INDUSTRY 4.0 and the use of old industrial equipment
What is Industry 4.0
Industry 4.0 is a process that stems from the fourth industrial revolution and is leading to fully automated and interconnected industrial production. New digital technologies will have a profound impact within four directions of development.
What to do with used industrial equipment
A survey by UCIMU (Union of Italian Machine Tool Manufacturers) shows that the average age of the machine park of Italian companies is 12 years and 8 months and that only a few plants are numerically controlled (32 percent) and can be integrated with computer systems (2.5 percent of the total installed). The concessions put in place by the Italian government are many, from hyper-super depreciation to tax credits, but all this does not seem to have borne the desired fruit, perhaps because the question remains what to do with old machinery that is still working?
When we usually buy new machinery or new technology, we either sell the old ones or wipe out them. If we opt for the second choice then the value, we would get from these machineries that we will no longer use is equal to 0. In cases where we sell them there is a risk that the value of the sale will be lower than the current value of the machinery thus constituting a capital loss, while in cases where we manage to make a capital gain, we would have to pay the taxes inherent of the sale.
Consequently, the question arises as to what is best to do with these old machines. A good solution would be to transfer these machines to another country where they can still be usable and perform well. In this way the entrepreneur will not have to sell them, let alone dispose of them. A perfect country to do such an operation is Albania. A great many Italians have chosen to expand their businesses or open new ones by taking advantage of the facilities that this state offers long before Industry 4.0 was so in vogue.
By moving old machinery to Albania, you will find a labor market with a cost almost 9 times lower than in other EU countries and a tax system that greatly facilitates companies that decide to invest and produce in the country, so you will continue to generate profit margins and invest more in 4.0 technology. Albania is a developing country and as such has the positive features that a businessman must know how to take full advantage of:
– Highest GDP increase in the past 5 years in Europe;
– You can set up a business with 100 percent foreign capital;
– Foreign investors have the opportunity to expatriate capital and revenue in the desired percentage;
– The Albanian tax system does not distinguish between foreign and domestic investors;
– Albania’s geographic location is at the very strategic as it lies at a crossroads between several European countries.
Going to analyze the costs, we can strongly say that this is one of the strong points if you opt for a move or a creation of a new business/branch in Albania. Production costs in the neighboring country are lower in comparison with other European countries and much lower in comparison with Italy. Tax policy provides for lower outgoings and tax breaks or exclusions, which you can learn more about with a tax consultation at our firm.
Labor in Albania over the years has been the main reason why many Italian investors have chosen Tirana or other cities for their businesses and activities. More than one million Albanians making roughly 33 percent of the population are well-educated new professionals. The average age in the country is only 35 and the literacy rate is very high (97.6%). One aspect not to be underestimated is the Albanian youth’s excellent knowledge of the Italian and English language, so an Italian or an EU businessman investing in Albania in a very little time can make employees settle with his business of producing material goods or services. The minimum salary in Albania is 34000 Albanian lek or about 300 euros so the general cost of labor is also much lower compared to Italy or other EU countries, and the employer also does not have the obligation of the thirteenth month payment and severance payments that exist in other countries.
Labor costs and taxation in Albania
Minimum salary in Albania is 34,000 lek (€300), the law provides for progressive taxation on the basis of the following rates with respect to wages, salaries and other allowances arising from labor relations
Income from work on a monthly basis:
- A) Personal income tax on gross income from employment:
- 0–40.000 ALL (345€) 0% income taxation;
- 40.001 ALL, for pay exceeding 40,000:
- 0 – 30.000 income taxation 0%;
- b. 30.001 – 50,000 ALL (430€) 50%*13% taxation for pay exceeding 30,000.
- 50.001 ALL, for the pay exceeding 50,000:
- 0.30,000 ALL taxation 0%;
- 30,001 – 200,000 ALL (€1,700) taxation at 13%;
- Pay above 200,000 ALL (1,700€) taxation at 23%.
- Retirement contributions,
Contribution rate is at 27.9% on gross income. The maximum gross salary that contributions are calculated is 149,954 ALL (€1,285), the part of the salary that exceeds the 149,954 lek is not subject to contribution payment, maximum contributions that can be paid are 4,1837.1 ALL (€360).
