Question 1

183-Day Rule

Accepted Answer

The so-called 183-day rule is a central component of most double taxation treaties (DTTs). It determines in which country wages are taxable when a person works temporarily abroad. It is becoming increasingly important in practice, particularly in the context of secondments, cross-border projects, or remote work.

The starting point here is the so-called worldwide income principle. According to this principle, a person is generally subject to taxation in their country of tax residence on their entire income—regardless of which country that income is earned in.

So, for example, someone who is resident in Italy must report their entire income there. However, double taxation treaties ensure that this income is not actually taxed twice by dividing the taxation rights between the participating countries.

Basic Principle of Taxation

In international tax law, the basic principle is that wages are taxed where the work is physically performed.

The 183-day rule represents an important exception to this. It means that, despite working abroad, the right to tax remains with the country of residence -but only if certain conditions are met.

This exception is provided for in double taxation treaties to simplify the administration of short-term work abroad and to establish a clear demarcation of taxing rights.

Requirements of the 183-day rule

For wages to continue to be taxed exclusively in the country of residence, three requirements must be met simultaneously.

Length of stay:
The employee does not stay in the country of employment for more than 183 days in total within the relevant period (e.g., calendar year or 12-month period).

Employer:
The remuneration is paid by an employer who is not resident in the country of employment. The decisive factor here is the economic perspective (who actually bears the responsibility and the risk).

Permanent establishment:
The remuneration is not borne by a permanent establishment or fixed base in the country of employment. This means, in particular, that the personnel costs are not economically attributable to that country.

If these requirements are met, taxation remains in the country of residence. If, however, even one of these conditions is not met, the right to tax generally passes to the country of employment.

In practice, it is often the question of whether a permanent establishment exists or who is to be regarded as the employer from an economic perspective that leads to uncertainty.

Calculation of the 183 Days

The 183 days are calculated based on actual physical presence in the country of employment. This generally includes arrival and departure days as well as weekends and vacation days.

It should also be noted that the relevant period may be defined differently depending on the double taxation treaty. In some cases, the calendar year is used as the basis; in others, a rolling twelve-month period.

If the 183-day limit is exceeded, this may result in the country of employment obtaining the right to tax retroactively from the first day of stay.

Examples: Residence in Germany – Work in Italy

A typical scenario is the secondment of an employee residing in Germany to Italy.

If the employee stays in Italy for less than 183 days for a project, the employer remains based in Germany, and the costs are not borne by an Italian permanent establishment, the wages are taxed exclusively in Germany. In this case, Germany continues to tax the employee’s entire worldwide income.

The situation is different if the stay in Italy lasts longer or if the work is economically attributable to an Italian permanent establishment. In this case, Italy obtains the right to tax the portion of the work performed there. Although Germany, as the country of residence, continues to tax the worldwide income, it must avoid double taxation, for example by exempting the income or crediting the Italian tax.

Specific case study:

Mr. Müller is a resident of Germany and is sent to Italy by his German employer for a project. He works there on-site from February 1 to July 20 (= 170 days). He then spends his vacation with his family in Italy from August 1 to August 31 (= 31 days).

Result: Italy, as the country of employment, has the right to tax the wages. Mr. Müller stayed in Italy for a total of more than 183 days during the relevant period. Since the vacation is closely connected in time to the previous employment, these days must also be included in the calculation. The 183-day limit is thus exceeded.

Germany, as the country of residence, continues to tax the entire worldwide income but must avoid double taxation, generally by exempting the Italian income subject to a progression clause.

Conclusion

The 183-day rule is an essential tool for determining taxing rights in cross-border activities. It is closely linked to the worldwide income principle and the provisions of double taxation treaties. A comprehensive assessment of all requirements and the specific individual case is always decisive.

Frequently Asked Questions (FAQ)

1. What does the worldwide income principle mean?
It states that a person resident in the country must pay tax on their entire worldwide income there.

2. When does taxation remain in the country of residence?
When all requirements of the 183-day rule are met.

3. Is it sufficient to stay for less than 183 days?
No, the requirements regarding the employer and the permanent establishment must also be met.

4. What happens if the 183-day limit is exceeded?
The country where the work is performed generally gains the right to tax, often retroactively from the first day.

5. How is double taxation avoided?
Through provisions in the respective double taxation treaty, usually through exemption or credit.

6. Why is the provision complex in practice?
Because several conditions must be examined simultaneously, and each double taxation treaty has its own specific provisions.

Question 2

Absorbable pay supplement

Accepted Answer

In Italian labor law, an absorbable pay supplement is an additional salary element that exceeds the minimum wages of the applicable collective bargaining agreement (CCNL) and may later be "absorbed" against certain wage increases.

The absorbable pay supplement element can be offset against future wage increases – i.e., gradually reduced. Typical cases:

Increase in minimum wages due to CCNL renewal,
Change of category,
Introduction of new contractual elements (e.g., third wage element in the collective agreement for trade and services)

Example:

CCNL minimum wage: €1,500
Wage element to be absorbable: €500
Total gross wage: €2,000

If the CCNL minimum wage increases by around €200 (to €1,700), the employer can offset this increase against the chargeable wage element:

New minimum wage according to CCNL: €1,700
Offsetable wage absorbable: €300 (€500 – €200)
Total gross wage remains: €2,000

The employee therefore does not experience a real wage increase because the absorbable pay supplement offsets the previously granted "advantage."

Certain wage components may not generally be "used up" via an absorbable wage element:

Seniority allowances
These are based on their own legal basis and may not be "used up" by an absorbable pay supplement.
Wage components protected by the CCNL
If the collective agreement stipulates that certain increases or allowances are non-offsetable, this rule takes precedence.
Expenses and social benefits
Pure cost reimbursements (travel expenses, meals, accommodation) are not remuneration and cannot be used as an absorbable pay supplement.

