The Fourth Industrial Revolution in Italy

Italy is the second largest industrial producer of goods in Europe, and has the

appropriate strategic knowledge about manufacturing in a range of different sectors.

Italian manufacturers are renowned for their quality. Italian manufacturing technology

has always pursued to make strides in improving production and reduce operating

costs. The Fourth Industrial Revolution, or Industry 4.0, is a concept that focuses on

the changes in technology, industries, and society in line with increasing

interconnectivity and smart automation. It means to digitize the manufacturing sector

with analytics, human-machine interaction, and improvements in robotics.

In line with this thinking, the Italian government launched the national strategy for

digitizing industry, Industria 4.0. It is a wide range of policy measures to promote

domestic and international investment initiatives, and further facilitate innovation-

driven economic growth. Industria 4.0 has facilitates tax incentives for all types of

companies without the obstructing red tape associated with it or the uncertainty of

receiving those incentives. There are 5 fiscal measures that are the mainstays of

INdustria 4.0.

1. Tax incentives for investments in innovative startups and SMEs: Individual

and organisation that invest in innovative startups and innovative SMEs

receive relief on Italian income tax. These benefits amount to 30% of the

investment made or up to 1 million Euros yearly for individuals and 1.8 million

Euros for companies.

2. Super-depreciation: Industria 4.0 also includes a 40% increase in the ordinary

depreciation deduction for investments made in new industry machinery. This

would mean that the costs for acquisition are raised by an equivalent share for

accounting purposes. Since assets go through fiscal depreciation over the

years, this measure would result in a significant and long-lasting reduction in

taxable income and consequently the tax rate applicable.

3. Hyper-depreciation: Similar to Super-depreciation, this includes a 150%

increase in the ordinary depreciation deduction. This significant increase in

acquisition cost would result in a large reduction in tax burden over the years.

This applies to select equipment in line with the values of Industria 4.0.

4. Tax credit for Research and Development: An increase in Research and

Development would benefit companies with a tax credit on additional

expenses. This applies to basic research, industrial research, and

experimental development (including personnel expenditure, research

agreement with other companies/organizations).

5. Patent Box: This is a special fiscal measure that includes a massive 50%

reduction in corporate tax on income that is earned by the direct and indirect

use of intellectual property (industrial patents, industrial designs, copyrighted

industrial software).