Italy is the second largest industrial producer of goods in Europe, and has the
appropriate strategic knowledge about manufacturing in a range of different sectors.
Italian manufacturers are renowned for their quality. Italian manufacturing technology
has always pursued to make strides in improving production and reduce operating
costs. The Fourth Industrial Revolution, or Industry 4.0, is a concept that focuses on
the changes in technology, industries, and society in line with increasing
interconnectivity and smart automation. It means to digitize the manufacturing sector
with analytics, human-machine interaction, and improvements in robotics.
In line with this thinking, the Italian government launched the national strategy for
digitizing industry, Industria 4.0. It is a wide range of policy measures to promote
domestic and international investment initiatives, and further facilitate innovation-
driven economic growth. Industria 4.0 has facilitates tax incentives for all types of
companies without the obstructing red tape associated with it or the uncertainty of
receiving those incentives. There are 5 fiscal measures that are the mainstays of
INdustria 4.0.
1. Tax incentives for investments in innovative startups and SMEs: Individual
and organisation that invest in innovative startups and innovative SMEs
receive relief on Italian income tax. These benefits amount to 30% of the
investment made or up to 1 million Euros yearly for individuals and 1.8 million
Euros for companies.
2. Super-depreciation: Industria 4.0 also includes a 40% increase in the ordinary
depreciation deduction for investments made in new industry machinery. This
would mean that the costs for acquisition are raised by an equivalent share for
accounting purposes. Since assets go through fiscal depreciation over the
years, this measure would result in a significant and long-lasting reduction in
taxable income and consequently the tax rate applicable.
3. Hyper-depreciation: Similar to Super-depreciation, this includes a 150%
increase in the ordinary depreciation deduction. This significant increase in
acquisition cost would result in a large reduction in tax burden over the years.
This applies to select equipment in line with the values of Industria 4.0.
4. Tax credit for Research and Development: An increase in Research and
Development would benefit companies with a tax credit on additional
expenses. This applies to basic research, industrial research, and
experimental development (including personnel expenditure, research
agreement with other companies/organizations).
5. Patent Box: This is a special fiscal measure that includes a massive 50%
reduction in corporate tax on income that is earned by the direct and indirect
use of intellectual property (industrial patents, industrial designs, copyrighted
industrial software).