Question 3

Asset account

Accepted Answer

An asset account is a central element of double-entry bookkeeping. It records the individual asset and liability items of a company and thus forms the basis for the balance sheet.

What is a balance sheet account?

A balance sheet account records asset and liability items on the balance sheet on a specific date. It thus reflects the current "balance" of an account – in contrast to income statement accounts, which show changes over a period of time (expenses and income).

Balance sheet accounts are opened at the beginning of the fiscal year with the opening balances from the opening balance sheet and closed again at the end of the year via the closing balance sheet. The balances recorded in these accounts are entered directly into the balance sheet.

A distinction is made between:

Asset accounts (use of funds): e.g., property, plant, and equipment, inventories, bank, cash, receivables
Liability accounts (use of funds): e.g., equity, liabilities, provisions

In Italian financial statements, the balance sheet accounts reflect the individual items of the balance sheet that must be reported in accordance with the provisions of the Civil Code and the accounting rules of the OIC principles (see lexicon entry "Balance sheet in Italy").

Examples of balance sheet accounts

Asset accounts are divided into fixed asset accounts and current asset accounts:

Fixed assets (tied up in the company for the long term):
- Tangible assets, e.g., buildings, machinery, office equipment (see glossary entry "Depreciation (ammortamento)")
- Financial assets
Current assets (available in the short term or intended for sale):
- Inventories (goods, raw materials)
- Cash / bank
- Trade accounts receivable
- Other receivables

Liability accounts are divided into equity and debt capital:

Equity:
- Subscribed capital / share capital
- Other equity (e.g., retained earnings, reserves)
Debt capital:
- Shareholder loans
- Liabilities to suppliers
- Tax and social security liabilities
- Other liabilities

Together, these balance sheet accounts form the structure of the balance sheet and show how the company is financed and how its funds are used.

Significance for entrepreneurs and HR managers

A basic understanding of balance sheet accounts is important for decision-makers in the company. It helps to:

manage liquidity
Bank, cash, and short-term liabilities show how much financial leeway is currently available and what payment obligations are due in the short term.
plan investments
Asset accounts, depreciation, and any leases provide information about how much the company has already invested and what financial impact new investments may have.
better classify personnel decisions
Wage and salary liabilities as well as provisions for severance pay/TFR reveal what long-term obligations exist towards employees (see glossary entry "TFR – Severance pay in Italy").
prepare for financing discussions
Balance sheet accounts form the basis for key figures such as the equity ratio or debt ratio, which are particularly important for banks and investors.

The balance sheet accounts thus provide the "raw data" for key balance sheet ratios, which play a decisive role in practice in credit negotiations, credit checks, and subsidy applications, among other things.

Question 4

Ateco Code (ital.: Codice Ateco)

Accepted Answer

The ATECO code is the system used in Italy to classify the economic activities of companies and freelancers. The abbreviation ATECO stands for “Attività Economiche”, i.e. economic activities. It is based on the European nomenclature NACE Rev. 2.1, which has been adapted by the Italian statistical office ISTAT to the specific characteristics of the Italian economy.

Purpose and areas of application

The ATECO code was originally developed for statistical purposes, such as the collection and evaluation of economic data. Today, it also plays a central role in many areas of administration:

Taxes: e.g. allocation to the reliability indices ISA (Indici Sintetici di Affidabilità fiscale) and determination of the income coefficient in the flat tax regime.
Social security (INPS): basis for allocation to the correct contribution classes and for the statistical classification of employers.
Subsidies and contributions: many grants, subsidies and PNRR measures are linked to specific ATECO codes.
Occupational safety / risk classes: assignment to industry risks and related training obligations.

Important: The ATECO code does not replace the detailed description of activities that must be provided to the Register of Companies in accordance with the Civil Code, particularly when founding or setting up a company.

Structure of the ATECO code

The classification is hierarchical and consists of letters and numbers:

Sections: 1 letter (macro sector, e.g. “C” – manufacturing)
Divisions: 2 digits
Groups: 3 digits
Classes: 4 digits
Categories: 5 digits
Subcategories: 6 digits

The new ATECO 2025 classification comprises over 3,250 activity codes and around 10,000 explanatory notes. When determining the ATECO code, companies must select the most precise available code that corresponds to their main activity. In addition to the main activity, further activities may be reported as secondary activities.

The transition to ATECO 2025

The new ATECO 2025 classification has been formally in force since 1 January 2025, replacing ATECO 2007 (updated in 2022). Its operational application in administration and practice began on 1 April 2025.

Key points:

For new registrations (new companies, freelancers or newly added activities) from 1 April 2025, activity codes are assigned according to the ATECO 2025 classification.
For existing companies, the Chamber of Commerce automatically carries out the reclassification based on a transition table developed by Istat. During an initial transition period, both the old ATECO 2007 code and the new ATECO 2025 code are visible in the extract from the commercial register.

Although the reclassification of activities is carried out automatically by the Chamber of Commerce, the previously reported old activity codes initially remain in the personal tax box of the Revenue Agency. There is therefore no immediate need for action – the update to the new activity codes according to ATECO 2025 will take place in the course of the first subsequent change notification.

Question 5

Cadastral income

Accepted Answer

The cadastral income is a fiscal value in Italy assigned to every real estate unit, specifically both buildings (fabbricati) and land (terreni). It does not represent the actual, real income generated by a property, but rather defines the normally average achievable income that a real estate unit should be capable of generating.

