Industry 5.0 Tax Credit Guide

The Industry 5.0 Decree represents a revolution for Italian companies. Published in March 2024, this decree offers extraordinary incentives for the adoption of advanced technologies such as artificial intelligence and IoT. Discover how your company can benefit from tax credits and incentives designed to enhance competitiveness and promote green investments.

What does the Industry 5.0 decree consist of?

The Industry 5.0 decree is a regulation aimed at promoting a significant evolution of companies, integrating more advanced digital technologies and ecological sustainability into production processes. The 5.0 transition plan aims to support companies that will invest in goods and activities that generate energy savings and/or bring improvements in energy efficiency. Industry 4.0 focused on the interconnection between machinery and information systems. Industry 5.0 instead looks at the entire production process and the energy efficiency interventions that can be carried out. This transition is facilitated with an increase in the tax credit that goes from 20%, provided for by the Industry 4.0 decree, to a credit of between 35% and 45%, and which for some types of photovoltaic systems can reach up to 63%.

Allocation of the funds

In total, approximately 6.3 billion in tax credits have been allocated to cover expenses incurred between January 1, 2024 and December 31, 2025. The goal is to support the digital transition of Italian companies. Of these, 3.78 billion are aimed at supporting energy efficiency measures. In particular, the funds support IoT technologies, ERP and new machinery. 1.89 billion are earmarked for goods for self-production and self-consumption from renewable sources. Finally, 630 million are dedicated to staff training on topics relating to the digital and energy transition.

Who can benefit from the funds provided?

All companies resident in Italy that make new investments in innovation projects in the two-year period 2024-2025 and which result in a reduction in energy consumption benefit from the 5.0 tax credit. However, these benefits are subject to an essential condition; namely, that a reduction in energy consumption of the entire production structure of no less than 3% is achieved or, alternatively, a reduction in energy consumption of the processes affected by the investment of no less than 5%.

Which goods are eligible?

An essential distinction is made between two types of investments, driven and driving. Driving investments are fundamental investments that must be made in order to benefit from the incentives provided for by the plan. They must include tangible or intangible assets 4.0 that contribute significantly to energy saving and the digital transformation of companies. For example, software for monitoring and efficiency of production processes, such as our E-BOOST, are among the driving investments. Driven investments, on the other hand, can only be made after having made a driving investment. They do not necessarily have to contribute directly to energy saving but are still linked to the objectives of technological and digital transformation. They can include:

• Photovoltaic systems, with a tax credit of up to 63%
• Other systems from renewable sources, excluding biomass, with a tax credit of up to 45%
• Training costs, with a maximum of 300,000 euros
• Energy certification costs

Let’s take a practical example to help us understand better. Company X produces specific accessories for its plastic products using injection/milling processes and replaces these small productions with a new process based on 3D printing. This innovation allows the required specific parts to be produced in small series with maximum efficiency. As a result, warehouses are eliminated and the overall process is optimized. The savings in this case are extremely variable but potentially in the order of 35%. If we assume an initial investment of 120,000 euros, with the 45% credit a benefit of 54,000 euros is earned. This is a driving investment, because it improves energy efficiency. Subsequently, the company purchases a management system that integrates the consumption management part, making an investment of 65,000 euros. This second investment, driven because it is secondary to the first, still benefits from 45% credit and therefore the company earns a benefit of 29,250 euros.

How to access credit, step by step

Below we define the procedure necessary to access the tax credit 5.0:

1. Submit the required documentation electronically to the GSE using a standardized form. The form includes a description of the investment project including the expected costs. The start and completion dates and certification of the reduction in energy consumption that can be achieved must also be indicated.
2. Wait for confirmation of the booked tax credit. This usually occurs within 5 days of notification, unless additional information is required.
3. Communicate the placing of orders with a 20% deposit accompanied by invoices, which will be followed by confirmation within 5 days.
4. Communicate the placing of orders with a 50% deposit by 12/31/2021 for projects relating to 2024 and to be concluded by 04/30/2025. In this case too, confirmation will follow within 5 days.

After the start of the works

1. It is mandatory to send to the GSE by 28/12/2026 a communication that includes the date of completion of the works, the value of the investment made and the expected credit. The certification of the reduction in energy consumption achieved, the certified appraisal of the 4.0 assets and the accounting certification of the costs must also be sent.
2. The GSE will send confirmation of usability within 10 days of sending the communication.
3. The 5.0 tax credit can only be used as a compensation via the F24 form, in a single annual solution or in several installments by 31 December 2025. If the amount is not fully used up by the Plan deadline, the remaining part of the credit will be divided into 5 equal installments over the following 5 years.
4. Be careful! The conditions for using the credit include the connection of renewable energy systems within one year and the maintenance of the assets and the reduction of consumption for at least 5 years.

The required certifications are official and must therefore be produced by accredited bodies. We can support you in their processing and in monitoring the progress of the procedures. For small and medium-sized businesses, the expenses incurred to fulfill the certification obligation are recognized as an increase in the tax credit for an amount not exceeding 10,000 euros. For businesses exempt from auditing the additional amount for the required certifications is a maximum of 5,000 euros.

Veil Energy services for Industry 5.0

E-BOOST, our advanced energy monitoring platform with artificial intelligence (AI) is one of the 4.0 Green capital goods that allow access to the Transition Plan 5.0. In fact, it allows for savings of more than 5% for the entire production structure and therefore benefits from a 35% tax credit. Furthermore, it can extend the same benefit to other “driven” investments that will also benefit from the same tax benefit.

In addition to this, we offer consultancy services and recognized energy certifications that are necessary to access credit. We support you in all phases of the process:

• To process the ex ante certification that includes the reduction of achievable energy consumption.
• To monitor the progress of the application acceptance procedures.
• To produce the ex post certification where the actual implementation of the investment is declared in a manner compliant with the certification initially produced.
• To process the final certification relating to the reduction of energy consumption, which will be useful for any checks on the measures adopted.

Do not hesitate to contact us for any information or professional evaluation for your systems!