corporate tax rates
Italy Corporate Tax Rates for Foreign-Owned Companies
By Andrea Sala, Tax and Cross-Border Compliance Lead, Milan · Reviewed by Stefano Colombo · Updated 12 October 2026
Rates as in force in 2026 · next review January 2027
An Italian company's tax year: accounts approved, two taxes computed, the balance paid, the return sent online.
The Italy company tax rate in 2026 is 24%: an Italian company pays IRES, the corporate income tax, on its net total income (Art. 77(1) TUIR). IRAP, a regional business tax, is 3.9% of the net value of production, a different base (IRAP 2026 instructions). A non-resident company pays IRES on Italian-source income only; dividends paid abroad bear a withholding.
What is the corporate tax rate in Italy in 2026?
The Italy corporate tax rate is set by IRES (imposta sul reddito delle società): 24% of the net total income (reddito complessivo netto) under Art. 77(1) TUIR, text marked in force 1 January 2020 to 31 December 2026. The Agenzia delle Entrate's IRES page, updated 22 October 2025, states the same rate.
That page gives one rate for every payer: resident S.p.A., S.a.p.a. and S.r.l., cooperatives, resident bodies, and non-resident companies and entities of every type, trusts included, on their Italian income only.
The base starts from the accounts, adjusted by the tax rules (Art. 83 TUIR), so it rests on the bookkeeping an Italian S.r.l. has to keep. By our arithmetic, an IRES base of EUR 100,000 gives IRES of EUR 24,000; IRAP depends on its own base and region and is not computed here.
A company is resident if, for most of the tax period, its registered seat, effective management or main ordinary management is in Italy (Art. 73(3) TUIR as amended by D.Lgs. 209/2023, text to 31 December 2026); an Italian S.r.l. is resident by its seat alone. IRES stays 24% from 1 January 2027.
Was the 20% IRES rate only for 2025?
Yes. Art. 1(436-444) L. 207/2024 cut IRES to 20% for the single tax period after the one in progress at 31 December 2024, 2025 for a calendar-year company, on conditions the Agenzia's IRES page lists:
- At least 80% of the 2024 profits set aside in a reserve.
- At least 30% of them invested in new Transizione 4.0 or 5.0 capital goods.
- Not below 24% of the 2023 profits, never below EUR 20,000, for Italian sites.
- Staff not below the three-year average, employment up by at least 1%.
- No cassa integrazione guadagni (state wage support) in the periods named.
- One period only: no 2026 option appears in the sources read for this guide.
What is IRAP, and how is its base different from the IRES base?
IRAP (imposta regionale sulle attività produttive, regional tax on productive activities) is 3.9% of the net value of production (valore della produzione netta), as the Agenzia's IRAP 2026 instructions restate Art. 16(1) D.Lgs. 446/1997. A company's activity is in every case the taxable event.
For capital companies the base is the value less the costs of production, items A and B of Art. 2425 of the Civil Code, without staff costs (item B.9), items B.10(c)-(d), B.12 and B.13; staff costs count only through the Art. 11 deductions. So IRAP tax in Italy falls on production, not profit: a loss-making company can still owe it.
A non-resident owes IRAP for activity in a region of at least three months through a permanent establishment (IRAP 2026 instructions). 10% of the IRAP paid is deductible from the IRES base (Art. 6(1) D.L. 185/2008, text to 31 December 2026), and the IRAP on taxable staff costs is deductible in full from the period current at 31 December 2012 (Art. 2(1) D.L. 201/2011).
24% plus 3.9% gives 27.9% only as a headline: two rates on two different bases, not an effective rate.
Which IRAP rate applies, and why does the statute print 3.5%?
The Agenzia's IRAP 2026 instructions set 3.9% ordinary; 4.20% for concession holders other than motorway and tunnel operators; 4.65% for financial intermediaries (Art. 6 entities); and 5.90% for insurers (Art. 7 entities), before any surtax.
Normattiva still prints Art. 16(1) D.Lgs. 446/1997 with 3.50 per cent: Art. 1(22) L. 190/2014 repealed the D.L. 66/2014 cut from the period after the one in progress at 31 December 2013, and the printed text was never restored. The comma 1-bis sector figures are relics too.