The cadastral income plays a central role in the taxation of real estate. It is crucial for:

Municipal real estate taxes (imposte municipali degli immobili) – based on this, the basis for calculating the municipal real estate tax IMU or GIS (Autonomous Province of Bolzano) and ILIA (Friuli Venezia Giulia Region) is determined.
The cadastral value (valore catastale) – this is derived from the cadastral income and forms the assessment basis for inheritance and donation taxes as well as mortgage and cadastral taxes.
The taxation of income from property (redditi fondiari) – it is used for the determination of income from property.

Determination of cadastral income for buildings

The cadastral income is determined by the responsible cadastral offices (uffici del catasto). Two factors are decisive here:

The size (consistenza catastale) – depending on the cadastral category, it is expressed in different units of measurement:
- Category A (residential units and offices): in rooms (vani)
- Category B (buildings with a social or community character, e.g., schools, hospitals, or libraries): in cubic meters (m³)
- Category C (buildings for commercial or diverse activities, e.g., shops, garages, or cellars): in square meters (m²)
- Category D (buildings with a special purpose, e.g., factories, hotels, or industrial facilities): in square meters (m²)
The valuation rate (tariffa d'estimo) – this is a numerical coefficient created by the cadastral offices. This varies depending on the location of the property and the typology or customary use (cadastral category or class).

The cadastral class (classe catastale) serves to further differentiate objects within the same cadastral group by taking into account, for example, the amenities and the size of the rooms.

For real estate units with a special purpose (Group D), the determination of the cadastral income is not carried out using standard tariffs, but through a direct appraisal by the responsible cadastral office.

Determination of cadastral income for land

The cadastral income for land is calculated differently than for buildings. For every plot of land used for agriculture, there are two values:

The ownership income (reddito dominicale) – this refers to the income attributed to the mere ownership of the land.
The agricultural income (reddito agrario) – this refers to the income attributed to the cultivation of the soil.

For both the ownership income and the agricultural income, there are officially determined valuation approaches (tariffe di estimo) per hectare. These depend on the type of use (qualità di coltura) of the land (e.g., grassland, forest, fruit growing) and the quality (classe) of the soil.

The ownership income and the agricultural income result from the multiplication of the land area by the respective valuation approaches.

Question 6

Cadastral value

Accepted Answer

The cadastral value (valore catastale) is a central fiscal value in Italy used for calculating taxes and duties related to the ownership and acquisition of real estate.

It is not intended to reflect the market value of a property, but rather serves as the tax assessment base on which the rates of various property-related taxes are applied. These include registration tax, mortgage and cadastral tax, gift and inheritance tax, as well as municipal property tax.

The cadastral value is calculated on the basis of the cadastral income of the respective property, which can be obtained from the cadastral extract.

For the calculation, the cadastral income must first be increased by 5 %. The revalued cadastral income is then multiplied by the following coefficients depending on the cadastral category:

Cadastral category	Description	Coefficient
A and C (except A/10 and C/1)	Dwellings and their appurtenances	120 or 110 in case of main dwellings
B	Public buildings such as schools, libraries or museums	140
A/10 and D	Offices, industrial buildings, hotels	60
C/1 and E	Shops and special properties such as bridges, churches	40.80

Example

From the cadastral extract of an office property in category A/10, a cadastral income of € 2,912.82 is shown. The cadastral value is then determined as follows:

first, the cadastral income is increased by 5 %, i.e. € 2,912.82 × 1.05. The resulting revalued cadastral income of € 3,058.46 is then multiplied by the coefficient of 60 for category A/10.

This results in a cadastral value for the office of € 3,058.46 × 60 = € 183,507.66.

Question 7

Cash limit in Italy

Accepted Answer

The cash limit defines the maximum amount that may be paid in cash in Italy. The purpose of this rule is to combat money laundering and tax evasion as well as to promote traceable payment flows.

Since 1 January 2023, the cash limit in Italy has been set at 4.999,99 €. Cash payments from €5,000 onwards are therefore not permitted and must be made using traceable payment methods:

Bank transfer
Debit or credit card
Bank or cashier’s cheque

Foreign tourists are exempt from this rule and may therefore make purchases of up to 15.000 € also in cash.

Prohibition of artificial splitting

It is not permitted to artificially divide a single transaction into several smaller cash payments below the threshold. Such an arrangement is considered an inadmissible circumvention of the cash limit.

Sanctions for violations

Sanctions range from 3.000 € to 50.000 € and apply to both the payer and the recipient. For amounts above 250.000 €, the penalty is multiplied by five.

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Question 8

Certification notation/Auditors' report (ital.: Visto di conformità)

Accepted Answer

The certification notation or auditors' report (Italian: Visto di conformità) is a formal audit note under Italian tax law. It was introduced by Decree Law No. 241/1997 and serves to confirm the formal correctness of certain tax information and its conformity with the available documentation.

It is a declaration of conformity issued by an authorised external expert which, unlike a substantive audit, ensures the formal consistency of the data before it is used for tax purposes.

Formal vs. qualified review

A basic distinction is made between:

"Visto leggero" – simple declaration of conformity:
The expert confirms only the formal correctness of the information and documents.

"Visto pesante" – qualified/extended declaration of conformity:
This involves a more in-depth review of the content in terms of tax applicability and compliance with legal requirements.

A certification notation is therefore a simple declaration of conformity (Visto leggero).

When is a certification notation required?

The certification notation is required in the following legally relevant cases in particular:

Compensation of large tax credits: If tax credits (VAT, Ires, Irpef, Irap) are to be used to offset other tax liabilities (horizontal offsetting), a certification notation is mandatory as soon as they exceed the threshold of 5,000 euros (*).

