Transition 5.0, higher rate for SMEs but no extension

The changes to the Transition 5.0 incentive plan arrive at the finishing line after troubled negotiations with the European Commission. There are rate enhancements and simplifications. But surprisingly, in the end, apparently due to resource alignment issues raised by the Ministry of Economy, the extension of the deadline for investments from 31 December 2025 to 30 April 2026 is skipped. Thus, what was considered the antidote to the considerable implementation difficulties that have held back most companies, with tax credit bookings still stuck at less than 5% of the more than 6.2 billion Pnrr funds available, only partially passes. The government's amendment to the budget law, the result of the work of the Ministry of Enterprise and Made in Italy led by Adolfo Urso, was filed yesterday in the Budget Committee of the Chamber of Deputies.

According to the scheme now in force, the incentives cover investments of up to EUR 50 million. The amendment reduces the brackets from three to two, increasing the rate for the portion of projects between 2.5 and 10 million, in which most of the plans of small and medium-sized companies are concentrated. In detail, in this bracket the benefit rises from 15% to 35% if the energy saving achieved is between 3 and 6% with reference to the production structure or between 5 and 10% in relation to the process involved in the investment; it increases from 20 to 40% with energy reductions between 6-10% and 10-15% respectively; it is increased from 35% to 45% in cases of maximum efficiency, i.e. over 10% for the structure and over 15% for the process. The retroactivity of these increases, for investments made from 1 January 2024 and until the Budget Law comes into force, is subject to a special communication from the Gse based on the availability of resources within the Pnrr ceiling.

The other novelties, on reading the regulation, appear to be automatically retroactive. The benefits for the purchase of photovoltaic panels are enhanced. The original rule states that investment in plans that include the most efficient photovoltaic modules contributes to the basis for calculating the tax credit for an amount equal, depending on the type of product, to 120% or 140% of their cost. Now the percentages rise to 140% and 150% respectively, and the immediately lower efficiency category (the least expensive on the market) is also 'super-incentivised', with a 130% increase.

The go-ahead is also given for cumulation with other incentives, an opening much awaited by businesses. The amendment contains not only the possibility of adding the benefit to the tax credit for investments in the Special Economic Zone of Southern Italy, but also surprisingly (the most complicated point of the negotiation with Brussels) the cumulability with other EU-funded facilities, provided that the support does not cover the same cost shares and individual investments of the innovation project.

On the simplification front, on the other hand, the automatism in calculating the reduction in energy consumption passes for capital goods purchased to replace goods with similar technological characteristics that have been fully depreciated for at least 24 months. In this case, efficiency is automatically considered to be 3% with reference to the production structure and 5% for the processes concerned, without prejudice to the possibility of demonstrating a higher result. Moreover, the reduction in consumption is in any case considered to have been achieved in the case of innovation projects carried out through an Esco (energy service company) in the presence of an energy performance contract in which the commitment to achieve the minimum savings mentioned above is expressly provided for. As for ESCos, the amendment also provides that they can directly access tax credits for investment projects carried out at the client company.