What is IRAP and does my company have to pay it?

IRAP (Imposta Regionale sulle Attività Produttive) is a regional tax on productive activities. It applies to corporations, partnerships, and commercial entities. Individual sole proprietors and freelancers were exempt from IRAP from 2022. The standard rate is 3.9%, adjustable by ±0.92% per region. Banks and financial intermediaries pay 4.65% (increased to 6.65% for 2026–2028). Insurance companies pay 5.90%.

What are the VAT rates in Italy for 2026?

Standard IVA: 22% on most goods and services. Reduced 10%: food, tourism, hotel accommodation. Reduced 5%: social housing, certain foods. Super-reduced 4%: basic foodstuffs, books, newspapers, essential medical supplies. No domestic VAT threshold - every taxable business activity requires a Partita IVA. Electronic invoicing through the SdI platform is mandatory.

How are dividends taxed in Italy in 2026?

Dividends to resident individuals: 26% withholding tax. Dividends received by Italian corporate shareholders: 95% IRES exclusion, now conditional on holding at least 10% participation (from 1 January 2026). Dividends to EU/EEA corporations: 1.2% WHT, subject to a minimum 5% participation or €500,000 tax value. EU parent companies qualifying under the Parent-Subsidiary Directive: 0% WHT (10% holding for ≥1 year). Non-EU non-residents: 26% WHT, reduced by applicable tax treaty.

What is the difference between SRL and SPA taxation in Italy?

Both SRL and SPA pay IRES at 24% and IRAP at 3.9%. Tax rates are identical. The difference is structural: SRL requires €10,000 minimum capital (€1 permitted with restrictions), suits SMEs and foreign investors, and has lighter governance. SPA requires €50,000 minimum capital, suits large companies or those seeking external investment, and has stricter governance and auditing obligations.

When is the corporate tax return due in Italy?

For calendar-year companies (January 1 – December 31), the IRES and IRAP return (Redditi SC) must be filed by 31 October of the following year. The balance payment (saldo) is due by 30 June. Advance payments (acconti) are paid in two instalments: 40% by 30 June and 60% by 30 November of the current tax year. All payments use form F24 via the Agenzia delle Entrate.

How do I register a company in Italy and get a VAT number?

Steps: (1) Obtain an Italian Codice Fiscale (tax code) for all founders and directors. (2) Draft the Atto Costitutivo e Statuto (articles of incorporation) and sign before a notary. (3) Deposit share capital into an Italian bank account. (4) File a Comunicazione Unica with the Chamber of Commerce - this registers the company with the Registro delle Imprese, Agenzia delle Entrate, INPS, and INAIL in one step. The Partita IVA is usually issued the same day. A standard SRL takes 3–6 weeks and costs €3,000–€6,000.

What employer social security costs should I budget for in Italy?

Employer INPS contributions typically range from 27% to 32% of gross salary, depending on the sector and collective agreement. Employees contribute a further 9–10% from their gross pay. Add INAIL accident insurance, regional surcharges (1.2–3.33%), and municipal surcharges (0.1–0.9%). In practice, the total employer cost is roughly 130–140% of what the employee takes home.

What is the Italy corporate tax rate for foreign companies in 2026?

Foreign companies with a permanent establishment (stabile organizzazione) in Italy pay 24% IRES and 3.9% IRAP on income attributed to that Italian establishment. Foreign companies without an Italian PE pay only on specific Italian-source income categories. There is no withholding tax on profit repatriation from a branch to its foreign parent.

24% Flat IRES Corporate Tax Rate

Italy Corporate Tax 2026: 24% IRES, 3.9% IRAP, VAT & Business Guide

Q: What is the corporate tax rate in Italy for 2026?

The IRES (Imposta sul Reddito delle Società) rate is a flat 24% on net taxable profits. It has not changed since 2017. Resident companies pay IRES on worldwide income. Non-residents pay only on Italian-source income. On top of IRES, most companies also pay IRAP at 3.9% on the regional value added. The combined effective rate for a standard commercial company is around 27.9%.

What taxes does your company pay in Italy in 2026? Flat 24% IRES corporate rate, 3.9% IRAP regional tax, 22% VAT, withholding taxes, and filing rules for SRL, SPA, branches, and sole proprietors.

