background image
Italy Converts VAT Reduction and Tax Credits to Offset Energy Costs into Law and Introduces R&D Credit for Certain Innovative Start-Ups — Orbitax Tax News & Alerts

Italy published Law No. 56 of 26 May 2023 in the Official Gazette on 29 May 2023, which converts into law Legislative Decree No. 34 of 30 March 2023. Among other things, the Legislative Decree provided for a reduced VAT rate of 5% on natural gas consumed in the months of April, May, and June 2023, as well as a 20% tax credit for costs incurred in the second quarter of 2023 on electricity and natural gas by qualifying companies whose gas and electricity bills in the first quarter of 2023 rose 30% or more compared to the same period in 2019.

In addition to converting the measures of Legislative Decree No. 34 into law, Law No. 56 also introduces additional measures, including a tax credit for qualifying innovative start-ups operating in the sectors of environment, renewable energy, and healthcare that were established from 1 January 2020. The tax credit is equal to 20% of expenses incurred for R&D activities aimed at creating innovative solutions for advanced technological instruments and services to guarantee environmental sustainability and the reduction of energy consumption. The credit is capped at EUR 200,000.