IRAP is regional, not municipal, so there is no Milan tax rate of its own. Regions may vary the rate by up to 0.92 percentage points by sector, and ordinary-statute regions may cut it to zero (IRAP 2026 instructions). The Finance Ministry publishes each region's table; this guide prints no regional value.
Two temporary surtaxes add 2 points: Art. 1(74) L. 199/2025 for financial intermediaries and insurers other than the entities of Art. 6(2), (3), (4) and (9) D.Lgs. 446/1997, 2026 to 2028, with a EUR 90,000 deduction in the later periods; Art. 3(1) D.L. 21/2026 for the ATECO codes of its Table 1, 2026 and 2027. No resulting rate is printed here.
Which companies pay more than 24% IRES or 3.9% IRAP?
Financial intermediaries (fund managers and SIMs excluded) and the Bank of Italy carry a 3.5-point addizionale (surtax) under Art. 1(65) L. 208/2015, 27.5% by our arithmetic. Shell companies carry a 10.5-point maggiorazione (surcharge) under Art. 2(36-quinquies) D.L. 138/2011, 34.5% by our arithmetic. Two IRAP surtaxes add 2 points.
| Tax | Levied on | Rate | Who pays it | What changes it | Statute |
|---|---|---|---|---|---|
| IRES | net total income | 24% | resident capital companies; non-resident companies on Italian-source income | the FY2025 20% option (one period, ended) | Art. 77(1) TUIR, text to 31 December 2026 |
| IRES addizionale | the IRES base | +3.5 points (27.5%, our arithmetic) | financial intermediaries (fund managers and SIMs excluded) and the Bank of Italy | applies from the tax period in progress at 31 December 2018 | Art. 1(65) L. 208/2015 as amended by D.Lgs. 142/2018 |
| IRES shell-company maggiorazione | the IRES base, with a deemed minimum income | +10.5 points (34.5%, our arithmetic) | non-operating companies, a foreign company's branch included | the revenue test below | Art. 2(36-quinquies) D.L. 138/2011, text to 31 December 2026 |
| IRAP, ordinary | net value of production | 3.9% | companies and entities; a non-resident's permanent establishment of three months or more | the regional band; the surtaxes | Art. 16(1) D.Lgs. 446/1997; IRAP 2026 instructions |
| IRAP, sector rates | net value of production | 4.20% concession holders (not motorways or tunnels); 4.65% financial intermediaries; 5.90% insurers | the entities named | the regional band; the surtaxes | IRAP 2026 instructions |
| IRAP, regional band | net value of production | varied by up to 0.92 points; may be cut to zero in ordinary-statute regions | each region, by sector and category | a regional law | IRAP 2026 instructions |
| IRAP, two temporary surtaxes | net value of production | +2 points each; resulting rate not printed | financial intermediaries and insurers other than the Art. 6(2), (3), (4) and (9) entities (2026 to 2028); the ATECO codes of Table 1 of D.L. 21/2026 (2026 and 2027) | a EUR 90,000 deduction in the later periods of the first | Art. 1(74) L. 199/2025; Art. 3(1) D.L. 21/2026 |
Sources: Art. 77 TUIR; Art. 2 D.L. 138/2011; Art. 16 D.Lgs. 446/1997; Agenzia delle Entrate.
How is the IRES base calculated?
The accounts are the starting point
The profit or loss in the profit-and-loss account, raised and lowered as the later articles require (Art. 83 TUIR, text marked 4 July 2026 to 31 December 2026). For IAS/IFRS and most Civil Code reporters, the accounting criteria of qualification, timing and classification apply.
Losses
Set against up to 80% of each later period's income; losses of the first three periods of a new productive activity, against all of it. The carry-forward stops when the majority of votes passes to third parties and the main activity changes, subject to the exceptions in the article (Art. 84 TUIR).
Interest
Deductible up to interest income, then up to 30% of the gross operating result (risultato operativo lordo) of the period plus 30% carried forward; the rest carries forward (Art. 96 TUIR). Financial intermediaries and insurers are outside.
Prices between group companies
Dealings with a non-resident controller, subsidiary or sister company are priced as independent parties would agree, where that raises income (Art. 110(7) TUIR). The rule does not apply between Italian-resident companies.
When is a company treated as a shell company?