Refund of VAT credits without guarantee: When applying for a VAT refund of more than €30,000 (*) without providing a bank or insurance guarantee, the revenue agency requires the certification notation to confirm the formal legitimacy of the refund.

Superbonus and other tax benefits: For certain tax benefits such as the Superbonus (110% tax deduction for energy refurbishment, energy rehabilitation), the certification notation is also generally mandatory if the benefit is used directly in the tax return. In practice, it also had to be available for options such as the transfer of tax credits in order to formally prove that the requirements were met.

(*) Companies and freelancers can raise the thresholds mentioned when they hit a certain level of credibility in the ISA (Indici sintetici di affidabilità fiscale) reliability index calculation.

Who is authorised to issue a certification notation?

A certification notation may only be issued by authorised professionals. These must meet certain legal requirements and generally belong to one of the following groups:

Chartered accountants and tax advisors
Labour law consultants
Managers of tax assistance centres CAF (Centro di Assistenza Fiscale)

Additional requirements include authorisation to submit tax returns electronically to the revenue agency (Italian: Agenzia delle Entrate) and proof of appropriate professional liability insurance covering potential damages resulting from errors in the audit.

How does the certification notation work?

The process can be summarised in two steps:

Preliminary check: The authorised specialist checks the formal consistency between the declared tax data and the underlying documents (receipts, invoices, etc.).
Affixing the certification notation: After a successful review, the certification notation is affixed to the tax return or the relevant form – usually by signing or marking it accordingly – and the return is submitted to the revenue agency.

Why is there a certification notation?

The certification notation was introduced to achieve several objectives:

Prevention of abuse: It prevents the unauthorised compensation of large tax credits or the unlawful use of tax advantages.
Formal assurance: The certification notation gives the revenue agency the assurance that the information provided is consistent with the documentation.
Efficiency in audit procedures: It reduces the need for the revenue agency to identify simple formal errors itself.

Conclusion

The certification notation is an important formal legal instrument in the Italian tax system. It ensures that certain tax information and tax reliefs are formally correctly documented and checked before they are used for tax purposes. The obligation to attach it depends on the type of compensation or tax relief.

Question 9

Certified Email Address (PEC)

Accepted Answer

The PEC address (Posta Elettronica Certificata) is a certified electronic address that has the same legal validity in Italy as a registered letter with return receipt. When two PEC addresses exchange messages, confirmation of sending and delivery is automatically generated, providing legally binding proof of the date, time and integrity of the message transmitted. The entire content – including attachments – is protected against subsequent changes.

Companies, corporations, freelancers and numerous commercial activities are legally required to use a PEC address. This must be entered in the commercial register. Since 2025, this obligation also applies to the appointed administrators of Italian companies: each administrator must apply for a personal PEC address and also register it with the commercial register.

PEC enables efficient, secure and legally recognised communication with authorities, business partners and customers. It facilitates the management of deadlines, the documentation of deliveries and various organisational processes.

Nevertheless, there are limitations: the PEC only has full legal effect within Italy and only if both the sender and the recipient have a PEC address. Messages sent to ordinary email addresses lose their certified status.

Despite its cost, PEC is a central tool of digital administration in Italy. Planned adjustments to the European eIDAS standards are intended to further standardise and professionalise its use in the future.

Question 10

ComUnica (Comunicazione unica d’impresa)

Accepted Answer

The ComUnica (Comunicazione unica) single declaration is the central procedure that has been in place in Italy since 2010, enabling sole traders and companies to submit all important declarations to the relevant authorities in a single step. This includes the establishment of a company, changes to company data and the termination of business activities.

Instead of multiple individual applications, the information is automatically transmitted to the commercial register, the Revenue Agency (Agenzia delle Entrate), the INPS (National Social Security Institute), the INAIL (Accident Insurance Institution) and, depending on the activity, to craft offices and municipalities.

Submissions are made exclusively electronically, with a digital signature and a certified email address (PEC).

As ComUnica informs several authorities at the same time, the procedure serves in particular to simplify the bureaucratic effort and ensures a uniform, efficient reporting procedure. In practice, ComUnica is usually handled by a notary or the responsible tax advisor.

Question 11

Corporate Income Tax IRES in Italy (Imposta sul Reddito delle società))

Accepted Answer

The Corporate Income Tax IRES (Imposta sul Reddito delle Società)

The IRES (Imposta sul Reddito delle Società) is the corporate income tax in Italy. It is a proportional tax applied to the income of corporations and certain other entities. The IRES replaced the former IRPEG and is regulated by the Consolidated Income Tax Act (TUIR).

Who is subject to IRES?

IRES is payable by the following entities:

Corporations (SRL, SPA).
Cooperatives, mutual insurance companies, European companies and European cooperative societies based in Italy.
Public and private entities based in Italy, including consortia, trusts, collective investment schemes and non-profit organizations.
Trusts not based in Italy, but only for income generated in Italy.

Companies resident in Italy must pay IRES on their worldwide income. Bilateral double taxation treaties are in place to prevent double taxation. If a foreign company establishes a permanent establishment in Italy under tax law, the profits generated there are also taxable in Italy.

Partnerships and freelancers are not subject to IRES, as their income is taxed under IRPEF (personal income tax).

The IRES Tax Rate

The standard IRES rate for 2025 is 24%. This flat rate is applied to the company's taxable income.

Italian tax legislation has been updated several times in recent years to harmonize and modernize it in line with other major EU countries. Starting from 2025, a reduction of 4% is possible through the introduction of the “IRES premiale”.

