations of intent through the telematic channels of the Revenue Agency.

It will also be prohibited to send through the SDI any electronic invoices, issued by the seller/provider, unaware of the possible fraud put in place by the transferee/purchaser customer, under the VAT non-taxable regime pursuant to Article 8 paragraph 1 letter c. DPR 633/72, and reporting the reference to a protocol of invalidated declaration of intent.

However, it is necessary to wait for a specific Provision of the Tax Authority in order to clarify the operating procedures for the implementation and operation of the described anti-fraud mechanism.

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