Under Art. 30(1) L. 724/1994 (text to 31 December 2026), a company is non-operating (società di comodo) if its revenues, averaged over three years, fall below 1% of shares and receivables, 3% of real estate (less in some cases), 6% of the Art. 8-bis(1)(a) D.P.R. 633/1972 assets and 15% of other fixed assets.
- Inside: the S.p.A., S.a.p.a., S.r.l., S.n.c. and S.a.s.
- Inside: a foreign company's Italian permanent establishment, so its branch.
- Outside: the first tax period; never fewer than ten employees in the two previous years.
- Outside: production value above total assets; listed groups; 50 or more members.
- Outside: entities at least 20% held by public bodies.
- Deemed income: 0.75%, 2.38% (less for some real estate), 4.75% and 12% of the same asset classes.
- A deemed IRAP base; a VAT credit neither refunded nor offset.
- Also: the 10.5-point IRES surcharge on the company's rate.
- The exit: an interpello (advance ruling request) on objective facts.
Does the tax change for a branch, a subsidiary or a partnership?
A subsidiary (S.r.l. or S.p.A.)
Pays IRES itself at 24% and IRAP on its own base (Art. 77 TUIR); its shareholders are taxed again when it distributes profit, through the withholding below.
A branch of a foreign company
Taxed at the same rate on a separate profit-and-loss account and balance sheet, as a separate and independent entity (Art. 152 TUIR); from the period in progress at 31 December 2026 the account needs a data certa (certain date) by the return deadline (Art. 19(1) D.Lgs. 148/2026). IRAP after three months; the shell test applies.
A partnership (S.n.c. or S.a.s.)
Transparent: income is imputed to each partner by profit share, whether or not received (Art. 5(1) TUIR). The partners bear the tax, an individual under IRPEF.
The vehicle is settled before the deed, and these conditions are part of that decision, which our corporate structuring service works through with the founders or the group.
What does the company withhold on a dividend to a foreign owner?
A dividend waits for the accounts: they go to the members within the term in the deed, at most 120 days from year end, or 180 where the deed allows it and the company prepares consolidated accounts or its structure and object require it, and only profits in approved accounts are distributed (Civil Code Arts. 2478-bis and 2364(2)).
The Italy dividend tax rate for a non-resident shareholder is a final withholding (ritenuta a titolo d'imposta) of 26%: Art. 27(3) D.P.R. 600/1973 (text to 31 December 2026) with Art. 3(1) D.L. 66/2014. Foreign tax on the same profits is refunded up to 11/26 of it. The 27% printed in comma 3 is a relic; the 27% of comma 5 concerns resident exempt entities.
A company of a listed EU or EEA State, taxed and resident there, bears 1.20% final (Art. 11(2) D.L. 38/2026, from 1 January 2026). Under Art. 27-bis D.P.R. 600/1973, an EU parent holding at least 10%, uninterrupted for one year, obtains a refund on request, or non-application at source on request where the payer holds its certificate and declaration by the payment date.
A UK parent has been a third-country parent since 1 January 2021 (Agenzia, Brexit FAQ): the EU routes are closed and 26% applies unless the Convention caps it. The dividend guide sets out the treaty rates that cut Italian dividend withholding.
law a statutory rate in 2026no sum the layers are never added
Layer 1 · the company's own taxes
IRES 24%
of the net total income (Art. 77(1) TUIR)
IRAP 3.9%
of the net value of production (Art. 16(1) D.Lgs. 446/1997; IRAP 2026 instructions)
- different bases two rates on two bases, not an effective rate
Layer 2 · when profit is distributed to a foreign owner
The bars share one scale, 26% at full length; the EU parent route is a procedure, drawn without a bar.
Layer 3 · an Italian holding that receives dividends or sells a qualifying holding
Dividends received
95% excluded from IRES (Art. 89(2) TUIR)
Sale of a qualifying holding
95% exempt under the PEX (Art. 87 TUIR)
5% taxed at 24%: an effective 1.2%, our arithmetic. No total is drawn across the three layers.
First dividend to a foreign owner? We map the withholding route for each payment and prepare the relief file with the company's intermediary.
What is withheld on interest, royalties and fees paid abroad?