Historical IRES Rates by Year

IRES has undergone several changes over the years to harmonize and modernize the Italian tax system.

Historical IRES tax rates in Italy:

Year	IRES / IRPEG Rate
2000	37% (IRPEG)
2001–2002	36% (IRPEG)
2003	34% (IRPEG)
2004–2007	33%
2008–2016	27.5%
2017–2023	24%
From 2024	24%

Until the end of 2003, the former IRPEG was in force, with a rate of 37% in 2000, then gradually reduced: 36% in 2001–2002, 34% in 2003. From 2004, IRES replaced IRPEG with a flat rate of 33% until 2007. Between 2008–2016 the rate was reduced to 27.5%. Since 2017 the rate has been 24% and remains valid for 2024 and 2025.

How is the IRES tax base calculated?

The IRES tax base starts from the statutory net income of the company, derived from business activities.

The process includes the following steps:

Starting point: accounting result – Based on the profit and loss statement, reflecting the company’s revenues and expenses.
Mandatory tax adjustments – Fiscal corrections required by law are applied to the accounting result. These may increase or decrease the taxable base and are known as “plus/minus adjustments”. Examples include non-deductible expenses, amortization, or provisions.
Further tax deductions – Additional deductions may apply, such as the ACE (notional interest deduction) or loss carryforwards:
- Tax losses from the first three tax years can be carried forward indefinitely and fully offset against future taxable income.
- Losses from the fourth year onward can also be carried forward without time limit, but may only offset up to 80% of the taxable income of future years.

After these adjustments, the final tax base is determined, to which the 24% IRES rate is applied to calculate the tax payable.

Practical example:

Revenues: €100,000
Deductible costs: €30,000
Taxable income: €70,000
Tax due (24%): €16,800

How and when is IRES paid?

IRES is paid electronically via the F24 form. Payment is divided into two advance payments and a final balance, based on the previous year’s tax.

Payment deadlines and prepayments:

First prepayment: Due by June 30 of the current year, equal to 40% of the prior year’s tax (50% for ISA subjects).
Second prepayment: Due by November 30, equal to 60% of the prior year’s tax (50% for ISA subjects).
Balance: Due by June 30 of the following year, based on actual income.

For example, by June 30, 2025, both the IRES balance for 2024 and the first prepayment for 2025 must be paid. The second prepayment is due by November 30, 2025.

Distinction between IRES and other taxes

IRES vs. IRAP: IRES taxes the net income of companies, while IRAP (Regional Tax on Productive Activities) is a regional tax based on net production value, excluding certain costs such as employee and financial expenses.
IRES vs. IRPEF: IRES applies to corporate income with a flat 24% rate, regardless of profit level. IRPEF is a progressive personal income tax, with rates increasing based on income brackets.

Question 12

Depreciation

Accepted Answer

Depreciation refers to the annual reduction in value of a company's tangible and intangible fixed assets. In Italy, depreciation is regulated both in the civil code and in the Income Tax Consolidation Act (in particular Articles 102 and 103 of the Income Tax Consolidation Act).

Under civil law and tax basis

Under civil law, depreciable assets must be depreciated as soon as they are ready for use. The distribution is made over the expected useful life.

For tax purposes, the Income Tax Consolidation Act determines the extent to which depreciation is deductible as a business expense:

Tangible capital goods, investment goods, fixed assets (e.g., machinery, vehicles, office equipment): Section 102 Income Tax Consolidation Act
Intangible capital goods, investment goods, fixed assets (e.g., patents, trademarks, software): Art. 103 Income Tax Consolidation Act

Since commercial and under tax law regulations can differ, temporary differences between the commercial and tax balance sheets often arise.

Depreciation rates and depreciation tables

The depreciation rates permitted for tax purposes are taken from the depreciation tables. These tables differentiate between industries and types of assets and specify a maximum rate per year.

Key points in practice:

In the year of acquisition, only half of the annual rate may generally be applied to tangible fixed assets (half-year rule).
Low-value assets with an acquisition value of up to €516.46 can be depreciated in full immediately in the year of purchase.

Tangible and intangible capital goods, investment goods, fixed assets

Tangible capital goods, investment goods, fixed assets

Typical examples:

Buildings and structures
Machinery, technical equipment, production facilities
Vehicles, office equipment, hardware

Depreciation begins in the financial year in which the asset is ready for use and is calculated using the maximum rates specified in the tables.

Intangible capital goods, investment goods, fixed assets

Typical examples:

Usage rights and copyrights, patents
Trademark rights
Licenses, concessions, software
Goodwill

Special tax limits often apply to intangible assets, e.g.:

Certain rights: depreciation only up to a specified percentage per year
Trademarks and goodwill: often very long depreciation periods (e.g., 18 years)

Depreciation methods in Italy

The following depreciation methods are permitted and commonly used in practice:

Straight-line depreciation
The same percentage is applied each year. This method is the most widely used.
Declining balance depreciation
Higher depreciation rates in the first few years, then decreasing. It is only used in certain cases or under special regulations.
Performance-based depreciation
Depreciation is based on actual use, e.g., number of units produced or operating hours. It is rather exceptional and must be compatible with the maximum tax rates.

Plausibility, documentation, and consistent application are crucial for tax recognition.

Significance for earnings and taxes

Depreciation has both accounting and tax implications:

In the income statement, it reduces the annual result.
In the balance sheet, it reduces the book value of the assets and reflects their performance.

For tax purposes, depreciation reduces the tax base for corporate income tax and regional taxes, within the permissible limits. For more detailed information, please refer to our glossary entries on corporate income tax and personal income tax.

Frequently asked questions (FAQ)

1. When can I start depreciation on a new asset?
From the financial year in which the asset is ready for use. The delivery date is not decisive.

