Tax benefits

Being updated in accordance with the Law Decree n. 124/2023, establishing the Special Economic Zone for Southern Italy – “Unified SEZ”

One of the main consequences of the SEZs introduction is that companies can take advantage of significant tax breaks and benefit from relevant administrative and bureaucratic simplifications.

TAX CREDIT ON INVESTMENTS

By Article 5 of Law-Decree No. 91 of 2017, the tax credit introduced by the 2016 Budget Bill was extended to investments made in SEZs.

By Law-Decree No. 77/2021, the tax credit for investments carried in SEZs was also recognized for the purchase of investment properties, while the maximum limit for each investment project was raised to 100 million euros.

The intensity of the tax credit is related to the size of the investment, with differences depending on the Region in which it occurs and the company size.

For companies investing in Sicily, the tax credit is allocated in the maximum amount of:

– 45% for Small Enterprises

– 35% for Medium enterprises

– 25% for Large enterprises

for expenses deemed eligible up to a maximum of 100 million euros.

Companies that start a business in the areas identified within the Eastern Sicily SEZ are granted additional regional and municipal incentives, in addition to the national benefits, including tax benefits for innovative start-ups, support for research and innovation, and access to funds allocated by the 2022-2027 POR FESR (Axes I, II and III).

The tax credit can be cumulated with de minimis aid and with other State aid related to the same eligible costs, provided that such cumulation does not lead to exceeding the highest aid intensity or amount allowed by the relevant European frameworks.

Specifically, the cumulation must always comply with the maximum limit set out in the percentages above mentioned.

The total benefits must not exceed the investment. The tax credit, specifically, is determined by applying the aforementioned percentages of 45%, 35% or 25% to the cost of capital goods and decreasing the relevant result by the amount of aid granted or applied for in respect of the same investments.

BENEFICIARIES

Eligible for the SEZ tax credit are business income holders, identifiable under Article 55 of the Italian Tax Code, who invest in capital goods, including through leasing, for new economic activities located in SEZs.

Aid may be granted to SMEs for any form of initial investment, as well as to large enterprises only for an initial investment in a new economic activity in the area concerned (Paragraph 3 of Article 14 of the EU Regulation No. 651/2014 dated 17 June 2014 (so-called GBER).

Therefore, in the communication form for the use of tax credit, large enterprises investing in assisted areas are required to submit a substitute statement pursuant to Articles 75 and 76 of Presidential Decree No. 445 of 2000 to certify that the investment project carried out/to be carried out relates to a new economic activity.

Recognition of the above-described benefit is subject to compliance with the following conditions:

  • Beneficiary enterprises must maintain their activity in the SEZ area for at least seven years after the completion of the subsidized investment;
  • Beneficiary enterprises must not be in a state of liquidation or dissolution.

The facility does not apply to entities operating in the industries of steel, coal, shipbuilding, synthetic fibres, transportation and related infrastructure, energy production and distribution, energy infrastructure, as well as the credit, financial and insurance sectors.

In addition, the facilitation does not apply to struggling companies  (as defined in the European Commission Notice 2014/C 249/01, dated 31 July, 2014).

For the SEZ tax credit, companies operating in the agriculture, fishery and aquaculture sectors are also excluded from the benefit.

HOW TO BENEFIT FROM THE TAX CREDIT

To benefit from the tax credit, interested parties must submit a special notice to the Italian Tax Authority, in which the details of the eligible investments and the tax credit for which authorization to take advantage is requested must be indicated.

The authorization or non-authorization to use the tax credit is communicated by the Italian Tax Authority electronically by means of a special receipt certifying the eligibility or non-eligibility of the tax credit.

The beneficiary may use the accrued tax credit only as compensation, pursuant to Article 17 of the Law-Decree No. 241/1997, by submitting the F24 form exclusively through the telematic services of the Italian Tax Authority (Entratel or Fisconline), starting from the fifth day following the date of issuance of the receipt certifying the usability of the tax credit, under penalty of rejection of the payment transaction.

If the amount of the tax credit used, even taking into account previous compensations of the credit, is higher than the amount indicated in the receipt issued by the Italian Tax Authority, the relevant F24 form is discarded.

REDUCTION WORTH 50% ON INCOME TAX

Law 178/2020 (Budget Bill 2021) introduces a 50% income tax reduction for businesses that undertake a new economic initiative within SEZs.

Pursuant to Article 1, par. 173 of the aforementioned law, the benefit operates since the tax period in which the new activity is undertaken and for the following six tax periods.

Entitlement to the benefit is subject to compliance with the following conditions:

(a) The benefiting companies maintain their activity in the SEZ area for at least 10 years.

b) The companies keep the jobs created due to their business within the ZES for at least 10 years.

The facility shall be granted in compliance with the limits and conditions set out in EU Regulation No 1407/2013 dated 18 December 2013 on the application to de minimis aid of Articles 107 and 108 of the Treaty on the Functioning of the European Union.

The total amount of de minimis aid granted by a Member State to a single company must not exceed EUR 200.000,00 over a period of three financial years.