Italy

Italy

KPMG Global Energy & Natural Resources.

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taxes and incentives

Support schemes

Renewable energy in Italy: recent changes to legislation

In 2014, the Italian Ministry of Economic Development issued three decrees implementing the general provisions contained in Law Decree no. 145/2013 and Law Decree no. 91/2014, which provided incentives for the energy sector.

Two of the decrees concerned the solar photovoltaic industry while the third decree extended incentives to non-photovoltaic renewable energy sources.

New feed-in tariff system

The decree of 16 October 2014 has made certain changes to the way in which feed-in tariffs are paid for energy produced by photovoltaic plants. The GSE now offers feed-in tariffs in the following way:

  • through a fixed monthly premium — a bonus on top of the market price of electricity — equal to 90 percent of a plant’s annual production capacity
  • through a final balance paid by 30 June of the following year and based on the plant’s actual production.

Photovoltaic plants whose output is higher than 200 kW

Under the decree of 17 October 2014, which came into effect on 1 January 2015, owners of photovoltaic plants whose output is higher than 200 kW are now able to choose between three options for feed-in tariff payments. These three options, paid by the GSE, are:

  • a feed-in tariff paid over 24 years from the plant’s first period of production and recalculated annually from the second part of the 24-year period
  • a feed-in tariff paid over 20 years, with a lower tariff in the first period and a higher one in the second period to make up the difference
  • a feed-in tariff paid over 20 years, reduced by 6 percent for plants whose output is between 200 kW and 500 kW, 7 percent for plants whose output is between 500 kW and 900 kW, and 8 percent for plants whose output is higher than 900 kW.

Subsidies available under the Fifth Energy Incentive Decree

The Fifth Energy Incentive Decree , which redefined the subsidy scheme for the production of photovoltaic energy, continues to apply.

The decree established that both feed-in tariffs (for plants with a production capacity of up to 1 MW) and premium tariffs (for plants with a production capacity higher than 1 MW) would be available as follows:

  • EUR20/Mwh for plants going into operation by 31 December 2013
  • EUR10/Mwh for plants going into operation by 31 December 2014
  • EUR5/Mwh for plants going into operation after 31 December 2014

The decree also provided:

  • an inclusive feed-in tariff for plants with a capacity of up to 1 MW. This capacity is the sum of a base feed-in tariff (determined for each energy source, type of plant and capacity class) and any premiums, such as those for high efficiency, emission reductions, etc.
  • a special incentive for plants:
    • with a capacity higher than 1 MW
    • with a capacity of up to 1 MW that do not choose the all-inclusive feed-in tariff.

Other types of subsidies

Support for energy saving improvements

There is a rebate for energy saving improvements. The rebate is 65 percent of the cost of investments made in 2014 and 50 percent of the cost of investments made in 2015.

In particular, the rebate is available for the documented costs of:

a)installing solar thermal panels to produce hot water for industrial or domestic use, or for swimming pools, sports facilities, nursing and care homes, schools and universities

b) replacing winter heating systems with condensing boilers and simultaneously installing a distribution system

c) purchasing and installing solar shading systemsd) purchasing and installing winter heating systems that run on biomass fuels.

These rebates may not exceed EUR60,000 for costs a) and c), and EUR30,000 for costs b) and d).

Support for energy plants in Southern Italy

The Ministry of Economic Development has allocated EUR120 million to companies in the south of Italy that invest in renewable energy plants. This is for companies of all sizes in the regions of Calabria, Campania, Apulia and Sicily.

Additional Information

Taxation

Companies are still subject to IRES (corporate income tax) of 27.5 percent and IRAP (a regional business income tax) of between 3.9 percent and 4.82 percent.

Robin HoodTax

On 11 February 2015, the Italian Constitutional Court declared the Robin Hood Tax (RHT), a surtax on energy companies, to be unconstitutional. This decision significantly lowers their tax burden from 34 percent to 27.5 percent. However, the court’s decision does not apply retroactively.

Although companies no longer have to pay RHT from 12 February 2015, those that adopt the calendar year as their tax year must still pay RHT for 2014. These companies’ RHT obligations will end upon payment of their 2014 balance.

Reverse charge mechanism

The 2015 Stability Law extended the application of the reverse charge method for the payment of VAT to the renewable energy sector. VAT payments now have to be made by the purchaser and not the supplier. This is the case for companies involved in the transfer of:

  • greenhouse gas emission shares under the EU emissions trading system (“EU ETS System”)
  • certificates and similar documents relating to energy and gas within the EU ETS System
  • gas and electricity to a taxable dealer (defined as a taxable entity whose core business is the resale of gas, electricity, heat or cooling energy and whose own consumption of these products is insignificant).

On 19 December 2014, the GSE announced that, from 1 January 2015, invoices issued to it for electricity and electricity certificates would be subject to the reverse charge method, as the GSE is a taxable dealer.

For the moment, the reverse charge method will only be used for transactions concluded within4 years of the entry into force of the 2015 Stability Law.

Non-operating or dormant companies

The IRES rate is 38 percent for dormant companies. A company is considered dormant if:

  • it reports a tax loss in its tax return for 5 consecutive years
  • it is subject to minimum IRES and IRAP
  • it is not eligible to claim a VAT refund.

There is a special test to determine whether a company is dormant: if the actual amounts reported in the profit and loss account are lower than the presumed amounts, the company is deemed to be dormant.

Depreciation

Wind and solar plants are subject to ordinary amortization/depreciation rules for tax purposes.

For solar plants, the depreciation rate is 4 percent if the asset is considered immovable property and 9 percent if the asset is considered movable property.

For wind plants considered as immovable property, the depreciation rate is 4 percent.

Taxes and Incentives for renewable energy

A 2015 KPMG report that provides updates on renewable energy promotion policies for over 31 countries.

 
Read more

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