With the amendments published in March 2024, the Italian Accounting Standards Board (OIC) introduced a significant revision to the accounting treatment of costs relating to the dismantling of assets and the restoration of production sites.

Sources

• Amendments to OIC Accounting Standards – March 2024
• Ministerial Decree of 27 June 2025 – Coordination provisions on IRES and IRAP, including OIC 34 and updates to accounting standards OIC 16 and OIC 31
• Italian Revenue Agency Ruling No. 272/2022

What changes in practical terms?

Costs associated with the dismantling of installations and/or site restoration:

• must be capitalised as part of the asset’s cost at the time the obligation is incurred,
• rather than, as was previously common practice, at the time the expenditure is actually incurred.

Where a legal or contractual obligation exists, a provision for risks and charges is recognised in accordance with OIC 31, with a corresponding increase in the carrying amount of the asset pursuant to OIC 16. This updated value is then depreciated systematically over the asset’s useful life.

Which costs are involved?

• Dismantling of installations;
• Site restoration (e.g. land covering, remediation works).

Underlying rationale: two levels of information

The new approach is designed to provide:

1. Comprehensive balance sheet information, whereby the total cost of an investment also incorporates future decommissioning obligations;
2. Consistent performance information, as costs are depreciated over the asset’s useful life, enhancing comparability and ensuring a more faithful representation of results.

Civil law framework

Under the revised wording of OIC 16, the cost of tangible fixed assets may include:

• initial costs incurred for the acquisition or construction of the asset;
• estimated costs necessary for dismantling and removing the asset and restoring the site, provided that such obligations arise from laws, contracts, agreements or concessions.

These costs must be estimated on a forward-looking basis and discounted where relevant. They are recognised in the carrying amount of the asset and contribute to determining the related depreciation schedule. From a documentation perspective, a sworn technical expert report represents the appropriate instrument to substantiate both the amount and the nature of the provision, as well as to safeguard the company in the event of audits.

The objective of the OIC intervention is to align Italian accounting practice with international standards (IAS 16 and IFRIC 1), ensuring an economically accurate and transparent representation of future obligations associated with asset decommissioning.

Tax implications

From a tax perspective, the initial capitalisation of future costs allows for deduction on an accrual basis pursuant to Article 109, paragraphs 1 and 2(b), of the Italian Income Tax Code (TUIR), which provides that negative income components are deductible when recognised in the income statement for the relevant financial year.

This approach was confirmed by the Italian Revenue Agency in Ruling No. 272/2022, which acknowledges that dismantling costs recognised from the outset as part of the asset’s value may be depreciated and deducted in accordance with standard tax depreciation rates, even if the related expenditure has not yet been incurred in financial terms.

This marks a significant turning point: whereas in the past such costs were generally deductible only when actually incurred—resulting in deferred negative impacts—it is now possible to anticipate their tax recognition, generating a positive effect on deferred taxation and cash flow.

However, the following conditions must be met:

• the accounting recognition must be properly substantiated and documented;
• a certain and current legal obligation to incur the cost must exist;
• the economic estimate must be objective, reasonable and supported by an expert report.

From 8 July to 30 September 2025, the new REPowerEU call for applications is open, providing non-repayable grants to SMEs investing in photovoltaic systems, mini wind installations and energy storage solutions. The remaining available budget amounts to €178.6 million.

The incentive covers

• up to 40% of eligible costs for small enterprises (30% for medium-sized enterprises) for the purchase and installation of renewable energy systems (RES),
• 30% of eligible costs for energy storage systems,
• 50% of expenses incurred for energy certification, where not legally required.

Each application may relate to a single production unit, with a maximum eligible investment of €1 million. Projects must be initiated only after the application has been submitted.

Excluded

• specific sectors listed in Annex 1 of the call,
• energy-intensive enterprises and companies subject to the EU Emissions Trading System (ETS),
• entities that have already participated in the June 2025 call.

The Ministry of Tourism has extended the deadline from 15 June 2025 to 15 December 2025 for cadastral owners of open-air accommodation facilities to submit the documentation required to update the cadastral map and the Building Cadastre.

