I’ll tell you the whole story of business incentives for the digital transition

21 April 20244 days ago babelfish

The Transition 5.0 plan should encourage the digitalisation of Italian companies, but it is perhaps suspected that the deluge of European bureaucracy will prevent the use of the allocated sums. Giuseppe Liturri's analysis

In 2024 and 2025 there would be 6.3 billion in incentives in the form of tax credits available to companies for investments in capital goods with a high digital content (machine tools, robots, automated warehouses, etc….) and software. It's called Transition 5.0. We use the conditional because, reading the legislative decree of the beginning of March – now being converted in the Chamber, where the examination of the amendments continued last week – and after having listened to the hearings of Confindustria and Assonime, there is a strong suspicion that the deluge of bureaucracy requested by Brussels will constitute a very strong brake on the effective use of those sums. The transition from 4.0 to 5.0 is perhaps referable to the change in Dante's circle into which the entrepreneur must enter to satisfy the requirements, conditions and controls provided for in the 21 paragraphs of article 38 of the legislative decree.

We understand that the "burn" of the out-of-control spending of the Superbonus still burns, but in terms of controls and procedures we have gone from one excess to another. It is correct that the criterion of preventive spending control has been introduced, but there is a well-founded fear that the government has gone too far in the opposite direction.

The same goods subsidized with Transition 4.0 are now incentivized to a much greater extent but under the condition of achieving energy savings in the production structure or processes affected by the innovative investments.

The amount of the tax credit increases as energy savings increase. The more energy you save, the greater the incentive. For investments up to 2.5 million, we start with a subsidy of 35% of the investment, rising to 40% and then to 45%, in relation to an energy saving of the production structure equal to at least 3%, 6% respectively and 10%. Alternatively, the production process affected by the investment must save 5%, 10% and 15%. The tax credit can also be offset in a single payment by the end of 2025, then carried forward in five annual installments of the same amount.

If you haven't already missed it, this is the easy part. Because this is the necessary consequence of the fact that the money comes from Brussels and from a specific chapter of the PNRR added last August (RePowerUE) precisely to achieve energy saving objectives and thus reduce dependence on fossil fuels. The declared objective is to achieve cumulative energy savings of 0.4 million TOE (tons of oil equivalent). And already here some doubts arise, because in 2022 the country's gross energy availability stood at 149 million TOE, compared to 156 million in 2021. Those 0.4 million expected from Transition 5.0 seem like a drop in the ocean , at the limit of statistical error.

To measure this microscopic variation but, above all, to avoid unpleasant surprises on the revenue (Superbonus style) the ministerial technicians invented the Bermuda Triangle, at the top of which are GSE (energy services manager), Mimit (ministry of business and made in Italy) and the Revenue Agency. If even Assonime went so far as to write that "the procedure outlined by the decree is certainly not easy and immediate to apply", adding that "the steps to be taken and the formalities to be observed are perhaps excessive", it means that the skill of the famous mathematician Alan Turing to get to the bottom of the data to certify energy savings. This data must be calculated with reference to the year preceding the start of the investment, "net of changes in production volumes and external conditions that influence energy consumption".

Well, the law requires certification by an "independent evaluator" to certify ex ante the energy savings associated with the investment. What if, once the investment has been made, the theoretical hypotheses are not confirmed? What if temperatures worsened the energy efficiency of the production structure or process? The evaluator will then have to issue a second certification, ex post, in which only the control of the actual realization of the investments in accordance with the initial project is required. Let's gloss over, so as not to rant, the Nobel Prize-winning theme of the physics of measuring energy savings resulting from an investment in software.

The Court of Auditors itself admits that "the need to guarantee the pursuit of well-defined technical objectives, defined in terms of energy saving by the standard and the PNRR, has required the introduction of more stringent forms of control than those currently in place for the 4.0 plan.”. The result is that the expense is booked by sending a communication to the GSE, which in turn sends the list of companies with the booked amounts to Mimit. Then the company sends periodic communications to the GSE with the progress of the subsidized investment and its term. At that point the GSE transmits to the Revenue Agency the list of beneficiary companies admitted to compensation. All on a brand new IT platform.

What if something went wrong? “the procedure risks being blocked”, is Assonime's opinion. But it doesn't end there. Because it will also require certification from the statutory auditor as to whether the expenses have actually been incurred and, last but not least, the interconnection of the asset will still have to be sworn.

The issue of reduced times is also important. The 2025 deadline, according to Confindustria, determines the risk of "bottlenecks on the supply side, due to the inability of suppliers to complete orders concentrated in a limited time frame".

Then, like a monster that devours itself, the most polluting and dangerous companies are excluded from the relief, that is, as Viale dell'Astronomia points out, precisely those whose energy savings would be most valuable. Finally, the prohibition on cumulation with the tax credit for investments in the Zes Unica (which inherited the Southern bonus) is unjustified, if not for reasons of mere revenue.

We understand Minister Raffaele Fitto's desire to achieve, in any way, the spending objectives of the PNRR. But if these are the methods, certainly not chosen by Fitto but introduced by Brussels, there is a risk of not being able to spend what was budgeted, because for many entrepreneurs the expense (in terms of regulatory uncertainties, times and costs) will not be worth the undertaking.

We are now awaiting amendments to the decree but straightening out something that was born crooked, like the PNRR, is a challenge that is not always possible to win.

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/incentivi-transizione-5-0/ on Sun, 21 Apr 2024 05:07:50 +0000.