Taxation

IRES - Corporate Income Tax

• Corporate income tax IRES is due on all business income earned by the corporate taxpayer.
• IRES is levied at 24% on the taxable income (tax assessment basis).
• The taxable income is determined on a worldwide basis by applying increases and reductions, as provided by tax rules, to the profit (or losses) resulting from the statutory financial statements or annual accounts, prepared in accordance with the Italian accounting standards (OIC) or International accounting standards (IAS).
• Tax losses may be carried forward for an indefinite period of time but may be used to offset only 80% of relevant year taxable basis (100% for newly established companies during the first 3 fiscal years).

IRAP - Regional Tax on Productive Activities

• The Regional Tax on Productive Activities IRAP is a local tax due on the business income generated within a regional territory.
• The general rate applied is equal to 3.9%, but Regions are allowed to increase or decrease the base rate up to an additional 0.92%.
• For sales and manufacturing companies, the IRAP taxable income is broadly represented by the company’s gross margin as resulting from its financial statements.

GMT - Global Minimum Tax

• Italy has implemented the EU Directive 2022/2523 establishing the Global Minimum Tax, aimed at ensuring a global minimum taxation of 15% for companies located in Italy that are part of a multinational or national group with annual revenues equal to or exceeding 750 million euros.
• In implementing the Directive, Italy may resort to the so-called QDMTT (Qualified Domestic Minimum Top-up Tax) in addition to the IIR (Income Inclusion Rule) and UTPR (Under Tax Payment Rule).

VAT - Value Added Tax 

The ordinary value added rate that applies to sales of goods and services is 22%.

Reduced rates are available:

• 4% - applied for example to food and agricultural products,
• 5% - applied for example to medical products,
• 10% - applied for example to the supply of raw materials and fuels such as gas and energy for domestic use, to building materials and accessories.

IRPEF - Tax on Personal Income

It is a direct, personal, progressive tax.

There are 3 rates brackets:

• 23% - up to €28,000
• 35% - over €28,000 up to €50,000
• 43% over €50,000.

INPAT REGIME

Inpats can benefit from a reduction equal to 50% over their Italian taxable income from employment or self-employment (within the annual limit of 600,000 euros). Such reduction is granted for a period of 5 years and can be increased to 60% if moving with a minor or in the case of birth / adoption of a minor residing in Italy.

Eligibility requirements:

• being Italian, EU or foreign citizens
• have been tax resident abroad (i.e. not in Italy) for the 3 previous tax years, not on occasional basis, and commit to fiscally residing in the territory of the Italian State for at least 5 years. Workers transferred to Italy by the same employer (intragroup transfers) are eligible for the regime if they have been residents abroad in the 6 preceding tax periods (or in the 7 preceding tax periods in the event that the worker has previously been employed in Italy by the same group).
• carrying out working activities (either as an employee or self-employed) primarily within the territory of the State.
• meet the requirements of high qualification or specialization (e.g., holding a university degree obtained through a course of at least 3 years or professional qualifications related to regulated professions).

PROFESSORS AND RESEARCHERS

Professors and researchers that decide to move to Italy to conduct research and/or teaching activities and become tax-residents in Italy can benefit from a reduction equal to 90% over their taxable income for a period of 6 years.

Eligibility requirements:

• being Italian, EU or foreign citizens
• holding a university degree
• being a professor or a researcher
• have been tax residient abroad not on occasional basis
• have carried out certified teaching or research activities abroad for the 2 previous tax years
• have decided to move to Italy to conduct research and/or teaching activities and become tax-residents in Italy: working for at least 183 days/year (184 for leap years).

FLAT TAX FOR HIGH NET WORTH INDIVIDUALS

This favourable tax regime has been specifically designed to attract Italians and foreign High-Net-Worth Individuals who intend to move to Italy and become tax residents of Italy.

• The eligible individuals must have been tax residents outside of Italy for 9 years out of the 10 years preceding the application of the regime.
• Upon relocation, as an alternative to the principle of worldwide taxation, which is typically applicable to Italian tax residents, a substitute mechanism can be applied. Under this mechanism, indivisuals are subject to a tax on their foreign-source income (regardless of its amount), amounting to 100,000 euros for each fiscal year.
• The Italian-source income, instead, will be taxed according to domestic tax law. 
• Other wealth taxes on foreign source properties will not be applied.

The benefit lasts for a maximum of 15 years starting from the first year of adoption.

The flat taxation on foreign-source income can also be extended to family members of the eligible individual – in this case the lump-sum amounts to  25,000 euros per year per each additional family member.