IRES 24%IRAP 3.9%IVA 22%WHT 26%SRL Italy

Updated: March 14, 2026

Italian companies pay two main corporate taxes: IRES (Imposta sul Reddito delle Società) at a flat 24% on net taxable profits, and IRAP (Imposta Regionale sulle Attività Produttive) at a standard 3.9% regional rate. Resident companies pay IRES on worldwide income; non-residents pay only on Italian-source income. The standard VAT rate (IVA) is 22%, with reduced rates of 10%, 5%, and 4%. Dividends paid to individuals are generally subject to 26% withholding tax, while EU corporate recipients may qualify for a reduced 1.2% rate or full exemption. Employer social security contributions to INPS typically run 27–32% of gross salary. The 2026 Budget Law introduced new investment incentives with enhanced depreciation rates, tightened the participation threshold for dividend exemptions, and doubled the Tobin Tax on financial transactions. Below you'll find the full breakdown of rates, deductions, withholding taxes, and filing requirements.

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Corporate Tax Rates by Business Structure

Tax Residency and Rates

A company is an Italian tax resident if its registered seat, effective management, or principal place of business is in Italy for the majority of the tax period. Residents pay IRES on worldwide income. Non-residents pay IRES only on Italian-source income. All companies also pay IRAP on the value generated by productive activities within each region where they operate.

Italian residents: 24% IRES on worldwide income

Non-residents: 24% IRES on Italian-source income only

IRAP standard rate: 3.9% (can vary ±0.92% by region)

Banks and financial institutions: IRAP 4.65% (raised to 6.65% for 2026–2028)

Shell/dormant companies: IRES surcharge of 10.5% applies

Key 2026 Budget Law Changes

The 2026 Budget Law (published in the Italian Official Gazette on 31 December 2025) introduced several corporate tax changes effective from 1 January 2026.

Dividend exemption (95% IRES exclusion) now requires a minimum 10% direct or indirect participation threshold

Tobin Tax rates doubled: 0.4% on OTC equity transfers, 0.2% on regulated market trades

New hyper-depreciation incentive replaces Transition 4.0/5.0 tax credits for investments from Jan 2026 to Sep 2028

Cooperative compliance regime threshold lowered from €750M to €500M turnover

IRAP increased by +2 percentage points for banks and financial intermediaries for 3 years

SRL (Società a Responsabilità Limitata)

IRES Corporate Tax Rate

24%

Flat rate on net taxable profits

IRAP Regional Tax

3.9%

Standard rate (varies by region)

Minimum Share Capital

€1–€10,000

€1 allowed, €10,000 standard

Most popular structure for SMEs and foreign investors

Limited liability for shareholders (quotisti)

Separate legal entity; worldwide income taxed

Dividends to individuals: 26% WHT

No residency requirement for shareholders or directors

SPA (Società per Azioni)

IRES Corporate Tax Rate

24%

Flat rate on net taxable profits

IRAP Regional Tax

3.9%

Standard rate (varies by region)

Minimum Share Capital

€50,000

25% paid in before incorporation

Preferred for large companies and public listings

Shares freely transferable; limited liability

Same IRES/IRAP rates as SRL

More complex governance requirements

Required for companies listing on Italian stock exchange

Impresa Individuale (Sole Proprietor)

Tax Rate

23–43%

Progressive IRPEF personal income tax

IRAP

Exempt

Individuals abolished from IRAP since 2022

Liability

Unlimited

Personal assets fully at risk

Taxed under IRPEF (personal income tax), not IRES

No separate legal entity; unlimited personal liability

Exempt from IRAP since 2022 Budget Law

Flat-rate forfettario regime available if turnover ≤ €85,000

Suitable for freelancers and small sole-trader businesses

Branch of Foreign Company (Stabile Organizzazione)

IRES on Italian profits

24%

Italian-source income only

IRAP

3.9%

On Italian value added

Branch Remittance Tax

None

No withholding on repatriated profits

Taxed only on Italian-source income attributed to the branch

Parent company retains full legal liability

No withholding tax on profit repatriation to parent

Must register with Registro delle Imprese and obtain Partita IVA

Transfer pricing rules apply between branch and head office

VAT (IVA) in Italy 2026

VAT Rates

Italy's VAT (called IVA - Imposta sul Valore Aggiunto) applies to most business transactions. There is no domestic registration threshold - any taxable business activity requires a Partita IVA. Electronic invoicing via the SdI platform is mandatory for all VAT-registered entities.

Standard rate: 22% - applies to most goods and services

Reduced rate: 10% - food products, tourism, hotel accommodation

Reduced rate: 5% - social housing, specific food items

Super-reduced rate: 4% - basic foodstuffs, books, newspapers, certain medical supplies

No VAT registration threshold for non-residents; EU threshold of €10,000 applies for B2C cross-border sales under OSS

VAT Filing Deadlines

All VAT-registered businesses must submit periodic VAT settlement returns (Comunicazione Liquidazioni Periodiche IVA) and an annual VAT return.

