A Guide to Corporate Taxes in Italy

What Is the Corporate Tax Rate in Italy?

The corporate tax rate in Italy is 24% IRES plus 3.9% IRAP, about 27.9% combined on standard company profits in 2026. IRES is a flat national tax, not progressive. IRAP varies by region and sector. Resident companies pay on worldwide income. Non-residents pay only on Italian-source income.

How Does IRES Work?

IRES is the national corporate income tax at 24% on net taxable income. Resident companies pay on worldwide income. Non-resident companies pay only on Italian-source income, per Agenzia delle Entrate. Tax losses carry forward with no deadline.

Loss carryforward is indefinite but capped at 80% of taxable income each year. Losses from a company’s first three years offset 100% of income. Italy allows no loss carryback. Banks, other financial intermediaries, and the Bank of Italy pay a permanent 3.5-point IRES surtax under Law 208/2015, for a 27.5% effective rate that remains in force for 2026.

How Does IRAP Work?

IRAP is a regional tax of 3.9% on the net value of production, not on net profit. Regions may adjust it by up to ±0.92 percentage points, so the effective rate varies by location, per the Ministero delle Finanze IRAP page. Sector rates are higher.

Labor costs are fully deductible for permanent employees. Only INAIL contributions are deductible for temporary staff. The 2026 Budget Law (Legge 199/2025) raised sector IRAP by 2 points for FY2026 through FY2028.

What Is the Reduced 20% IRES Rate (Reinvestment Incentive)?

The IRES premiale was a reduced 20% rate (down from 24%) for companies that reinvested profits and grew employment. It applied to FY2025 only. The 2026 Budget Law (Legge 30 dicembre 2025, n. 199) did not renew it, so the ordinary 24% rate applies again from FY2026, per fiscooggi.

The FY2025 version required three things, under Law 207/2024, art. 1 commi 436-444:

Does the Global Minimum Tax Apply in Italy?

Yes. Italy transposed the EU Minimum Tax Directive (2022/2523) via Legislative Decree No. 209 of 27 December 2023. It applies a 15% minimum effective rate to multinational enterprise (MNE) and domestic groups with consolidated revenue of €750 million or more in two of the preceding four fiscal years.

The regime runs through three mechanisms. The Agenzia delle Entrate approved the annual GloBE Information Return model on 6 February 2026.

A transitional country-by-country reporting (CbCR) safe harbour can switch off top-up tax for low-risk jurisdictions. In-scope groups must track GloBE Information Return and registration deadlines, confirmed on the Agenzia delle Entrate GloBE page.

How Does Italy’s Tonnage Tax Regime Work?

Qualifying international shipping companies can elect taxation on presumptive income per net ton (NT) instead of actual profit. They pay IRES only, with no IRAP and no deductions. The election locks in for 10 years and is renewable. Rates fall as tonnage rises, under Italy’s tonnage tax rules in the TUIR (Testo Unico delle Imposte sui Redditi).

Eligibility depends on flag and qualifying-vessel conditions. Confirm current requirements before electing.

How Are Non-Resident and Foreign-Owned Companies Taxed in Italy?

Non-resident companies pay IRES only on Italian-source income, including permanent establishment (PE) profits, Italian real estate, and royalties. An Italian subsidiary of a foreign parent is a resident entity taxed on worldwide income, per Agenzia delle Entrate.

A PE forms when a foreign company has a fixed place of business or a dependent agent in Italy. A US or UK company expanding into Italy chooses between a branch (taxed on Italian-source income, no separate legal personality) and a subsidiary (a resident taxpayer on worldwide income). The Entity vs EOR calculator helps weigh entity setup against lighter options.

Treaty relief flows through the US-Italy and UK-Italy double tax treaties, reducing withholding and granting foreign tax credits. Three anti-avoidance rules apply: controlled foreign company (CFC) rules, a 30%-of-EBITDA (earnings before interest, taxes, depreciation, and amortisation) interest limitation, and OECD-aligned transfer pricing.

What Withholding Taxes Apply in Italy?

Italy applies a 26% standard withholding tax (WHT) on interest, dividends, and securities yields paid to residents and non-residents. Double tax treaties and EU directives reduce it where the beneficial owner qualifies. Interest on government bonds is taxed at 12.5%. The EU Parent-Subsidiary Directive can cut qualifying intra-EU dividends to 0%.

