New in the 2021 Budget Law: tax bonuses to rationalize water consumption and plastic bottles
Art. 1 of Italian law no. 178 dated December 30, 2020 (2021 Budget Law) introduced two new tax bonuses whose “common denominator” is water, but with very different aims because
- the first focuses on rendering sanitary water use more efficient, and
- the second on reducing the consumption of plastic bottles in which water is sold.
The content, areas of application and terms of validity of the two bonuses are very different.
1. The new “water bonus”
1.1 Who is eligible
Sections 61 to 65 create the new “water” bonus, solely for private individuals resident in Italy (companies and other entities are therefore excluded).
1.2. What the “bonus” covers
It involves the replacement of
- ceramic toilets with new low-flush models
- existing sanitary fittings, shower heads and shower columns
with new low-flow water fittings in existing buildings, sections of existing buildings or individual residential units.
However, new installations are not eligible for the bonus, only those that replace existing equipment with new fittings that comply with the characteristics provided for in the law.
The expenditures eligible for the “water” bonus are those involving:
- a) the supply and installation of ceramic toilets with a maximum flush volume less than or equal to 6 liters, and the relative flushing systems, including any plumbing and masonry work involved, and the removal and disposal of pre-existing systems;
- b) the supply and installation of faucets and mixer taps for bathroom and kitchen, including water flow control devices with a capacity of less than or equal to 6 liters a minute, and shower heads and shower columns with water flow levels of less than or equal to 9 liters a minute, including any plumbing and masonry work involved, and the removal and disposal of pre-existing systems.
1.3 Amount of the “bonus”
The amount of this bonus—valid as long as funding is available (the Ministry of the Environment has created a €20 million fund)—is a maximum of €1,000 for each beneficiary and must be utilized by December 31, 2021.
The law stipulates that the water bonus does not constitute taxable income for the beneficiary and is not included in the calculation of the family financial standing (ISEE).
1.4 Implementation subject to a Ministerial Decree
The modalities and provisions for the eligibility and attainment of the bonus are scheduled to be specified in a decree from the Ministry of the Environment on or before March 1, 2021.
2. Tax credit for filtering of drinking water
Sections 1087 to 1089 introduced a tax credit for the purchase of drinking water filtering systems in order to rationalize use and reduce the consumption of plastic bottles.
2.1 Who is eligible
Eligible for this “bonus” are not only private individuals, but also businesses, artisans and professionals, as well as non-commercial entities, including in the third sector and accredited religious bodies.
Therefore, compared with the first “bonus”, its coverage is much broader.
2.2 What the “bonus” covers
The “bonus” covers expenditures made between January 1, 2021 and December 31, 2022 for the purchase and installation of systems for the filtering, mineralization, cooling and adding of E290 alimentary carbon dioxide to improve the quality of water for human consumption coming from the public water grid.
2.3 Amount of the “bonus”
The maximum expenditures covered by the bonus are:
- €1,000 for each residential unit, for private individuals not involved in business activities;
- €5,000 for each property used for commercial or institutional activities, for other categories.
The tax credit covers fifty percent of the expenditures made.
Therefore, the maximum “bonus” is
- €500 for each residential unit, for private individuals not involved in business activities;
- €2,500 for each property used for commercial or institutional activities, for other categories.
The amount of the bonus is fairly modest, but it should also be kept in mind that the cost of the purchase and installation of the equipment it covers is also modest.
Total funding allocated is €5 million for each of the years 2021 and 2022.
2.4 Implementation subject to the Internal Revenue Agency
Given the expenditure limits above, the criteria and modalities for applying the tax credit and its use are to be set by the Internal Revenue Agency Director.
The deadline for its issuance expired on January 30, 2021 and it is to be hoped that the measure will be issued without further delay.
2.5 ENEA monitoring with online communications
It has also been provided for that, to monitor and assess the reduction in consumption of plastic drinking water bottles resulting from the implemented measures, information regarding these will be transmitted online to the National Agency for New Technologies, Energy and Sustainable Economic Development (ENEA) which, in turn, will liaise with the Ministries of the Environment, Economy and Finance and Economic Development.
We will continue to follow closely the implementation of the two “bonuses” discussed above, given their environmental and social value.
In fact, everyone knows how urgent it is to rationalize water consumption and drastically reduce plastic consumption, a part of which is unfortunately disposed of in the environment.
The incentives being implemented will help to meet these goals and promote significant cost savings, also because drinking water from the public grid is cheaper and on-average under stricter control and of high quality.