Subscription software is a cost of the year, purchased software is an investment
12 November 2026, 08:09
Since 10 November small and medium-sized businesses have been able to apply to the Ministry of Enterprises and Made in Italy for a non-repayable grant, the voucher, covering half of their spending on cloud services and cybersecurity solutions, up to €20,000 each, out of a total allocation of €150 million. Applications remain open until 20 January 2027, unless the funds run out first. The eligible services include subscription software for accounting, personnel and customer management, provided the supplier is on the Ministry's list and the software gives the company capabilities it does not have today: a service that does the same things as the one already in use is not eligible. Anyone thinking of renewing the company's software, adding the functions it lacks, is therefore asking whether it is worth switching to a subscription, now that the State pays part of it, and what changes in the accounts.
The same software ends up on two different lines
Purchased software, that is a perpetual user licence, is an investment: it is recorded among intangible fixed assets and its cost is spread over the years in which it is used, through amortisation. The same applies to the server it runs on and to the equipment that protects the company network from outside access, which go among tangible fixed assets. Subscription software, on the other hand, is a service: the fee, usually monthly or annual, goes among the costs for services of the year to which it relates, like maintenance or consultancy. Cybersecurity software paid for by subscription follows the same rule, and the Ministry's voucher covers it.
The difference matters because many decisions are taken on EBITDA, the operating result before interest, taxes, depreciation and amortisation. The subscription fee is an operating cost: it is deducted before reaching EBITDA and reduces it. Amortisation is deducted afterwards, and EBITDA is unaffected.
An example. A €90,000 licence, amortised over five years, weighs €18,000 a year below EBITDA, which stays as it was. The same software on a subscription, with a fee of €24,000 a year, lowers EBITDA by the whole amount for as long as it is used.
In the first two years the voucher softens the effect. It is an operating grant: it is recorded among other income in the same years as the fees it reimburses, and so offsets part of the cost before EBITDA. The part offset is at most half of the fees, and less when that half exceeds the grant cap, as in the example. After that EBITDA bears the fee in full.
The bank reads a lower EBITDA
Banks measure a company's financial debt, net of cash, in years of EBITDA, that is they count how many years of operating result it would take to repay it, and some loan agreements contain a covenant, that is a limit on a ratio built on EBITDA, beyond which the bank can ask to renegotiate or to be repaid. A company that moves its software from purchase to subscription sees EBITDA fall without its management having got any worse: it has simply changed the way it pays. Whoever looks after relations with the banks, usually the managing director or the finance and administration manager, writes it into the budget and tells the bank before the annual accounts arrive, and checks the loan agreements for a covenant and how much headroom it leaves.
The comparison is made over the same years
The typical mistake is to compare the first year of the subscription, partly paid by the State, with the full price of the licence. The voucher covers only the costs of the first two years of the subscription, and the contract must last at least as long; from the third year the fee is paid in full, for as long as the software is used. The correct comparison puts the two routes over the same period, for example five years: on one side all the fees, minus the share paid by the Ministry; on the other the licence, the server, annual maintenance, replacing the hardware when it ages and the time of whoever manages it within the company.
Before signing, three things are asked of the supplier, in writing: the fee from the third year onwards and how it can change, the minimum length of the contract, and how the data can be retrieved, in a format readable by another program, if the company decides to change supplier. Without the last answer the subscription becomes hard to leave, and the price in the following years is decided by whoever sells it.
A subscription has real advantages: no server to buy and replace, updates included, spending that is spread out instead of being concentrated in one year. In the income statement, however, the fee enters in a way the company needs to understand before signing: the voucher lightens the start, and the rest weighs on EBITDA for the whole life of the contract.
This article was prompted by a news item published in Teleborsa on 10 November 2026.