2. Do I always have to depreciate at the maximum rates in the tables?
No. The tables set tax limits. Under commercial law, a different economically justified expected useful life can be applied.

3. What happens if I depreciate more than is permitted for tax purposes?
The commercial balance sheet remains unchanged. For taxes, the excess amount is corrected off-balance sheet and is only deductible in later years.

4. Can low-value assets be depreciated immediately?
Yes, immediate depreciation is possible up to a value of €516.46 per asset.

5. How is intangible assets such as software depreciated?
Fixed tax rules apply to intangible assets, e.g., limited maximum rates or prescribed expected useful lives. Under commercial law, a realistic, different expected useful life can be chosen.

Question 13

Direct taxes

Accepted Answer

Direct taxes are assessed and collected directly from the taxpayer and represent one of the State’s most important sources of revenue. The most important direct tax is income tax.

Substitute taxes (Imposte sostitutive)

Substitute taxes are flat or special taxes that apply to certain types of income instead of regular IRPEF or IRES. They are often used to simplify taxation and are usually charged at a fixed rate.

Flat tax on rental income (cedolare secca)
Substitute tax for small taxpayers (regime forfettario)

Question 14

Double taxation agreement (ital.:  accordo sulla doppia imposizione)

Accepted Answer

Double taxation of income occurs when two countries have the right to tax the income. This results in a taxation conflict.

To protect taxpayers, double taxation agreements (DTAs) have been concluded. As a rule, these protect against double taxation in transactions with other contracting states. The template for this is provided by the OECD Model Tax Convention, which countries use as a guide when concluding and drafting their bilateral double taxation agreements.

Double taxation agreements generally take precedence over domestic tax regulations. In Italy, this is stipulated in Article 75 of Presidential Decree No. 600/1973 (DPR 600/1973). However, national tax law remains in force and is merely superseded by the agreement, not replaced.

Insofar as domestic regulations are more favourable to the taxpayer, they may also be applied in deviation from the double taxation agreement in accordance with Article 169 of the Italian Income Tax Code (TUIR).

Typical types of income in the DTA

Income from employment

In the case of employment, the taxation rights of the country of residence and the country of employment often overlap.

However, most double taxation agreements stipulate that taxation is generally the responsibility of the country of employment, i.e. the country in which the work is actually performed. However, special exceptions may apply to short-term work assignments of less than 183 days.

Company profits / self-employment

Under the system of double taxation agreements, company profits and income from self-employment are generally taxed in the country of residence. The country of employment only has a right of taxation if there is a permanent economic establishment or a permanent establishment there.

Dividends, interest, royalties

Dividends, interest and royalties are capital income-related earnings arising from the transfer of capital or the use of rights.

Double taxation agreements therefore regularly restrict the right of taxation of the source country and assign the main right of taxation to the recipient's country of residence.

Real estate

Income from immovable property, in particular from the letting, leasing or sale of real estate, has a close territorial connection. Real estate is location-bound and cannot be moved across borders.

Double taxation agreements therefore generally assign the right of taxation to the country in which the real estate is located. The taxpayer's country of residence avoids double taxation by exempting or crediting the tax levied in the country where the property is located.

Artists and athletes

Under double taxation agreements, income earned by artists and athletes is generally taxed in the country where they perform, regardless of the length of their stay.

The above lists are not exhaustive, but cover the types of income that are most relevant in practice for companies in connection with their activities in Italy.

In principle, double taxation agreements do not treat income randomly, but follow a clear economic logic: taxation takes place where a service is provided, assets are located or capital is used.

Practical information on relief or exemption from withholding tax (DTA)

The tax relief provided for in double taxation agreements does not take effect automatically in practice. Therefore, applications for exemption from withholding tax must be submitted regularly or, if the tax has already been withheld, applications for refunds must be submitted in the country of origin.

The nature and procedure of these processes are governed by the domestic law of the respective source country and, in addition to the application for exemption or reduction of withholding tax, usually require proof of tax residence and DTA eligibility.

Question 15

DURC (ital.: Documento Unico Regolarità Contributiva DURC)

Accepted Answer

The DURC (Documento Unico di Regolarità Contributiva) is a certificate confirming that a company is compliant with its social security and insurance contribution obligations in Italy. It verifies that no outstanding contribution debts exist towards the competent authorities.

The document is mainly issued/verified by:

INPS (social security authority)
INAIL (workers’ compensation authority)
Construction funds (Casse Edili), where applicable

When is a DURC required?

A DURC is mandatory in various situations, including:

participation in public tenders
execution of public contracts
payment of public grants or subsidies
construction and works contracts
certain private contractual relationships with general contractors

Without a valid DURC, payments may be suspended or contracts may not be finalized.

Who is affected?

Generally:

employers
companies with employees
construction companies
self-employed individuals subject to contribution obligations

A valid DURC is often required throughout subcontracting chains.

Frequently Asked Questions (FAQ)

1. How long is a DURC valid?
Generally 120 days from the date of issue.

2. Can a company without employees need a DURC?
Yes, for example in public contracts or if registered with INAIL.

3. What happens in case of contribution arrears?
A deadline is granted to regularize the situation; otherwise, the DURC will be negative.

4. Is a DURC required for private contracts?
Often yes, especially in construction and works contracts.

5. Who can apply for a DURC?
The company itself or an authorized professional (e.g., labour consultant or tax advisor).

Question 16

Duties and Liabilities of Directors in Italian Srl Companies

Accepted Answer

The directors (amministratori) of an Italian limited liability company (Srl) bear a central responsibility for the management, control, and crisis prevention of the company. Their duties are governed by the Italian Civil Code (Codice Civile), particularly in Articles 2475 et seq. and 2476 of the Civil Code.

