Transition Plan 4.0 is part of the National Recovery and Resilience Plan (PNRR), the Italian government’s programme to manage funds from NextGenerationEU, the EU project for promoting economic recovery after the COVID-19 pandemic. The PNRR includes measures across various sectors, including digital and green transitions, healthcare, education, transportation, and justice. Transition Plan 4.0 seeks to encourage Italian businesses to invest in digital transformation, modernise, and enhance their market competitiveness. This article will explore the details of Transition Plan 4.0, its target audience, and the types of investments it can support.

What’s in this article?

• What is Transition Plan 4.0?
  
• Who is Transition Plan 4.0 aimed at?
  
• What can Transition Plan 4.0 fund?
  
• How to apply for funding under Transition Plan 4.0
  

What is Transition Plan 4.0?

The Ministry of Enterprises and Made in Italy introduced National Transition Plan 4.0 with the Budget Law 2020 (Law 160/2019) to support Italian manufacturing businesses in their digital transformation. It replaces the measures of the Impresa 4.0 National Plan (hyperamortisation and superamortisation) with a system of tax credits for businesses that aim to invest in specific areas to enhance their competitiveness and technological advancement.

The Ministry of Enterprises and Made in Italy initially created the plan to provide incentives for businesses to invest in three main categories:

• Tangible and intangible assets
  
• Research and development, technological innovation, design, and creative visualisation
  
• Training
  

Transition Plan 4.0 allocated €13.381 billion, with an additional €5.08 billion from the Supplementary Fund.

Reporting obligations before and after

Until Decree Law 39 of 29 March 2024 came into effect, entrepreneurs seeking the tax credit under the National Transition Plan 4.0 could automatically trigger the tax credit offset by completing Form F24, provided they met the legal requirements. The business only had to submit an annual declaration ex-post. However, there were no penalties for businesses that did not fulfil this requirement.

After Decree Law 39 came into effect on 30 March 2024, entrepreneurs seeking the tax credit must now electronically report the total amount of investments, the expected distribution of credit over the years, and the intended use for credit in advance. After the investments are completed, businesses are also required to engage in ex-post communication to update the previously reported information.

Who is Transition Plan 4.0 aimed at?

All businesses based in Italy, including permanent establishments of non-residents, qualify for the Transition Plan 4.0 bonus tax credit regardless of their legal form, economic sector, size, accounting method, or income determination system for tax purposes. Therefore, small and medium-sized enterprises, which had been excluded from such tax relief, are now included.

Enterprises operating in voluntary liquidation, bankruptcy, compulsory liquidation, composition with creditors without going concern, and other bankruptcy proceedings are excluded. Enterprises subject to disqualification sanctions under Article 9, Paragraph 2, of Legislative Decree No. 231 of 8 June 2001, are also excluded.

To use the benefit, applying businesses must follow workplace safety rules and ensure they pay social security and welfare contributions for their workers.

What can Transition Plan 4.0 fund?

The tax credit varies based on the type of assets being offset. Since 2023, the Ministry of Enterprises and Made in Italy has scaled back Transition Plan 4.0 with reduced or sometimes no incentives, such as the Tax Credit for Training 4.0. Transition Plan 4.0 allows access to tax credits for investments in advanced tangible and intangible capital goods as well as for research and development, technological innovation, design, and aesthetic projects. Let’s look at them in detail.

Purchase of technologically advanced tangible capital goods

These are primarily machines operated by computer systems or managed with sensors and drives. Annex A of Law No. 232, dated 11 December 2016, has lists of these goods. For the tax period from 2023 to 2025, we can determine the rate for the tax credit as:

• 20% of eligible costs for the portion of investment up to €2.5 million
  
• 10% of eligible costs for the portion of investment between €2.5 million and €10 million
  
• 5% of eligible costs for the portion of investment between €10 million and €20 million
  
• 5% of eligible costs for investments between €10 million and €50 million euros, if they are part of the PNRR and aimed at achieving transition goals set by the minister of Economic Development in consultation with the ministers of Ecological Transition and Economy and Finance.
  

Acquisition of advanced intangible capital goods

These are primarily the software products required to connect and run machinery. A complete list is available in Annex B of Law No. 232, dated 11 December 2016 (supplemented by Article 1, Paragraph 32, of Law No. 205, dated 27 December 2017).

The tax credit rate for 2024 is 15%, decreasing to 10% in 2025, with a maximum eligible cost limit of €1 million.

Investment in research and development, technological innovation, design, and creative visualisation

For the tax credit in this investment sector, these subcategories of activities can be identified, each with a specific rate for the tax credit:

• Fundamental research, industrial research, and experimental development activities in science and technology: From the tax period after 31 December 2022, until 31 December 2031, the tax credit rate is 10%, with an annual maximum limit of €5 million.
  
• Technological innovation activities: These activities focus on creating new or significantly enhanced products or production processes. From the tax period after 31 December 2023, until the tax period ending 31 December 2025, the tax credit rate is 5%, with an annual maximum limit of €2 million.
  
• 4.0 technological innovation activities and green activities: These activities focus on creating new or significantly improved products or production processes to achieve ecological transition or digital innovation 4.0. The tax credit rate from the tax period after 31 December 2023, until the one ending 31 December 2025, is 5% with an annual cap of €4 million.
  
• Design activities and creative visualisation: These activities aim to significantly improve the business’s products in terms of form and other non-technical or functional elements (lines, contours, colours, surface texture, ornaments, etc.). The tax credit rate from the tax period after 31 December 2023, until the one ending 31 December 2025, is 5% with an annual cap of €2 million.
  

How to apply for funding under Transition Plan 4.0

To apply for tax credit offsets under the Transition Plan 4.0 bonus as of 18 May 2024, you must use the new simplified functionality, which also allows form submission via the GSE portal. Once registered in the Customer Area, users can access the “Transition 4.0 – Access Questionnaires” application, choose the type of investment, and complete the form for tax credit offsetting in a few steps. Sending communication forms via certified email (posta elettronica certificata (PEC)) is no longer possible.

For assets costing more than €300,000 each, a sworn appraisal by an engineer or industrial expert or a certificate of conformity from an accredited body is mandatory. For lower amounts, a self-declaration with a technical analysis showing the 4.0 technical requirements and signed by the business’s legal representative is sufficient.