Transition Plan 5.0 was created as part of the National Recovery and Resilience Plan (PNRR). The Italian government’s plan is part of the gradual shift toward Industry 5.0. Unlike programs such as Industry 4.0, Enterprise 4.0, and Transition 4.0, Industry 5.0 focuses on achieving energy efficiency in the production processes of Italian businesses. This article will explore the details of Transition Plan 5.0, its target audience, and what it can fund.
What's in this article?
- What is Transition Plan 5.0?
- Who can apply?
- How to apply for funding under Transition Plan 5.0
- What Transition Plan 5.0 can fund
- Tax credit rates for Transition Plan 5.0
What is Transition Plan 5.0?
Article 38 of Decree-Law No. 19, dated March 2, 2024, and amended by Law No. 56 of April 29, 2024, introduced Transition Plan 5.0 to complement Transition Plan 4.0. The new plan is in line with the shift to Industry 5.0 and is part of a broader strategy to promote the digital and energy transformation of businesses. The plan offers a tax credit to businesses that invest in innovation projects that reduce the energy consumption of their production structure by at least 3% or reduce the energy consumption of the processes involved in the investment by at least 5%.
The plan has allocated an additional €6.3 billion on top of the €6.4 billion already set aside in the budget law, making €12.7 billion available for 5.0 investments from January 1, 2024, to December 31, 2025.
For income tax purposes, the 5.0 tax credit does not count toward the calculation of income or the Italian regional tax on productive activities (IRAP) tax base.
The tax credit cannot be used with the Transition 4.0 tax credit or the credit for investments in the single Special Economic Zone (SEZ). However, it can be combined with other incentives—such as the Capital Goods measure (Nuova Sabatini)—as long as this combination, considering the noncompetition in income and IRAP tax base calculation, does not exceed the investment cost.
Who can apply?
All Italian resident businesses and permanent establishments can apply for the 5.0% tax credit, regardless of their legal form, economic sector, size, or tax regime.
Businesses undergoing voluntary liquidation, bankruptcy, compulsory liquidation, composition with creditors without business continuity, or other insolvency proceedings are excluded.
Businesses facing disqualification sanctions under Legislative Decree No. 231 of June 8, 2001, are also excluded.
Businesses that fail to comply with workplace safety regulations or fail to meet their obligations to pay social security and welfare contributions for workers are also excluded.
How to apply for funding under Transition Plan 5.0
As with Transition Plan 4.0, access to funding requires the submission of an initial certification and a final certification upon completion of the project. For Transition Plan 5.0, you must submit an initial certification showing the expected reduction in energy consumption from the planned investments and a final certification confirming the investments were made as planned and achieved the expected reductions. The August 16 circular issued by the Ministry of Enterprises and Made in Italy (MIMIT) and GSE (Energy Services Manager), detailing how to access the Transition 5.0 tax credit, has been published.
On August 7, 2024, the IT platform for submitting advance notices to access the Transition 5.0 tax credit opened. You must also submit, through the same platform, confirmation that orders have been placed and accepted by the vendor, along with a down payment of at least 20% of the total acquisition cost. All communications must be submitted exclusively through the digital system on the GSE website in the “Transition 5.0” section. The forms and instructions for completion can be found on the site.
What Transition Plan 5.0 can fund
The 5.0 tax credit is granted if the investments result in at least a 3% reduction in energy consumption for the production structure or at least a 5% reduction for the processes involved. This reduction in energy consumption must come from investments in tangible and intangible assets listed in Annexes A and B of Law No. 23, dated December 11, 2016. Intangible assets also include:
- Facility management software, systems, platforms, or applications that enable monitoring of energy consumption or implementation of energy efficiency mechanisms through data collection or processing, including from Internet of Things (IoT) field sensors.
- Software related to enterprise management if purchased along with the mentioned software, systems, or platforms.
These investment projects are also eligible for funding:
- New tangible assets essential for business operations and used for own production of energy from renewable sources for own consumption, excluding biomass, including facilities for storing the energy produced.
- Expenses for staff training in skills useful for transitioning production processes, up to 10% of the investment in capital goods and a maximum of €300,000.
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Ineligible projects
Article 5 of the Decree from July 24, 2024, regarding the implementation of Article 38 of Decree-Law No. 19, dated March 2, 2024, states that to avoid environmental harm, certain types of innovation projects are not eligible, even if they might meet the requirements:
- Activities directly related to the use of fossil fuels
- Activities under the European Union (EU) Emissions Trading System (ETS) that are expected to produce greenhouse gas emissions at or above the set benchmarks
- Activities related to waste landfills, incinerators, and mechanical biological treatment plants
- Activities that produce a large amount of pollutants classified as special hazardous waste under Commission Regulation (EU) No. 1357/2014 of December 18, 2014, and whose long-term disposal could harm the environment
Tax credit rates for Transition Plan 5.0
The 5.0 tax credit rate varies based on the level of investment and consumption reduction achieved. Here are the rates based on the percentage of energy consumption reduction at the production facility level and the process level affected by the investment for each investment level: up to €2.5 million, €2.5 million to €10 million, and €10 million to €50 million.
Investment level up to €2.5 million
|
Percentage of energy consumption reduction at the production facility level
|
Percentage of energy consumption reduction at the process level
|
Tax credit rate
|
|---|---|---|
| 3%–6% | 5%–10% | 35% |
| 6%–10% | 10%–15% | 40% |
| At least 10% | At least 15% | 45% |
Investment level from €2.5 million to €10 million
|
Percentage of energy consumption reduction at the production facility level
|
Percentage of energy consumption reduction at the process level
|
Tax credit rate
|
|---|---|---|
| 3%–6% | 5%–10% | 15% |
| 6%–10% | 10%–15% | 20% |
| At least 10% | At least 15% | 25% |
Investment level from €10 million to €50 million
|
Percentage of energy consumption reduction at the production facility level
|
Percentage of energy consumption reduction at the process level
|
Tax credit rate
|
|---|---|---|
| 3%–6% | 5%–10% | 5% |
| 6%–10% | 10%–15% | 10% |
| At least 10% | At least 15% | 15% |
The content in this article is for general information and education purposes only and should not be construed as legal or tax advice. Stripe does not warrant or guarantee the accurateness, completeness, adequacy, or currency of the information in the article. You should seek the advice of a competent attorney or accountant licensed to practice in your jurisdiction for advice on your particular situation.