Organizational forms of management

The management of an Srl can be structured in different ways:

Sole director (amministratore unico)
Several directors with individual signing authority (amministrazione disgiuntiva)
Several directors with joint signing authority (amministrazione congiuntiva)
Board of directors (consiglio di amministrazione) as a collective body

Depending on the structure, the decision-making and representation powers vary. In a board of directors, representation is usually held by the president or the delegated directors.

Main duties of directors

The directors represent the company externally and are responsible for its ordinary and extraordinary management. They must:

establish an adequate organizational, administrative, and accounting structure;
implement early warning systems for identifying business crises;
promptly adopt appropriate restructuring measures in the event of a crisis;
prepare the annual financial statements and – where required by law – a half-year report;
fulfill the statutory bookkeeping and filing obligations.

Liability in case of losses

If the company’s share capital decreases significantly, specific obligations apply under Articles 2482-bis and 2482-ter of the Civil Code.

Loss exceeding one third of the share capital (Art. 2482-bis Civil Code)

When a loss exceeding one third of the company’s share capital is ascertained, the director must convene a shareholders’ meeting within 30 days.

The meeting may decide to:

carry the loss forward to the following financial year;
restructure the company’s debts;
have shareholders make capital contributions to cover the losses;
evaluate a merger or transformation.

If the loss persists in the following year, a reduction or recapitalization of the share capital becomes mandatory.

Loss below the statutory minimum capital (Art. 2482-ter Civil Code)

If the capital falls below €10,000, the company must either:

make additional capital contributions;
reduce and simultaneously increase the capital;
transform into a company form without a minimum capital requirement; or
resolve to liquidate the company.

Liability of directors (Art. 2476 Civil Code)

Directors are jointly and severally liable towards the company, its shareholders, and third parties for damages resulting from intentional or negligent breaches of their duties.

They are particularly liable for:

violations of laws or the company’s articles of association;
inadequate supervision of delegated functions;
impairment of the company’s assets.

An action for liability may be brought by the company, the shareholders, or the creditors if the company’s assets are insufficient to satisfy their claims.

Criminal liability always remains personal to the director. Each shareholder may, in the event of serious irregularities, bring an action for liability and request the dismissal of the director.

Duties of directors under the Code of Business Crisis and Insolvency

With the entry into force of the Code of Business Crisis and Insolvency (Codice della crisi d’impresa e dell’insolvenza, Legislative Decree No. 14/2019), the responsibilities of directors in the field of crisis prevention and management have been significantly expanded. The aim is to identify business crises at an early stage and adopt appropriate measures to prevent insolvency.

In addition to the obligations already mentioned, directors must carry out the following activities:

implement internal early warning systems (indicatori della crisi);
take appropriate restructuring measures at the first signs of financial distress;
where applicable, use the legal instruments provided for the out-of-court settlement of crises (e.g. composizione negoziata della crisi).

Failure or delay in taking such measures may be considered a breach of duty and may entail both civil and criminal consequences. The crisis legislation thus emphasizes the preventive responsibility of directors to ensure business continuity and protect the interests of creditors.

Frequently Asked Questions (FAQ)

1. Who qualifies as a director of an Italian Srl?

Directors (amministratori) are the persons responsible for managing and representing the Srl, such as the sole director or the board of directors.

2. What are the main duties of directors?

They must ensure proper organization and accounting, identify risks early, and take appropriate measures to manage financial crises.

3. When are directors personally liable?

Directors are personally liable for breaches of duty, violations of law, or gross negligence, both civilly and in some cases criminally.

4. What happens if more than one third of the capital is lost?

The director must convene a shareholders’ meeting within 30 days to decide on actions such as recapitalization or liquidation.

5. What does the Business Crisis Code require from directors?

It requires directors to implement early warning systems and adopt restructuring measures to prevent insolvency.

Question 17

Electronic invoice (ital.: fattura elettronica)

Accepted Answer

Electronic invoicing has been mandatory in Italy since 1 January 2019 and replaces the traditional invoice in paper or PDF form. It must be created in a standardized XML format and transmitted via the state exchange system SdI (Sistema di Interscambio) to the Italian tax authority (Agenzia delle Entrate).

After transmission, the SdI checks the invoice for formal and technical criteria and then forwards it to the invoice recipient.

Affected are companies and freelancers who hold a VAT number. Excluded are healthcare services provided to private individuals. For these services, there is a permanent prohibition—due to data protection reasons—on transmitting invoices electronically via the SdI.

Legal relevance

Outgoing invoices that have not been transmitted electronically to the SdI in XML format are deemed not issued and have no legal relevance.

Process of electronic invoicing

Creation of the electronic invoice in the form of an XML file
Electronic transmission to the SdI via software or an online portal
Verification and feedback by the SdI

Important:

Delivery to the recipient

Identification and delivery of the recipient

The identification of the invoice recipient is based on:

the VAT number (for companies and freelancers), or
the tax code (for private individuals and organizations without a VAT number).

For technical delivery, the following details are relevant:

Recipient code (Codice destinatario)
Each software provider is assigned its own identification code. Based on this code, the SdI transmits the invoice to the respective provider, which then makes it available to the customer.
Certified email address (PEC)
As an alternative to the recipient code, a certified email address (PEC) can be provided through which delivery is carried out.

