Tax credits for energy efficiency: what’s outlined in the Ecobonus 2020
Italy’s latest Budget Law has confirmed the Ecobonus incentives for the residential sector and has maintained the existing incentives for apartment buildings. Thanks to these tax advantages and the possibility to transfer tax credits, it is possible to significantly reduce the overall or immediate upfront costs of energy efficiency projects
Published on 22 April 2020
In Italy buildings are responsible for almost 40% of final energy consumption1 (and more than 36% of greenhouse gas emissions): this far from rosy situation means that three out of four buildings are below acceptable standards of energy efficiency. For this reason it is essential to implement energy renovation projects in existing buildings.
These projects, which reduce environmental impact by decreasing consumption and, consequently, energy bill costs, are encouraged through the tax credits introduced in the Financial Legislation 296/2006, commonly known as the Ecobonus. This tax incentive is “non-structural,” meaning that it needs to be reconfirmed each year. The latest Budget Law has in fact extended the tax breaks set out in 2019 at residential level for the duration of 2020 and has confirmed those already in existence for projects involving the common parts of apartment buildings, which will run until 31 December 2021.
The Ecobonus enables those liable to pay personal income tax (IRPEF) or corporate income tax (IRES) to obtain a tax credit, the value of which is a variable percentage of the costs incurred for the energy efficiency project on an existing building. The tax credit is divided into 10 equal-sized annual parts, or, alternatively, it can be transferred in a single solution in the form of a partial payment to the company that carries out the energy renovation work. If the latter option is selected, then it is possible to benefit immediately and entirely from the incentive.
The current legislation outlines differing rates that vary based on the type of project carried out. The highest rate is currently available for projects involving common parts of apartment buildings, in particular, for energy renovation projects such as the insulation of external walls or roofs: these qualify for tax credits of 70% of the total cost incurred, with a maximum limit of 40 thousand euros per residential unit. This incentive can rise to 75% if it meets the average quality requirements outlined in the “Guidelines” (with reference to tables 3 and 4 of the D.M. 26/06/2015) in terms of both winter and summer energy performance.
If the renovation projects are carried out at the same time as anti-seismic measures that qualify for the Sismabonus incentive, and permit the building to be upgraded to a lower seismic risk class (there are several categories and the building could improve by a maximum of two risk levels), then the tax credit can reach 80 or even 85% of the total cost incurred.
A tax credit of 65% is available for the following types of projects; installation of solar thermal panels for hot water (maximum limit of 50 thousand euros per residential unit), the replacement of a heating system with a class A condensing boiler equipped with an evolved thermoregulation system (maximum 30 thousand euros per residential unit), the installation of micro or hybrid generators (maximum 100 thousand euros per residential unit) and the installation of “building automation” devices that facilitate the intelligent (and also remote) control of buildings’ heating and cooling systems (in this latter case there are no maximum limits).
Incentives are also available for overall building energy renovation projects, with a rate of 65% and can include projects such as the replacement of winter heating systems, the installation of solar thermal collectors, insulation of opaque structures and the replacement of windows and window fittings. In the latter case, the maximum tax credit is 100 thousand euros per residential unit.
Finally, there is the tax advantage of 50% of the costs incurred for projects to replace heating systems with class A condensing boilers or biomass boilers (maximum limit of 30 thousand euros per residential unit) and the installation of solar shields (maximum 60 thousand euros per residential unit). The replacement of windows and window fittings (maximum 60 thousand euros per residential unit) can qualify for a tax credit of 50% that can rise to 70 or 75%, if carried out at the same time as energy renovation projects on the building envelope, and to 80 or 85%, if carried out simultaneously with improvements to the seismic risk class as part of the Sismabonus scheme. In these cases the maximum is equal to that outlined for the renovation or renovation plus seismic improvements.
The 2020 Budget Law has also introduced the Bonus Facciate (“Building Facade Bonus”). This is a new tax credit equal to 90% of the cost of the building work that has an impact on heat retention, or that involves more than 10% of the plastering on the heat-losing surface of a building. The work can be carried out on the opaque structures of the facade visible from street level. This new incentive is applicable to the costs incurred in 2020 on existing buildings situated in homogeneous A and B zones, i.e. historical town centres and totally or partially built-up areas.
Although the “Bonus Facciate” offers a higher percentage rate with respect to the Ecobonus, its application does have some limitations linked to the zones in which the building is located and the surfaces that can benefit from this incentive. Furthermore, when comparing the “Bonus Facciate” with the Ecobonus, the latter enables users to benefit from the transfer of the tax credit as a partial form of payment to the company carrying out the work, thereby leading to a drastic reduction in the upfront costs of such a project.
In conclusion, there’s no shortage of tax incentives for work that improves buildings’ energy efficiency. Just find a reliable partner to help plan the energy renovation project around your specific needs. This is an opportunity worth seizing immediately because it will also make it easier to achieve the decarbonisation goals for 2030. It’s a unique opportunity to renovate your home, making it more pleasant and more comfortable, cutting consumption and reducing energy bill costs, while helping our planet, thanks to projects centred on sustainability and efficiency.
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The thermal insulation of a building’s outer layer can reduce its energy needs (and therefore consumption) by up to 40%. This constitutes an investment that pays off pretty quickly, thanks to savings in bills, tax incentives and an important novelty: the tax credit transfer.
The scope of the Bonus Facciate 2020 (facade bonus) tax incentive and the cases in which, in order to access this tax incentive, it is necessary to improve a building’s energy efficiency by carrying out work that could benefit more from the Ecobonus