Retrofit and revamping, the extra weapon to avoid the technological obsolescence of machinery

When at the beginning of 2016 the survey on the machine tool fleet carried out by Ucimu - Sistemi per Produre revealed that the average age of the machinery installed in the Italian factories at 31/12/2014 was almost 13 years, it was clear to everyone that it was necessary to provide incentives that allowed the Italian manufacturing system to modernize its production facilities. 

Precisely in that period the super-depreciation, introduced by the Stability Law for 2016, came into force for the first time: the incentive allowed to increase depreciation by 40% for the purposes of tax calculation, effectively guaranteeing a tax advantage of the 11% (at the time IRES was equal to 27.5%). 

The formula of this incentive, which for that year extended to all capital goods, including cars, was a very successful experiment of automatic incentives, without tenders, branches and bureaucracy. And so, when the Industry 4.0 plan was born in September 2016, it was normal to think of the same formula also to incentivize, with an even more attractive rate, the purchase of machinery compliant with the 4.0 paradigm.

Even then, however, the representatives of the industrialists were quick to explain that while the super-depreciation was intended to allow companies to "rejuvenate" the fleet of machines, the hyper-depreciation was reserved for those more mature companies that wanted to take the big step towards the digitization of production systems. 

How did things go?

The factory becomes more automated

So let's take a leap forward a few years and come to the present day, in the summer of 2021. Five years after the previous survey, the new edition of the Ucimu - Sistemi per Produrre survey arrives, this time referring to the fleet of machines installed at 31 / 12/2019. An interesting analysis because five years have passed from the end of 2014 to the end of 2019, of which four with super-depreciation (2016-2019) and three with hyper-depreciation (2017-2019). Incentives that show, as we will see now, their first effects. 

And here they are the numbers. The average age of the machines has (naturally) increased by one year and nine months, going from 12 years and 8 months in 2014 to 14 years and 5 months in 2019. But this number is just the cover of a book full of information interesting. 

Meanwhile, for example, the share of machines under the age of 5 is growing, 16.1% of the total against 13.1% in the previous survey. 

The machine park is more advanced on average (numerical control machines are more than half of the installed fleet, while in 2014 they did not reach a third of the total). 

Furthermore, the degree of automation and integration of the systems is growing both at the machine, line and factory level.

An old car is not necessarily a technological "ballast"

However, there is also another fact that makes us think: almost half of the machines installed have more than twenty years of life behind them. How can we explain the interest in (incentivized) technological innovations and the contemporary "affection" towards the old glories? 

What happened in the 2014-2019 period is actually very simple: companies have purchased new machines mainly to activate new lines, but in principle they have been careful not to scrape the existing ones that obviously continue to do their job, especially when it comes to removal and deformation processes (these are the machines with the most advanced average age). Of course, they do it perhaps with a little more effort, consuming more energy and wearing more tools, requiring continuous maintenance and adjustments and often without being integrated with the "modern" part of the factory. 

However, companies today have several tools at their disposal to ensure that these older machines do not become a burden. 

The first opportunity is, of course, the replacement of older machines. We remind you that in 2022 the tax credit for the purchase of capital goods 4.0 is equal to 50% for investments up to 2.5 million euros : an opportunity that will not arise again easily in the future (just think that already in 2022 the higher rate will return to 40%).

Another opportunity, especially for the benefit of the most advanced companies that have already made a recent investment in a 4.0 machine and want to replace it with the latest technologies or with one with greater capabilities, is the possibility of opting for the replacement of the machine. with a technological level equal to or higher without falling into the "recapture" mechanism (ie without having to return the incentive used, where the amortization plan is not yet completed).

Finally, returning to those who do not want to scrap or sell machinery that still works, the current legislation allows companies to retrofit or revamp, bringing those machines to an important production and environmental improvement.

The revamping can be done either by exploiting the simple tax credit for the purchase of capital goods, today at 10%, or by transforming those old machines, making an extra effort, into 4.0 machines and thus accessing the higher rate of credit d '' tax at 50% for all the part of new devices necessary for the transformation.

Revamping or late interconnection?

Here it is worth dwelling on a question addressed in a recent response to a request from the Revenue Agency ( no. 394 of 8 June 2021 ).

As is well known, the very famous circular 4E of 30 March 2017, developed jointly by the Agenzia delle Entrarte and the Ministry of Economic Development, specified that it is always possible to purchase a "4.0" asset and interconnect it at a later time. 

There are several reasons why companies may find themselves in such a case. For example, you can proceed with the purchase of an advanced machine, but start using it at first without the part linked to the interconnection because perhaps the management systems have not yet been adequate. Or you take a machine that you do not yet know how to use in all its potential and put it into operation only after having provided the technicians with the necessary training.

In all these cases, the company will temporarily begin to benefit from the incentive for the purchase of non-4.0 capital goods, then moving on to the greater benefit envisaged by the legislation for 4.0 goods when the interconnection takes place.

The question posed in the appeal to the Revenue Agency concerns precisely this point. Simplifying and summarizing the contents of answer 394, the company that proposed the question had acquired forklifts in the years from 2017 onwards and only today would it intend to proceed with the interconnection by purchasing an equipment, with the relative software, which would allow the connection of the trolleys to the management systems.

The response of the Agency, accompanied by the opinion of the technicians of the Ministry of Economic Development, explains that the philosophy that inspired the possibility of operating the subsequent interconnection is to allow the buyer "to be able to equip himself or to be able to adapt the IT systems to which the asset (already equipped with the technical characteristics at the time of its first use) will have to interconnect ".

Therefore - it is the logic illustrated - it must be an asset which, from the point of view of the product characteristics and compliance with the conditions and requirements set by the legislation, is natively suitable for interconnection from the moment of purchase, and that this operation is performed at a later time only to adapt the infrastructure to which the asset will be connected.

In this case - explains answer 394 - we are instead faced with an intervention that consists in an "adaptation" not only of the infrastructure, but also of the machinery, thus falling into the case of revamping or modernization of the machinery. In other words, the company will be entitled to 50% incentives, but only for new components and not for the original purchase cost of the machinery, which remains subsidized as a "simple" instrumental good.