On 30 December 2019, Italy published Law No. 160 of 27 December 2019 in the Official Gazette which includes the budget measures for 2020.
VAT rate
The reduced VAT rate will be maintained at 10% for 2020 and will increase to 12% in 2021 unless budget targets are met and the standard rate will be maintained at 22% for 2020 and will increase to 25% in 2021 and to 26.5% in 2022 unless budget targets are met.
Digital Services Tax
The Budget Law 2019 is amended to introduce of a 3% digital services tax (DST) applying from 1 January 2020. Taxpayers are required to pay the DST by 16 February and submit the DST return by 31 March. The allowance for corporate equity (notional interest deduction) is reintroduced with a fixed rate of 1.3% on net capital increases made in a company effective from 2019.
Tax credit
The “super depreciation” and “hyper depreciation” incentives are replaced by a tax credit for qualifying investments in new assets (excluding real estate, vehicles and assets with a tax depreciation rate lower than 6.5%) made during the period from 1 January 2020 to 31 December 2020 (or up to 30 June 2021 if certain requirements are fulfilled by 31 December 2020). As from 1 January 2020, Italian companies may benefit from the following:
- A tax credit equal to 40% of the costs of new assets for the technological transformation of enterprises under the “Industry 4.0” plan for investments up to EUR 2.5 million, and a 20% tax credit for investments between EUR 2.5 million and EUR 10 million;
- A tax credit equal to 15% for investments up to EUR 700,000 in new intangible assets (e.g. software, systems, platforms, etc.) related to the technological transformation of enterprises under the Industry 4.0 plan; and
A tax credit equal to 6% of the costs of other new tangible assets, up to a total investment of EUR 2 million.