Interest to a non-resident lender bears 26% final (Art. 26(5) D.P.R. 600/1973; Art. 3(1) D.L. 66/2014); royalties 30% on their taxable part, and fees for self-employment-type services 30% unless performed abroad (Art. 25, text to 31 December 2026).
| Payment | General rate (final) | EU or EEA route | UK Convention cap | Statute |
|---|---|---|---|---|
| Dividend | 26%; foreign tax refunded up to 11/26 of the withholding | 1.20% for a company of a listed EU or EEA State; an EU parent at 10% held one year: refund on request, or non-application at source on request | 5% (a company with at least 10% of the voting power) or 15% | Art. 27(3), (3-ter) and Art. 27-bis D.P.R. 600/1973; Art. 3(1) D.L. 66/2014; Convention Art. 10(2) |
| Interest | 26% | exempt between EU associated companies (25% of the votes, one year; attestation of residence and beneficial-owner declaration) | 10% | Art. 26(5) and Art. 26-quater D.P.R. 600/1973; Convention Art. 11(2) |
| Royalties | 30% on the taxable part (30% on the whole amount for the use of industrial, commercial or scientific equipment in Italy) | the same exemption; between related parties only the normal value | 8% | Art. 25 and Art. 26-quater D.P.R. 600/1973; Convention Art. 12(2) |
| Fees for services | 30%, unless performed abroad or paid to an Italian permanent establishment | none stated | adviser's check | Art. 25 D.P.R. 600/1973 |
Sources: D.P.R. 600/1973 (as in force to 31 December 2026); D.L. 66/2014; the UK-Italy Convention.
How do treaties and the UK Convention change the withholding?
Art. 169(1) TUIR (text in force 1 January 2004 to 31 December 2026): the TUIR applies, if more favourable to the taxpayer, also in derogation of the double-tax agreements. The taxpayer relies on the more favourable rule; this guide does not say which applies. For a US parent, see the double tax treaty between Italy and the US.
The UK-Italy Convention, signed at Pallanza on 21 October 1988, caps Italian tax on dividends at 5% of the gross for a company with at least 10% of the voting power, otherwise 15% (Art. 10(2)); on interest at 10% (Art. 11(2)); on royalties at 8% (Art. 12(2)).
Tax withheld above a cap is refunded on application with a certificate of the State of residence (Art. 29); each article is set out in the UK-Italy tax treaty guide.
Relief at source, an exemption or a refund is claimed on the Agenzia's models of the Provvedimento of 10 July 2013. The claim and its documents can be prepared and coordinated with an English-speaking tax adviser in Italy.
What does an Italian holding pay on dividends and on selling a subsidiary?
95% of a dividend received by an Italian company is excluded from IRES (Art. 89(2) TUIR); profits from privileged-tax jurisdictions, 50% on conditions. By our arithmetic, 5% taxed at 24% is an effective 1.2%. That is the regime for dividends an Italian holding company receives.
For 2026, Art. 11 D.L. 38/2026 repealed Art. 87(1.1) and Art. 89(2.1) TUIR and the 2026 limits of L. 199/2025 from 1 January 2026, so the 95% regimes stand in full.
Gains on selling a holding are 95% exempt under the participation exemption (partecipazione esente, PEX) of Art. 87 TUIR, again an effective 1.2% by our arithmetic.
Four conditions apply: uninterrupted possession from the first day of the twelfth month before the sale; booking as financial fixed assets in the first balance sheet of the holding; a subsidiary outside privileged-tax regimes; a commercial business from the start of the third prior period.
A gain outside the PEX, such as an individual's sale of quotas, falls under capital gains tax in Italy.
Do tax consolidation and the global minimum tax apply to a group?
Under domestic tax consolidation (consolidato fiscale nazionale), the parent and each IRES subsidiary held for more than 50% may elect group taxation. The option runs three financial years and is irrevocable (Art. 117 TUIR); inside it, excess interest can use other participants' spare capacity (Art. 96 TUIR). The election's form and a foreign parent's position are outside this guide.
The global minimum tax (imposta minima globale) reaches enterprises in Italy of groups with consolidated revenue of EUR 750 million or more in at least two of the four preceding financial years (Art. 10(1) D.Lgs. 209/2023), through the imposta minima integrativa, suppletiva and nazionale. A founder's S.r.l. or a mid-size group is below it.
When is the tax paid and the return filed?
