Today, when we talk about innovation, research, and development in the corporate sector in Italy, we often hear about the tax credit. This tax break is a very useful tool for businesses, as it allows them to reduce the amount of taxes they owe to the government and therefore to obtain significant savings. As of 2020, Italy also introduced a tax credit on electronic payment fees, with the aim of promoting the use of payment methods other than cash. In this article, you will find out what the tax credit is, what the tax credit on electronic payment fees is and how it works, and what advantages it can bring to your business.

What’s in this article?

• What the tax credit is
  
• What the tax credit on electronic payments is
  
• Who can benefit from the tax credit on electronic payment fees and how you can get it
  
• Option to transfer the tax credit
  

What the tax credit is

The tax credit is a form of tax relief that Italian businesses can use to reduce the tax payable on their net profits. The goal of this measure is to encourage the economic growth and competitiveness of Italian businesses by supporting investments and promoting technological innovation. The tax credit for businesses can cover different types of expenses, including those for research and development, professional training, internationalization, investments in capital goods, and other activities seen as strategic.

As it is a tax credit, businesses can use this incentive to offset tax debts toward various Italian creditor institutions such as the government, social security (INPS), the National Institute for Insurance against Accidents at Work (INAIL), local authorities, etc. And, when permitted, businesses can request the tax credit's reimbursement in a tax return.

What the tax credit on electronic payments is

Article 22 of Italian Legislative Decree no. 124/2019 introduced the tax credit on electronic payment fees, a tax relief for business owners and self-employed workers aimed at promoting the use of payment methods other than cash. The purpose of the measure is to partially offset the costs incurred by businesses by accepting electronic transactions. The amount of the tax credit that businesses can claim is equal to 30% of the fees charged for transactions carried out by a private entity using credit, debit, or prepaid cards, and other traceable electronic payment instruments. Transactions made with corporate cards are therefore excluded.

The tax credit on electronic payment fees, also known as the POS Bonus, does not contribute to the generation of income and will not be taxed for corporate income tax (IRES) or regional business tax (IRAP) purposes. In addition, businesses can only use it to offset costs starting from the month after the one in which they incurred the expense. You must indicate the 30% tax credit both when filling out the F24 tax form, with tax code 6916, and on the 2023 Income Form in the “RU” section using the “H3” code to offset the recognized credit.

As already mentioned, the amount of credit due is equal to 30% of the fees charged. However, it is useful to know that, following the changes introduced by Article 11-bis, paragraph 10, of Italian Decree-Law 73/2021, for fees accrued from July 1, 2021, to June 30, 2022, the tax credit increased to 100% for businesses that adopted electronic payment tools linked to technological tools that guarantee the inalterability and security of the data. This includes those that allow payments by debit and credit card, or advanced payment instruments referred to in Article 2, paragraph 3, of Italian Legislative Decree 127/2015. This provision is currently no longer in force and, starting from July 1, 2022, the tax credit has returned to 30%.

Who can benefit from the tax credit on electronic payment fees and how you can get it

What the requirements are

All value-added tax (VAT) number holders, traders, businesses, artisans, and business owners can apply for the tax credit on electronic payments—regardless of the business type and the tax regime adopted—with a turnover that did not exceed €400,000 in the tax year prior to the one in which the payment transactions were made. In practice, this includes all small- and medium-sized businesses.

The role of electronic payment service providers

In order for eligible business owners and self-employed workers to obtain the tax credit on electronic payments, payment service providers that have entered into an agreement with businesses to accept payment cards in Italy (debit, credit or prepaid), or other traceable electronic payment instruments, are required to send to the former a monthly document showing all the fees on electronic payments made over the last thirty days.

Notice to the Agenzia delle Entrate

To obtain the 30% tax credit, businesses must send this document to the Agenzia delle Entrate (Italian Revenue Agency) by the twentieth day of the month following the one in which they made the payments. This can be done independently, using the appropriate page on the Agenzia delle Entrate website, or with the help of an accountant. Once eligibility has been verified, the Agenzia delle Entrate will be able to assign the tax credit to the business.

Option to transfer the tax credit

Article 121 of Italian Legislative Decree no. 34 of 2020 introduced the two options below, as an alternative to the direct use of the deduction for building work and energy measures:

• A discount on the fee due: The so-called “invoice discount” is up to a maximum amount equal to the fee itself, advanced by the providers that carried out the work.
  
• The transfer of a tax credit of the same amount to other parties: Other parties include credit institutions and other financial intermediaries.
  

Subsequently, Article 2 of Italian Legislative Decree no. 11 of 2023 established that, starting from February 17, 2023, this right can no longer be exercised, albeit with some exceptions. But let’s see how the transfer of the tax credit worked.

What is a tax credit transfer?

The transfer of a tax credit allows the transfer of the right to obtain the tax deduction to third parties—such as financial intermediaries, banks, and contractors—which collect it from the debtor. To better understand how it works, it is useful to understand who the interested parties are:

• Assignee: This is the debtor—in other words, the subject whom the transferee will ask to pay off the acquired credit.
  
• Transferor: This is the subject who has the right to a credit.
  
• Transferee: This is the subject who acquires the credit and manages it (usually a bank).
  

The transfer of the credit is carried out by the transferor to the transferee, generally upon payment of a fee agreed between the parties. In the construction sector, the transferor is generally the taxpayer who bears the expense and the transferee is the business or bank.

The main advantage of transferring the tax credit is that of immediately obtaining liquidity deriving from its sale. Businesses can therefore obtain an immediate benefit in comparison with the tax deduction, which is spread over several years.

Until 2023, the transfer of the tax credit was permissible as part of the execution of the following types of work:

• Energy redevelopment measures, which provided for the right to obtain the Ecobonus or the Sismabonus (i.e., the adoption of antiseismic measures)
  
• Building renovations benefitting from a 10-year deduction
  
• Recovery and/or restoration of the facades of existing buildings
  
• Installation of charging stations for electric vehicles
  
• Works eligible for the 110% Superbonus
  
• The installation of photovoltaic systems
  

As mentioned, as of February 17, 2023, the option of transferring the tax credit is no longer exercisable, except in some specific cases. For example, for works aimed at overcoming and eliminating architectural barriers or for interventions carried out in municipalities falling within areas classified as being at seismic risk.

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