Corporate Tax Rate in Italy: IRES, IRAP Guide

Italy Corporate Tax at a Glance: Rate Table (2026)

The table below covers the main corporate taxes applicable to an Italian SRL or SpA in 2026. Both IRES and IRAP are filed and paid separately using Form F24.

Legal basis: TUIR D.P.R. 917/1986 Art. 72–142; D.Lgs. 446/1997; D.Lgs. 209/2023.

Need help calculating your SRL's effective tax burden? Contact our team for a free consultation.

FY 2025 Reduced IRES Rate (Premiale): Conditions and Time-Limit

For FY 2025 only, Law 207/2024 (the 2025 Budget Law) introduced a reduced IRES "premiale" rate of 20%, down from the standard 24%. To qualify, a company must meet several cumulative conditions: at least 80% of the FY 2024 profit set aside in a reserve, reinvestment in qualifying capital assets (Industry 4.0 and 5.0 assets), no reduction of the average workforce together with new permanent hires of at least 1% of permanent staff (at least one), and no use of cassa integrazione in FY 2024 or FY 2025 (ordinary wage integration excepted). This is not an automatic rate reduction. It applies exclusively to FY 2025 and must be reported in the annual tax return with supporting documentation.

The standard rate of 24% applies to all other companies and to any FY where qualifying conditions are not met, including FY 2026: Law 199/2025 (the 2026 Budget Law) contains no extension of the reduced rate.

What Is IRES? Italy's Corporate Income Tax

IRES (Imposta sul Reddito delle Societa) is Italy's national corporate income tax. It is governed by the TUIR (Presidential Decree 917/1986, Art. 72–142) and applies to all Italian legal entities, including SRLs and SpAs, from the first day of registration with the Registro Imprese.

The tax base is worldwide net income: an Italian SRL is taxed on its total income from all sources, whether earned in Italy or abroad, after allowable deductions. Foreign-source income is included under the worldwide taxation principle. Allowable costs (operating expenses, depreciation, certain financial charges) are deducted before the 24% rate is applied.

IRES subjects include all Italian corporations. Foreign companies with a permanent establishment in Italy also pay IRES on the income attributable to that establishment. The Italian Revenue Agency (Agenzia delle Entrate) is the administering authority. Payment is made via Form F24, and the annual return (dichiarazione dei redditi) is filed by 31 October for calendar-year entities.

Advance payments are computed on the previous year's tax, so a newly formed SRL has no historical base for acconti in its first tax year: its first-year tax is paid as a balance (saldo) in the following year, together with the first advance for that year. This is a practical consideration for founders setting up their first Italian company.

What Is IRAP? Italy's Regional Production Tax

IRAP (Imposta Regionale sulle Attivita Produttive) is a regional production tax established by Legislative Decree 446 of 15 December 1997. The standard national rate is 3.9%. Regions may vary it by up to 0.92 percentage points, regions under health-deficit recovery plans apply further automatic increases, and some regions and autonomous provinces apply lower rates: in 2026 ordinary rates range from 2.68% (Autonomous Province of Trento) to 4.97% (Campania and Molise).

IRAP is levied on the net value of production, which is broadly a gross margin measure. Critically, IRAP is not based on net profit: an SRL can be loss-making for IRES purposes and still owe IRAP, because the IRAP base includes labour and other costs that reduce net income. This distinction matters for cash-flow planning, particularly in early-stage companies.

One important reform: employees on permanent (open-ended) contracts have their full labour cost deductible from the IRAP base since the 2015 reform. This reduces the IRAP burden for companies with a predominantly permanent workforce.

A common misconception: headlines about "IRAP abolition" refer only to individual sole traders (persone fisiche), whose IRAP liability was phased out from FY 2022. Italian SRLs, SpAs, and all other corporate entities remain fully subject to IRAP at the standard 3.9% rate in 2026. Factor this into your effective tax rate calculations.

IRAP Rates by Sector and Region

The 3.9% standard rate applies to most companies, including the vast majority of SRLs. Certain sectors carry higher statutory rates, and regional adjustments can push rates above or below the national standard.

Legal basis: Art. 16 D.Lgs. 446/1997; Law 199/2025 (bank and insurer rates for 2026).

Regional rates are set by individual regions (Regioni). The applicable rate depends on where the company's registered office and/or productive activity is located. For 2026, Lombardia and Toscana apply the standard 3.9%, while Lazio applies 4.82%.