For FY2025 of a calendar-year company, the 2026 cycle runs in seven steps.
Approve the accounts
Within the deed's term, at most 120 days from year end (180 in the cases the Code allows); a dividend waits for it.
Compute the two bases
IRES from the adjusted accounts, IRAP from items A less B, plus any surtax.
Pay the balance and first IRES advance
By modello F24 (payment form), by the sixth month's last day: 30 June 2026, or 30 July 2026 with a 0.40% increase. A company under the ISA indices, with revenues within their limit, could pay by 20 July 2026, or 30 days later with a 0.80% increase (Art. 6 D.L. 89/2026); a company that, as the law allows, approves its accounts after four months pays by the last day of the month after approval.
File the returns online
The Modello Redditi SC (corporate return) and IRAP return, from 15 April to the tenth month's last day: 2 November 2026, as 31 October is a Saturday (Art. 2 D.P.R. 322/1998, as in force in 2026).
Transmission
The company, or an intermediary on the closed list of Art. 3(3) D.P.R. 322/1998, sends the return; the preparation around it is our corporate tax filing service.
Pay the second IRES advance
By 30 November 2026; the advance is 100% of the tax, in two instalments (Agenzia delle Entrate).
Mind the penalty
An omitted return costs 120% of the tax, minimum EUR 250 (Art. 1(1) D.Lgs. 471/1997, text to 31 December 2026); assessment runs to 31 December of the fifth year after filing, or the seventh where none was filed (Art. 43 D.P.R. 600/1973, text to 31 December 2026).
law a term set by statuteAgenzia a date of the Agenzia delle Entratemuted passed in 2026
- 1
Accounts approved
The members
- law term in the deed, at most 120 days from year end (180 in the cases the Code allows)
- 2
Filing window opens
The company, or an intermediary of Art. 3(3) D.P.R. 322/1998
- Agenzia 15 April 2026
- 3
Balance and first IRES advance
The company, by modello F24 (payment form)
- Agenzia 30 June 2026
- Agenzia or 30 July 2026 with a 0.40% increase
- law ISA companies: 20 July 2026, or 30 days later with 0.80% (Art. 6 D.L. 89/2026)
- note accounts approved after four months: the last day of the month after approval
- 4
Redditi SC and IRAP returns
The company, or an intermediary of Art. 3(3) D.P.R. 322/1998
- law 2 November 2026, the tenth month's last day
- note 31 October is a Saturday
- 5
Second IRES advance
The company
- Agenzia 30 November 2026
- Agenzia the advance is 100% of the tax, in two instalments
Art. 2 D.P.R. 322/1998 as in force in 2026; dates of the Agenzia delle Entrate
What changes from 1 January 2027?
D.Lgs. 19 June 2026 n. 117 approves a consolidated income-tax text, in force from 4 July 2026 (GU n. 152 of 3 July 2026). Normattiva prints Art. 77 TUIR repealed from 1 January 2027, and the Finance Ministry's database lists the consolidated text's IRES article in force from that date, restating the rate: IRES stays 24% from 1 January 2027.
D.Lgs. 5 August 2026 n. 141 approves a consolidated text on filings and assessment; its application date was not read, so the filing rules in the calendar above may change once it applies. The two IRAP surtaxes still run in 2027, and the L. 199/2025 one in 2028.
Not company rates: personal income tax, the 7% rule and the 100k rule
In Italy the tax authority is the Agenzia delle Entrate; the company tax is IRES, the individual tax IRPEF (imposta sul reddito delle persone fisiche, personal income tax), the regional tax IRAP. The three regimes below apply to people, not to an S.r.l. or S.p.A.; a partner of an S.n.c. or S.a.s. meets IRPEF through transparency (Art. 5(1) TUIR).
| Regime | Rate or amount | Who, and the statute |
|---|---|---|
| IRPEF, personal income tax, 2026 | 23% up to EUR 28,000; 33% above EUR 28,000 and up to EUR 50,000; 43% above EUR 50,000 | individuals, and the partners of an S.n.c. or S.a.s. through transparency; Art. 11(1) TUIR, text 1 January 2026 to 31 December 2026 |
| The 7% regime | 7% substitute tax on foreign-source income, for each tax period of the option | a person with a foreign-source pension moving to a qualifying municipality of the listed southern regions; Art. 24-ter TUIR, text marked to 31 December 2026 |
| The new-resident lump sum | EUR 300,000 per tax period; EUR 50,000 per family member | a new resident, on foreign-source income, from 1 January 2026; Art. 24-bis TUIR, text to 31 December 2026 |
Sources: Arts. 5, 11, 24-bis and 24-ter TUIR (Normattiva).