The EU Interest and Royalties Directive can reduce qualifying related-party interest to 0%. Royalties carry a 30% domestic rate, often applied to 75% of the gross for an effective rate near 22.5%.

How Do Double Taxation Treaties Work in Italy?

Italy’s treaty network prevents double taxation by reducing withholding rates and granting a foreign tax credit. The credit is capped at the lower of foreign tax paid or the IRES due on that income. Italy has more than 100 treaties in force. Over-withheld tax is recoverable through a refund claim.

Non-residents reclaim excess tax using Agenzia delle Entrate Forms A (dividends), B (interest), C (royalties), and D (other income). The claim window is 48 months from the date the tax was paid or withheld.

What Corporate Tax Deductions and Incentives Are Available in Italy?

Italy’s main levers are the patent box super-deduction, R&D and innovation tax credits, the reshoring exemption, and Southern Italy Special Economic Zone (SEZ) credits. The patent box is a 110% super-deduction on R&D costs tied to qualifying intellectual property, not the older 50% income exemption. ACE (Aiuto alla Crescita Economica), the notional interest deduction, was repealed from 2024, with only residual surpluses carrying forward, so it is not a live incentive.

Verify current R&D and Transition 5.0 credit rates and caps against the latest Budget Law before claiming, since the percentages change annually.

How Is a Corporate Reorganization Taxed in Italy?

Mergers, de-mergers, and asset contributions are generally tax-neutral in Italy. Companies may elect to step up asset values for tax recognition and pay a substitutive tax instead of ordinary rates. Confirm the current substitutive tax brackets before electing, as they change with Budget Law updates.

How Do You Register for Corporate Tax in Italy?

Companies register by obtaining an Italian tax code (codice fiscale) and VAT number (Partita IVA) from Agenzia delle Entrate, then enrolling in the Registro delle Imprese through the chamber of commerce. Registration flows from incorporation and precedes any filing obligation.

1. Obtain the codice fiscale and Partita IVA from Agenzia delle Entrate.
2. Enrol in the Registro delle Imprese at the local chamber of commerce.
3. Set up electronic filing credentials (SPID, CIE, or CNS).

Before incorporating, confirm your company name is free with the Commenda company name checker.

How Do You File a Corporate Tax Return in Italy?

Corporations file the Redditi SC return and a separate modello IRAP electronically through the Agenzia delle Entrate portal. Authentication uses SPID (Sistema Pubblico di Identità Digitale), CIE (Carta d’Identità Elettronica), or CNS (Carta Nazionale dei Servizi). Calendar-year companies file by 31 October, the last day of the tenth month after year-end.

The withholding agent return (modello 770) is also due by 31 October of the following year. Confirm both dates against the current Agenzia delle Entrate calendar, since reforms have shifted the filing month in recent years.

When Are Corporate Tax Payments Due in Italy?

Italy uses self-assessment with two advance payments and a balance, all paid on the F24 form. For calendar-year companies the balance and first advance fall on 30 June, and the second advance on 30 November.

The 30 June deadline can extend to late July with a 0.4% surcharge. Track every date with the Commenda compliance calendar.

What Are the Penalties for Late Corporate Tax Filing in Italy?

Failure to file triggers a penalty of up to 120% of the tax due after the 2024 sanctions reform, with a €250 to €1,000 minimum where no tax was owed. Late payment adds a proportional penalty plus statutory interest. The reform under Legislative Decree 87/2024 applies to violations from 1 September 2024.

An incorrect return now carries a penalty near 70%, down from the old 90% to 180% range. Late payment carries roughly 25%, down from 30%. Ravvedimento operoso, the voluntary-correction regime, discounts penalties the sooner you self-report and cure the error.

How We Help With Corporate Tax in Italy

Commenda’s tax and accounting platform handles Italian corporate tax end to end: registration, Redditi SC and modello IRAP filing, deadline tracking, and incentive identification on one platform. Controllers get certainty that Italian compliance is done, so the laptop closes at 6 instead of reopening at 8.

If you are setting up an Italian subsidiary, Commenda’s entity management runs incorporation and ongoing filings, and its transfer pricing software keeps related-party pricing defensible. Keep every advance and return on track with the compliance calendar.

Book a demo for a free review of your Italian filing calendar and incentive eligibility.