IRES vs. IRAP: Key Differences for an Italian SRL

Both taxes apply to an Italian SRL, but they differ in base, level, and calculation logic.

The combined standard effective burden for an Italian SRL is approximately 27.9% (24% IRES plus 3.9% IRAP). These are separate obligations with separate filing and payment tracks. An SRL cannot offset IRES against IRAP or vice versa.

How Are Italian SRL Profits Taxed: Entity Comparison

The choice of business structure directly affects your effective tax rate. The table below compares the main Italian entity types for a foreign founder evaluating types of Italian companies.

For founders expecting significant profits, the SRL's 24% IRES corporate rate is typically more tax-efficient than personal IRPEF rates above EUR 50,000. However, partnerships allow operating losses to flow directly to partners and offset other personal income, which can be advantageous in early-stage or loss-generating operations. Consider your projected income trajectory, not just the headline rate, when choosing your structure.

For a fuller comparison of entity structures, see our guide on types of Italian companies.

Dividend Taxation: From SRL to Shareholder

For a foreign founder, the total tax burden on profits has two layers. The SRL first pays IRES at 24% on its net income. When those after-tax profits are distributed as dividends, a withholding tax (WHT) applies at the shareholder level. Understanding this cascade is essential to modeling your effective return.

The applicable WHT rate depends on the shareholder's residency and whether a tax treaty applies. For details on how an SRL distributes dividends and the full mechanics of profit extraction, see our dedicated guide on how an SRL distributes dividends.

Legal basis: Art. 27 and 27-bis D.P.R. 600/1973; Italy-US income tax convention, Art. 10; EU Directive 2011/96/EU.

For a US corporation that has owned 25% or more of the voting stock of an Italian SRL for the 12 months ending on the date the dividend is declared, the cascade is: 24% IRES at entity level, then 5% WHT on the dividend. A US-resident individual pays 15% under the treaty. For a minority shareholder without treaty protection, the cascade is 24% IRES plus 26% WHT. These layers do not fully stack on gross income, but the interaction should be modeled carefully for profit-extraction planning.

Italian resident companies receiving dividends from Italian SRLs benefit from a 95% exclusion from the IRES base, meaning only 5% of the dividend is included in taxable income (effective tax rate of 1.2%). The participation exemption (PEX) applies a similar 95% exclusion to qualifying capital gains on share sales.

Understanding your effective tax burden before incorporating can save significant costs. Our team helps foreign founders model IRES, IRAP, and dividend WHT impact before they set up. Request a free consultation or visit our accounting and tax services in Italy page.

2026 Budget Law: Changes to Dividend and PEX Rules

Law 199/2025 (the 2026 Budget Law, Art. 1, paras 51-55) introduced a minimum participation requirement for the 95% dividend exclusion and for PEX treatment: a 5% share of capital or voting rights, or a tax value of at least EUR 500,000, for distributions resolved from 1 January 2026. Decree-Law 38/2026 (Art. 11(4)), in force since 28 March 2026 and converted with amendments by Law 88 of 22 May 2026, repealed those thresholds with effect from 1 January 2026. The 95% exclusion for qualifying inter-company dividends therefore applies again without minimum participation or tax-value thresholds.

Italian Corporate Tax Deadlines and Advance Payments

Italian companies prepay their IRES and IRAP liabilities in two installments (acconti) during the tax year. Both are calculated on 100% of the prior year's net tax liability. The balance (saldo) is paid the following year once the actual liability is determined.

Calendar-year entity with FY ending 31 December. Instalment split: Art. 58 D.L. 124/2019.

All payments are made via Form F24. ISA taxpayers (those subject to the Synthetic Reliability Index assessment) use a 50/50 split rather than the standard 40/60. A newly incorporated SRL has no prior-year IRES/IRAP base, so no historical advance base exists in its first tax year.

For cross-referencing VAT obligations alongside corporate tax, see our overview of Italy VAT rates and, for Partita IVA setup and obligations, our guide to Partita IVA registration.

For violations from 1 September 2024, D.Lgs. 471/1997 as amended by D.Lgs. 87/2024 sets a penalty of 25% for late payment, halved if paid within 90 days (Art. 13), and a penalty of 120% of the tax due for failure to file a return, with a minimum of EUR 250 (Art. 1(1)). The annual offsetting limit for tax credits is EUR 2 million.