From our practice: a worked example
Andrea Sala
Tax and Cross-Border Compliance Lead, Milan: corporate tax, withholding on payments abroad and a foreign parent's relief.
A worked example from the rules above, not a client case. A UK company owns all of a calendar-year Italian S.r.l., which pays IRES at 24% (EUR 24,000 on a base of EUR 100,000, our arithmetic) and IRAP at its region's rate, and files for FY2025 by 2 November 2026.
A dividend to the UK parent bears 26%, unless the Convention's 5% cap for a company with at least 10% of the voting power is claimed with the Agenzia's models or by refund. We check the holding and its dates, ask the parent for its certificate of residence, and prepare the relief file with the intermediary.
Sources
- Art. 77 TUIR: the IRES rate and the addizionale (Normattiva)
- IRES: rate, payers and the FY2025 option (Agenzia delle Entrate)
- IRAP 2026 instructions: rates, regional band and base (Agenzia delle Entrate)
- Art. 16 D.Lgs. 446/1997: IRAP rates, the printed 3.50% and the surtaxes (Normattiva)
- Art. 96 TUIR: the interest limit (Normattiva)
- Art. 27 D.P.R. 600/1973: withholding on dividends (Normattiva)
- Art. 27-bis D.P.R. 600/1973: the Parent-Subsidiary route (Normattiva)
- Art. 11 D.L. 38/2026: the 1.20% rate and the dividends-received changes (Normattiva)
- The UK-Italy Convention, Pallanza, 1988 (S.I. 1990/2590) (legislation.gov.uk)
- Art. 87 TUIR: the participation exemption (Normattiva)
- Redditi SC 2026: when and how it is filed (Agenzia delle Entrate)
- The consolidated income-tax text: the IRES article from 1 January 2027 (Ministry of Economy and Finance)
Also cited, by name (TUIR and D.P.R. 600/1973 articles as in force to 31 December 2026): Arts. 5, 11, 24-bis, 24-ter, 73, 83, 84, 89, 110, 117, 152 and 169 TUIR; Arts. 25, 26, 26-quater and 43 D.P.R. 600/1973; Art. 3 D.L. 66/2014; Art. 30 L. 724/1994; Art. 2 D.L. 138/2011; Art. 6 D.L. 185/2008; Art. 2 D.L. 201/2011; Art. 10 D.Lgs. 209/2023; Art. 19 D.Lgs. 148/2026; Arts. 2 and 3 D.P.R. 322/1998; Art. 1 D.Lgs. 471/1997; D.Lgs. 117/2026 and 141/2026; the Agenzia delle Entrate's payment pages, treaty relief models and Brexit FAQ; the Finance Ministry's regional IRAP tables; Civil Code Arts. 2364, 2425 and 2478-bis.
Frequently asked questions
What is the corporate tax rate in Italy?
IRES, the corporate income tax, is 24% of a company's net total income in 2026 (Art. 77(1) TUIR). IRAP, a separate regional tax, is 3.9% of the net value of production, a different base. A non-resident company pays IRES on Italian-source income only, and the consolidated text that applies from 1 January 2027 keeps IRES at 24%.
How much corporation tax is due on a profit of EUR 100,000?
There is no single figure. If the IRES base is EUR 100,000, IRES is EUR 24,000, by our arithmetic. IRAP is levied on the net value of production, where staff costs are largely not deductible, at the rate of the company's region, and 10% of the IRAP paid is deductible from the IRES base.
Is there a reduced IRES rate for 2026?
The 20% rate was an option for one tax period, 2025 for a calendar-year company, under Art. 1(436-444) L. 207/2024, with conditions on reserving profits, investing in new capital goods and keeping staff numbers. No 2026 option appears in the sources read for this page.
Why do some pages say the IRAP rate is 3.5%?
