The hyper-depreciation allowance is worth the tax it saves, and that saving comes back one year at a time
14 October 2026, 09:27
On 13 October Ucimu, the association of Italian machine-tool manufacturers, announced that in the third quarter of 2026 orders from abroad grew by 24.7% on the same period of 2025, while those placed in Italy fell by 7.1%. Its president, Riccardo Rosa, is counting on the hyper-depreciation allowance to revive Italian demand.
For anyone weighing up the purchase of a machine, the question is what that incentive is really worth, and when it arrives.
The hyper-depreciation allowance increases the amounts deducted from taxable income
Article 1, paragraph 427, of Law 199 of 2025 covers investments in new capital goods made between 1 January 2026 and 30 September 2028 and intended for production facilities in Italy. For these goods the purchase cost is increased solely for the purpose of calculating the deductible depreciation charges and leasing instalments. The uplift falls as the size of the investment grows: 180% up to €2.5 million, 100% for investments from €2.5 million to €10 million, 50% from €10 million to €20 million. Eligible goods are those in the lists annexed to the law, that is, "Industry 4.0" machines and digital systems connected to the system that runs production or to the supply network, and plants for generating renewable energy for the company's own use.
In the financial statements the machine stays on the books at the price paid and is depreciated as usual. The uplift exists only in the tax return: each year, alongside the tax depreciation, the company deducts an additional amount from its income, which in the first band is worth 180% of the ordinary charge. It is not a grant and it is not a tax credit. It is a lower taxable income.
The value of the incentive is the tax that is not paid
A deduction is worth the tax it saves. For a limited company that tax is IRES, Italian corporate income tax, at the standard rate of 24%. The calculation is a multiplication: for every euro invested in the first band the company deducts, over the depreciation period, €1.80 more, and at a 24% rate its IRES falls by 43.2 cents in total. In the second band the reduction is 24 cents, in the third 12.
The typical mistake is to read the 180% as the measure of the support. On a machine costing €1 million the additional deductions add up to €1,800,000 but the IRES the company does not pay is €432,000: less than half the price, and not all at once.
The saving comes back into the cash with the taxes of the following years
The additional amount follows the tax depreciation, which is spread over the useful life of the asset at the annual rates set for each type of asset by the ministerial decree of 31 December 1988. The saving is therefore split into instalments, one for each year of depreciation. And it only returns to the company when taxes are paid: the deduction for a financial year lowers the IRES due for that tax period, which is paid as a balance the following year, normally by June. The advance payments made in that year fall too, because they are calculated on the tax of the previous financial year.
The machine, by contrast, is paid for on delivery or through the instalments of a loan. Years pass between the cash going out and the incentive coming back: the first part of the saving returns with the balance paid the year after the first financial year in which the additional amount is deducted, the last with the balance paid the year after the final one.
There is also a condition that the name of the incentive does not mention. The additional deduction lowers taxable income, and income that does not exist cannot be lowered: in a financial year closed with a tax loss, that amount reduces no payment at all. The saving arrives in full and on the expected timetable only if the company has taxable income in each of the depreciation years.
In the company's own accounts the incentive belongs among taxes, not in the price of the machine
Before signing the order, three checks are needed.
- Taxable income in recent financial years: if it has been low or negative, the additional amount may find no IRES to reduce in the very years in which it is deducted.
- The payment calendar: in the cash forecast the purchase goes out in the month the supplier is paid or the first instalment starts; the saving appears in pieces over the following years, as lower tax payments in June and November.
- Whether the machine pays its way: the investment is judged on the margin and the cash it will generate; the incentive lowers its net cost, spread over the years.
In a business plan, therefore, the hyper-depreciation allowance is entered on the tax line, financial year by financial year, and not as a discount on the purchase price. That way the plan shows how much money is needed in the first year, when the supplier has already been paid and the tax saving has not yet arrived.
This article was prompted by a news item published in ANSA on 13 October 2026.