This measure aims to ensure uniform application nationwide of the new rules on the non-cadastral relevance of mobile installations (mobile homes and maxi caravans) within open-air accommodation facilities. The extension allows the Italian Revenue Agency to standardise procedures and enables cadastral owners to follow a single, consistent interpretative approach for the correct identification and valuation of assets subject to registration.

Introduction

With the amendments published on 18 March 2024, the Italian Accounting Standards Board (OIC) updated accounting standards OIC 16 and OIC 31, introducing a revised framework for the accounting treatment of dismantling and restoration costs. These changes, applicable to financial statements for periods beginning on or after 1 January 2024, are intended to ensure a more accurate and faithful representation of obligations associated with the end of an asset’s useful life.

Previous framework

Prior to the amendments, OIC 16 did not permit the capitalisation of dismantling and restoration costs as part of the asset’s cost. Such costs were generally recognised through progressive provisions charged to the income statement over the asset’s useful life. OIC 31, in turn, did not provide specific guidance on provisions for dismantling and restoration, with the exception of landfill dismantling costs. As a result, companies were required to recognise a liability provision for these expenses, which became tax-deductible only when the costs were actually incurred.

Key changes introduced

Following the amendments, OIC 16 now provides that dismantling and restoration costs arising from legal or contractual obligations must be capitalised as an integral part of the asset’s cost. A provision for future obligations is recognised as the corresponding entry. This provision is subsequently increased through the recognition of discounting interest, which is also recorded as an increase to the same provision. The present value of these costs is then depreciated over the asset’s useful life.

For assets recognised in the user’s balance sheet because they are acquired under usage rights (for example, through leasing arrangements or concessions), OIC 31 allows dismantling and restoration costs to be capitalised as intangible assets. In this case, the corresponding provision for obligations is offset by an intangible asset recognised under “Other Intangible Assets” in accordance with OIC 24.

Tax implications and conditions for application

Assonime Circular No. 26 of 19 December 2024 examined the tax implications of the new provisions, envisaging tax recognition, for IRES and IRAP purposes, of the depreciation charges recorded, within the limits of the applicable statutory coefficients. Discounting charges should be prudently recognised in the income statement under interest expenses and are considered deductible; however, a specific interpretative ruling by the Ministry of Economy and Finance is awaited to confirm their tax deductibility.

In order to capitalise dismantling and restoration costs, prior administrative authorisation for disposal activities is required. For example, in the case of photovoltaic systems, such authorisation concerns the removal of installations from rooftops and must be supported by permission for surface operations, with an analytical identification of all eligible components. Where no legal or contractual obligation exists to incur these costs, the related provision remains relevant solely for civil law purposes, with tax deductibility confirmed only at the time the expenditure is actually incurred.

The updates to accounting standards introduced through the amendments to OIC 16 and OIC 31 represent a meaningful step towards a more accurate representation of obligations related to the dismantling and restoration of assets, while also facilitating access to tax benefits, provided that the prescribed conditions are fully met.

The Minister for the Environment, Gilberto Pichetto, has signed a decree amending the incentive scheme for Renewable Energy Communities (RECs). The new provisions extend eligibility to municipalities with fewer than 50,000 inhabitants, introduce greater flexibility in implementation timelines, allow for an advance payment of up to 30% of the grant, and abolish the reduction factor previously applied in cases of cumulation with other incentives. The decree is currently pending review by the Court of Auditors.

The incentive consists of a feed-in tariff of approximately €100/MWh and a capital grant covering 40% of eligible investment costs. Where the capital grant is awarded, the incentive tariff is reduced by half.
Eligible projects include installations or capacity upgrades of up to 1 MW, also equipped with energy storage systems.
Participants in a Renewable Energy Community may include SMEs, private individuals and local authorities (large enterprises may participate only as third-party entities).
Only installations that have entered into operation from January 2024 onwards are eligible.
Both the generation plant and the grid connection point must fall within the area served by the same primary substation.

Applications must be submitted to the GSE by 30 November 2025. The incentives are not cumulative with other forms of support.