Normattiva still prints 3.50% in Art. 16(1) D.Lgs. 446/1997, because a 2014 cut was repealed by Art. 1(22) L. 190/2014 and the printed text was never restored. The operative ordinary rate is 3.9%, as the Agenzia's IRAP 2026 instructions state, and the sector rates are 4.20%, 4.65% and 5.90%.
Does the IRAP rate depend on the region?
Yes. Each region may move the rate by up to 0.92 percentage points by sector and category of taxpayer, and ordinary-statute regions may reduce it to zero by their own law. IRAP is regional, not municipal, so a company in Milan pays the rate of its region, published in the Finance Ministry's regional tables.
Which companies pay more than 24%?
Financial intermediaries and the Bank of Italy add a 3.5-point addizionale to IRES; shell companies add a 10.5-point surcharge, and the shell-company test also covers a foreign company's Italian branch. Two temporary 2-point IRAP surtaxes apply to financial intermediaries and insurers, some Art. 6 entities excepted, from 2026 to 2028, and to certain listed sectors in 2026 and 2027.
How is the IRES base calculated?
From the profit or loss in the accounts, adjusted by the tax rules (Art. 83 TUIR). Losses are used up to 80% of each later year's income, or in full for the first three years of a new activity; interest beyond interest income is capped at 30% of the gross operating result; foreign group prices follow the arm's-length rule.
Is a branch taxed differently from a subsidiary?
Not in the rate: both pay IRES at 24%. A branch is taxed on a separate profit-and-loss account and balance sheet (Art. 152 TUIR), owes IRAP once its permanent establishment has run three months, and falls inside the shell-company test. A partnership differs: its partners, not the partnership, bear the tax.
What does an Italian company withhold on a dividend to a foreign shareholder?
A final 26%, refundable up to 11/26 against foreign tax on the same profits; 1.20% for a company of a listed EU or EEA State; for an EU parent holding at least 10% for a year, a refund on request, or non-application at source on request. A treaty can cap the rate. The printed 27% is a relic.
Is tax withheld on interest, royalties and service fees paid abroad?
Yes. Interest to a non-resident lender bears 26% final; royalties bear 30% on their taxable part; fees for services bear 30% unless the services were performed abroad. Between EU associated companies with a 25% voting holding kept for a year, interest and royalties can be exempt, and a treaty can cap the rate.
What does an Italian holding pay on dividends received or on selling a subsidiary?
95% of a dividend received is excluded from the IRES base (Art. 89(2) TUIR), and 95% of the gain on selling a qualifying holding is exempt (Art. 87 TUIR), so 5% is taxed at 24%: an effective 1.2%, by our arithmetic. The exemption on a sale has four conditions: holding period, booking, the subsidiary's residence and a commercial business.
Do tax consolidation and the global minimum tax reach my group?
A parent and each IRES subsidiary held for more than 50% may elect domestic tax consolidation, for three financial years and irrevocably. The global minimum tax applies only to groups with consolidated revenue of EUR 750 million or more in at least two of the four preceding years, so an ordinary founder's S.r.l. is below it.
When is the corporate tax due?
For FY2025 of a calendar-year company: balance and first IRES advance by 30 June 2026, or 30 July 2026 with 0.40% (20 July 2026 under the ISA indices; later for accounts approved after four months); Redditi SC and IRAP returns, sent by the company or an authorised intermediary, by 2 November 2026; second advance by 30 November 2026.
Is Italy heavily taxed?
No statutory source grades it, so this page gives no verdict. What the law sets is a company tax of 24% on profit and a regional tax of 3.9% on a different base, plus a withholding when profit leaves for a foreign owner, which an EU route or a treaty can reduce. The total depends on the structure.
What are the income tax rate, the 7% rule and the 100k rule in Italy?
They concern people, not companies. IRPEF is 23% up to EUR 28,000, 33% up to EUR 50,000 and 43% above, for 2026. The 7% rule is a substitute tax for foreign pensioners moving to qualifying southern municipalities; the 100k rule is now a lump sum of EUR 300,000 per tax period for those moving to Italy from 1 January 2026.
The tax side of a foreign-owned structure. Withholding routes, relief files and the yearly calendar, prepared and coordinated by an English-speaking tax adviser in Italy.
Branch or subsidiary for a foreign parent. Branch or Subsidiary in Italy for a Foreign Company