Monthly VAT: due by the 16th of the following month (mandatory if annual turnover > €400K for services or > €700K for goods)

Quarterly VAT: due by the 16th of the second month following the quarter

Annual VAT return (Modello IVA Annuale): filed between 1 February and 30 April of the following year

Electronic invoicing (fattura elettronica) via SdI: mandatory for all SRL, SPA, and other entities with a Partita IVA

Withholding Taxes and Dividend Taxation

Dividend Withholding Tax

Italy applies different withholding tax rates depending on who receives the dividend. The 2026 Budget Law tightened access to preferential rates by adding a minimum participation threshold.

Individuals (resident and non-resident): 26% WHT on dividends

Italian corporate shareholders: 95% exemption from IRES taxable income (requires ≥10% participation from 1 Jan 2026)

EU/EEA corporate recipients: 1.2% WHT (requires ≥5% share capital or ≥€500,000 tax value participation)

EU parent companies qualifying under Parent-Subsidiary Directive: 0% WHT (minimum 10% holding for ≥1 year)

Non-EU non-residents: 26% WHT, reduced by applicable double tax treaty

Other Withholding Taxes

Italy withholds tax on a range of outbound payments. Treaty rates may reduce or eliminate withholding on interest and royalties.

Interest payments to non-residents: 26% WHT (standard domestic rate)

Royalties to non-residents: 30% WHT on 75% of gross amount (effectively 22.5%); reduced by treaty

EU Interest & Royalties Directive: 0% WHT on qualifying intra-group interest and royalties

Capital gains - Participation Exemption (PEX): 95% of gains on qualifying share sales exempt from IRES

Tax Deductions, Losses, and Incentives

Loss Carry-Forward

Italy allows indefinite carry-forward of tax losses, but the annual offset is capped. There is no carry-back.

Losses carried forward: indefinitely, with no time limit

Annual utilization cap: losses can only offset up to 80% of taxable income each year (companies must always pay IRES on at least 20% of taxable profit)

Exception: losses from the first 3 years of activity can be used without the 80% cap

Key 2026 Investment Incentives

The 2026 Budget Law introduced a new hyper-depreciation regime for capital investments, replacing the previous Transition 4.0 and 5.0 tax credit systems.

New hyper-depreciation: acquisition cost of capital goods increased for depreciation purposes at progressive rates depending on investment size

Applies to investments from 1 January 2026 through 30 September 2028 in assets produced in EU/EEA countries

Design and aesthetic ideation tax credit: 10% of eligible costs, up to €2 million annually; extended to 2026

R&D tax credit: available for qualifying research and development expenditure

Global Minimum Tax (QDMTT): large groups with revenues over €750M must ensure a 15% effective tax rate

Employer Taxes and Social Contributions

INPS and INAIL Contributions

Employers in Italy pay mandatory social security contributions to INPS (national pension and welfare) and INAIL (workplace accident insurance). The rates are among the highest in Europe.

Employer INPS contributions: typically 27–32% of gross salary (varies by sector, collective agreement, and company size)

Employee INPS contributions: approximately 9–10% of gross salary

INAIL (accident insurance): additional percentage depending on risk classification of the activity

Regional surcharges (addizionale regionale): 1.2–3.33% of gross income withheld by employer

Municipal surcharges (addizionale comunale): 0.1–0.9%, also withheld by employer

Corporate Tax Filing and Deadlines

Key Deadlines for Calendar-Year Companies

Italy's corporate tax year generally follows the calendar year. All IRES and IRAP returns must be filed electronically via the Agenzia delle Entrate portal using form Redditi SC.

IRES/IRAP return filing deadline: 31 October of the year following the tax year (e.g., 31 October 2026 for FY 2025)

IRES/IRAP balance payment (saldo): end of the 6th month following year-end (30 June for calendar-year entities)

First advance payment (acconto): 30 June (40% of prior year tax for most taxpayers)

Second advance payment (acconto): 30 November (60% of prior year tax)

Annual VAT return: filed 1 February – 30 April of the following year

Payment via form F24 through the Agenzia delle Entrate portal (Fisconline/Entratel)

Calculate Your Italian Corporate Tax

Estimate IRES and IRAP liability, VAT obligations, withholding tax on dividends, and employer social contributions. Compare SRL vs SPA vs branch taxation for your business in Italy.

24% IRES rate

3.9% IRAP included

All business forms

Try Italy Corporate Tax Calculator

Sources

Agenzia delle Entrate – Corporate Income Tax (IRES)

PwC Tax Summaries – Italy Corporate Taxation

EY – Italy 2026 Budget Law Tax Measures

A&O Shearman – Italy 2026 Budget Law: Dividend and Capital Gains Changes

PwC – Italy Corporate Tax Administration and Deadlines

Invest in Italy (ITA) – Setting Up a Company