The tax depreciation schedule for tangible assets: cost, entry into service, ministerial rates and disposal

Marco runs a small machine shop through an Italian SRL. In November 2026 he buys a €40,000 lathe, but it only starts cutting metal in March 2027. His accountant tells him the lathe will not reduce the company's 2026 taxable income by a single euro. The invoice is paid and the machine sits on the shop floor, so Marco is puzzled. One sentence of the Italian income tax code explains why.

Why a long-lived asset is not deducted all at once

A machine, a van or a production line works for the business over many years. Charging the whole price to the year of purchase would push that year into a heavy loss and flatter the following ones. Depreciation spreads the outlay across the asset's useful life, so that the cost sits next to the revenue the asset helps to earn.

The statutory accounts depreciate according to a plan the directors estimate from expected use. Italian tax law accepts that plan but puts a ceiling on it, and the ceiling is the same for every business in the same sector. It is this ceiling, not the directors' estimate, that decides how much cost reaches taxable income each year.

The rules in this module come from article 102 of the TUIR, the consolidated income tax act, which deals with tangible assets, and article 110, which says how cost is measured. They sit among the rules on business income of companies subject to IRES, and the act also applies them to the business income of individuals.

The cost to be depreciated

The starting point is the cost of the asset. Article 110 states that cost includes ancillary charges that can be attributed directly to it: delivery, assembly, testing, customs duties, notarial fees tied to the purchase. General overheads and interest on the loan used to pay for the asset are normally left out and follow their own deduction rules.

Letter b) of the same paragraph makes one exception for business assets: interest becomes part of cost when it is recorded in the accounts as an increase in cost because a statutory provision requires it. Outside that case, adding mortgage interest to the carrying amount of a machine does not change its tax base.

Letter a) adds that cost is taken gross of the depreciation already deducted. In practice the rate is always applied to the original cost, never to the net figure left at the end of each year. That is why tax depreciation at a constant rate produces equal instalments year after year.

Entry into service starts the schedule

The first paragraph of article 102 ties the deduction to one specific event: depreciation is deductible from the financial year in which the asset enters service. The order date, the invoice date and the payment date are all irrelevant. An asset that has been bought but is still crated in the warehouse produces no deductible charge.

Entry into service is a fact the business must be able to prove. A commissioning report, an installation certificate, the first production record or a note in the register of depreciable assets all help show the year in which the asset began to work. If the tax authority audits the company, the declared date needs concrete evidence behind it.

Marco's lathe, bought in November 2026, starts production in March 2027, so its tax schedule begins in 2027. The cost appears among fixed assets at 31 December 2026 but yields no instalment. Claiming a first charge in 2026 would expose the company to an adjustment and to tax on the amount wrongly deducted.

The cap set by the ministerial rates

Paragraph 2 of article 102 sets the limit: the yearly deductible charge may not exceed the amount obtained by applying to cost the rates laid down by decree of the Minister of Economy and Finance and published in the Official Gazette. The decree groups assets into homogeneous categories, sector by sector.

Each rate reflects the normal period over which that category wears out in the sector where the business operates. The same computer may therefore carry one rate in a printing firm and another in an engineering practice, because the table follows the activity carried on, not the abstract nature of the item.

This course does not reproduce the table values. They must be read in the ministerial decree, locating first the group and species of the activity and then the asset category. In the examples that follow, the rate is stated as a working assumption, flagged as such, and never as a legal figure.

Half a rate in the first year

In the first year the rate is cut by half. The law does not ask anyone to count the days or months of actual use: whether the asset starts working in January or December, the reduction is always one half. It is a flat simplification that spares businesses any time-apportionment.

The practical effect is that the tax schedule runs one year longer than its theoretical length. An asset that would be written off in five full instalments receives a half charge in year one, four full charges after that and a final half charge in the sixth year, which clears the remaining cost.

When the accounts depreciate faster or slower than tax allows

If the accounting plan books a charge above the tax maximum, the excess is not deductible that year and is added back in the tax return. It is not lost, though. In the final years, once the accounts have fully written off the asset and the tax schedule has not, the remaining tax instalments come back as downward adjustments.

The opposite case is the trap. If the accounts book less than the tax maximum, the company cannot claim more in its return: the rule that a cost must pass through the profit and loss account before it is deducted links the deduction to the booked figure. The unbooked portion cannot be recovered by a simple adjustment.

Paragraph 3 of the article once allowed accelerated or anticipated depreciation beyond the table rate. Law no. 244 of 24 December 2007 repealed it. Today there is a single cap for everyone: article 102 grants no extra charge simply because an asset is used intensively.

Low-cost assets

Paragraph 5 gives small items a shortcut: where the unit cost does not exceed 516.46 euros, the whole outlay may be deducted in the year it is incurred. The wording grants an option, so the business may still depreciate such an item like any other, for example to stay in line with its accounting plan.

An update note attached to the article records a past exception: for cash registers able to transmit takings electronically, a 2006 law allowed full deduction in the year of purchase even above the paragraph 5 threshold. It illustrates how special laws can override the general cap for specific equipment.

Disposing of an asset before the schedule ends

When an asset that is not yet fully depreciated leaves the productive set-up, paragraph 4 allows its residual cost as a deduction. Scrapping after an irreparable breakdown, destruction or permanent withdrawal therefore releases, in a single year, the charges the schedule would have spread over later years.

Disposal needs evidence too. A scrapping report, the waste transfer form issued by a disposal centre or a statement of destruction signed by witnesses shows that the asset is no longer in the business. Without paperwork, deducting the residual cost becomes hard to defend in an audit.

If the asset is sold instead, the gap between the price and the residual cost is not a disposal loss in this sense: it becomes a capital gain or loss, with its own taxation and deduction rules. The residual tax cost, built from the instalments actually deducted, is where that comparison starts.

The register of depreciable assets

The whole tax schedule rests on the register of depreciable assets, or on the book that stands in for it. For each asset it records the year of acquisition, original cost, rate applied, charges deducted year by year and any disposal. It is the document the business produces to justify every instalment it claims.

• Purchase invoice and the documents for ancillary charges added to cost
• Report or document proving the date the asset entered service
• Extract of the ministerial table showing the group, species and category applied
• Yearly schedule of book and tax charges with the resulting differences
• Scrapping report or sale document at the end of the asset's life

Other limits in the act also hang on the total cost of depreciable assets recorded in the register, such as the cap on repair and maintenance costs. A messy register, with missing costs or wrong categories, makes those linked calculations as uncertain as the depreciation charges themselves.

The rules for the 2026 tax year

The 2026 accounts are governed by articles 102 and 110 in the wording that preceded the new consolidated act. Legislative decree no. 117 of 19 June 2026, which replaces them, takes effect from 2027, so this year's charges are still worked out under the rules described in this module.