Hogan Lovells - Italian Tax Bonus Decree: what's new on the Superbonus scheme

The original Superbonus scheme granted taxpayers a tax deduction equal to 110% of the costs borne in respect of certain eligible works linked to energy and seismic efficiency of real estate properties.

The tax deduction could be set off (a) against the taxpayers’ tax liabilities of any sort and social security contributions or, (b) alternatively and upon exercise of a specific option, converted into (i) a tax credit transferable (cessione del credito) to third parties (mainly financial institutions) or (ii) a so-called invoice-discount (sconto in fattura) entailing that the taxpayer did not pay the suppliers for their works and the suppliers accrued a tax credit equal to 110% of the invoiced amount (which they could, in turn, either set off against their own tax liabilities or sell to third parties). 

Under all the above options, the tax deduction or tax credit could be used in four or five equal yearly instalments.

We set out below the main changes introduced by the Tax Bonus Decree:

With effect from 30 March 2024 the Tax Bonus Decree finally abolishes the possibility to opt for the conversion of the tax deduction into a tax credit or an invoice-discount (the "Superbonus Options") also for those few taxpayers that, following the restrictions enacted by Law Decree 11/2023, were still allowed to exercise such options for new works. However, the Superbonus Options still remain valid and available for all those taxpayers that, before 17 February 2023, already completed certain procedural steps to authorize the eligible property works (e.g.: obtaining the administrative authorization for the works, resolving the works in the general meeting in case of condominiums, requesting the authorization to demolish and re-build, etc. as appropriate). 

Therefore, all the property works which met such formal requirements before 17 February 2023 are currently still entitled to exercise the Superbonus Options at the same conditions originally set out, with the sole exclusion of those works which met the formal requirements before the mentioned date but did not incur any expense as at 30 March 2024 (so-called dormient works).

For those who cannot or do not want to exercise the Superbonus Options, the Tax Bonus Decree now provides that the tax deduction generated by the eligible property works expenses borne from 2024 onwards has now to be spread over a 10-year term in equal instalments (rather than the current 4 or 5 instalments). 

It is also provided that, even where the tax deduction originates from property works which met such formal requirements before 17 February 2023, if the taxpayer initially opted to enjoy the tax deduction using it to set off his/her own tax liabilities in the tax return, it is no longer possible to convert the residual instalments in a tax credit and assign it to third parties.

Whilst not revoking with retroactive effect the right to use the tax credits purchased under the Superbonus scheme in the past years, the Tax Bonus Decree substantially affects the way in which financial institutions will be entitled to enjoy such tax credits and thus recover their investments. Indeed, the Decree provides that:

i. with effect from 1 January 2025, financial institutions will no longer be entitled to set off their portfolio of tax credits against social security and insurance contribution debts, thus reducing their tax capability to set off the tax credits acquired on the market;

ii. tax credits purchased by financial institutions and available for set off starting from 1 January 2025 must be spread and used in six equal annual instalments (rather than in the original 4 or 5 instalments) whenever the purchase price paid was lower than 75% of the tax credits nominal value and the tax credit were identified with an univocal code (i.e. those generated from 1 May 2022). If the financial institution is unable to fully set off said tax credits in the relevant fiscal year (also due to the impossibility to further set them off against social security and insurance contributions liabilities), it will not be allowed to carry them forward, request their refund, assign them to third parties nor further split them.

All these limitations do not apply to tax credits purchased at a price exceeding 75% of their nominal value, but the financial institution will be required to submit with the Italian Tax Authorities a specific confirmation in this respect within 31 December 2024 (the submission modalities will be set out by the Tax Authorities through a dedicated regulation).

Based on all the above, it is now possible to continue investing in the Superbonus tax credits but it is necessary to consider and take into account also the new limitations implemented in the use of the relevant tax credits and the constrains affecting the relevant purchase price.