Corporate Tax Rate in Italy: IRES, IRAP Guide

Italy Corporate Tax at a Glance: Rate Table (FY 2025)

The table below covers the main corporate taxes applicable to an Italian SRL or SpA for fiscal year 2025. Both IRES and IRAP are filed and paid separately using Form F24.

Source: PwC Tax Summaries Italy 2026; TUIR D.P.R. 917/1986 Art. 72–142; D.Lgs. 446/1997; D.Lgs. 209/2023. Rates cited for FY 2025.

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 two cumulative conditions: reinvestment in qualified tangible or intangible fixed assets, and maintenance or growth of the workforce. 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. This reduced rate should be confirmed with a qualified Italian tax advisor before being factored into financial planning.

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.

For a new SRL with no prior-year IRES liability, advance payments in the first fiscal year are calculated on a forecast basis rather than the standard prior-year method. 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 446/15 December 1997. The standard national rate is 3.9%, though regional authorities may adjust this by up to 0.92 percentage points in either direction.

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 as of FY 2025. 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.

Source: PwC Tax Summaries Italy 2026; D.Lgs. 446/1997.

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. Confirm the current rate for your specific region (such as Lombardia, Lazio, or Toscana) with your regional tax authority or a qualified advisor.

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.

Source: PwC Tax Summaries Italy 2026.

For founders expecting significant profits, the SRL's 24% IRES corporate rate is typically more tax-efficient than personal IRPEF rates above EUR 75,000. 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.

Source: PwC Tax Summaries Italy 2026 (withholding taxes); EU Directive 2011/96/EU.

For a US-based founder holding 25% or more of an Italian SRL, the cascade is: 24% IRES at entity level, then approximately 5% WHT on the dividend (subject to treaty confirmation). 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 207/2025 (the 2026 Budget Law) introduced new thresholds for certain dividend and participation exemption provisions: a 5% of share capital/voting rights threshold, or an EUR 500,000 minimum tax value, for qualifying PEX and inter-company dividend treatment. This affects Italian holding structures and certain cross-border dividend flows.

These provisions were analyzed by major international law firms in January 2026. Given the complexity and the [VERIFY] status of the final implementation text, these changes should be confirmed with a qualified Italian tax advisor before being incorporated into any holding or dividend structure.

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.

Source: PwC Tax Summaries Italy 2026 (tax administration). Calendar-year entity with FY ending 31 December.

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. For a newly incorporated SRL with no prior-year IRES/IRAP base, acconti in the first year are calculated on a projected-income basis.

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.

Late payment carries a penalty of 25% from 1 September 2024. Failure to file carries a penalty of 120% of taxes due from the same date (PwC Tax Summaries Italy 2026). The annual offsetting limit for tax credits is EUR 2 million.