Special cases

If the recipient is a private individual, a foreign customer, or an organization without a VAT number for whom no recipient code or certified email address (PEC) is available—or if these details are not known—the following recipient code must be used:

0000000 for customers based in Italy
XXXXXXX for customers based abroad

In these cases, the SdI cannot deliver the invoice to the customer. The issuer is therefore obliged to additionally provide the recipient with a copy in paper or PDF form.

Registration of a preferred channel

In the online portal of the Italian tax authority, a preferred receiving channel for electronic invoices can be registered. In this case, the SdI automatically assigns all invoices to this channel—regardless of whether the individual invoice indicates a recipient code, a PEC email address, or no delivery channel (code “0000000”).

Status notifications by the SdI

After completion of the verfication, the invoice issuer receives one of the following status notifications:

Rejected (scartato): The invoice was rejected due to technical or formal errors and must be corrected and resubmitted.
Delivered to the recipient (consegnato al destinatario): After successful verification, the invoice was properly delivered to the customer.
Delivery failed: The invoice was accepted after verification but could not be delivered due to missing delivery channels. A copy in paper or PDF form must additionally be provided. The invoice is nevertheless considered tax-compliant and legally valid.

Additional statuses for public bodies

If the invoice recipient is a public body (e.g. a municipality), a further 30 days are available after delivery for substantive review:

Accepted (accettata)
Not accepted (non accettata): The invoice was rejected due to substantive deficiencies and must be corrected
Time limit expired (decorrenza termini): No feedback within 30 days; the invoice is automatically deemed accepted

Frequently Asked Questions (FAQ) on Electronic Invoicing

1. Since when has electronic invoicing been mandatory in Italy?
Electronic invoicing has been mandatory in Italy since 1 January 2019. It replaces the traditional invoice in paper or PDF form and must be transmitted in XML format via the state exchange system SdI (Sistema di Interscambio).

2. Who is obliged to issue electronic invoices?
Companies and self-employed professionals with an Italian VAT number are obliged to issue electronic invoices. Excluded are healthcare services provided to private individuals, for which a permanent prohibition on transmission via the SdI applies for data protection reasons.

3. What is the legal effect of an invoice not transmitted electronically?
Outgoing invoices that have not been transmitted electronically to the SdI in XML format are legally deemed not issued and have no tax or legal relevance.

4. What happens if an electronic invoice is rejected by the SdI?
If an invoice is rejected by the SdI due to formal or technical errors (scartato), it is considered not transmitted. In this case, the invoice must be corrected and retransmitted electronically.

5. How is delivery handled if no recipient code or PEC is available?
If no recipient code or certified email address (PEC) is available or known, the following recipient code must be indicated:

“0000000” for customers based in Italy and
“XXXXXXX” for customers based abroad.

In these cases, the SdI cannot deliver the invoice. The issuer must therefore additionally provide the recipient with a copy in paper or PDF form.

Question 18

Employer of Record (EOR) in Italy

Accepted Answer

An Employer of Record (EOR) is a model in which an employee is not directly employed by the company for which they actually work, but by an intermediary “provider”. This provider is the formal employer. It typically handles the employment contract, payroll processing, salary payments, and the withholding of income tax and social security contributions. However, the actual work is performed for another company, which also manages the work from a technical standpoint and defines the employee’s tasks, goals, and operational assignments.

It is precisely this separation between the formal employer and the actual user of the work that is the legally sensitive issue in Italy:

An Employer of Record is not automatically equivalent to a traditional staffing agency. In Italy, however, a model of this type may be legally classified as staffing, depending on its specific configuration. What matters is not the name, but who actually acts as the employer and who exercises managerial authority.

Therefore, particular caution is required with EOR structures in Italy. This is because not every provider is permitted to “assign” employees to third parties. Decree 276/2003 requires staffing agencies to be registered with the Ministry of Labor. Anyone wishing to engage in temporary staffing must obtain the necessary legal authorization.

This is precisely why an Employer of Record model can become problematic if it functions economically like a staffing arrangement without the provider having the necessary authorization.

Frequently Asked Questions (FAQ)

1. What is an Employer of Record?
An Employer of Record is a service provider that formally hires employees and assumes the administrative obligations of an employer, while the work is often performed for another company.

2. Is an Employer of Record permitted in Italy?
It is not the name that matters, but the actual structure. In Italy, an EOR model may fall under the category of temporary staffing and is therefore permitted only within the limits set by law.

3. Why is the right to issue instructions so important?
Because the legal classification depends on who actually directs and controls the work. If this function lies with the user of the labor, this indicates temporary staffing.

4. Is direct employer registration in Italy the same as EOR?
No. In the case of employer registration, the foreign company directly hires the employee and directly fulfills its obligations as an employer in Italy. In EOR, however, a third party acts as the formal employer.

5. What are the risks associated with an EOR model?
Primarily labor law risks related to unauthorized temporary staffing. In addition, tax and social security issues may also arise.

Question 19

Employer-provided housing

Accepted Answer

If an employer provides an employee in Italy with an apartment, this generally constitutes a fringe benefit, as it is an advantage that the employee receives not in cash but in the form of a benefit in kind.

The tax treatment depends on whether the apartment is provided free of charge, whether the employee pays rent or a contribution toward costs, and whether the use of the accommodation is mandatory for work-related reasons.

Basic rule: Apartment as a fringe benefit

According to Art. 51(4)(c) of the TUIR, for apartments provided to the employee for rent, use, or loan, the rent paid by the employer is not simply treated as a taxable benefit. The decisive factor is generally the difference between the property’s Cadastral income, increased by the housing-related costs borne by the employer, and reduced by the amount the employee pays for its use.

Example:

The employer rents an apartment for an employee. The cadastral value of the apartment is 1,200 euros per year. In addition, the employer covers 1,000 euros annually in ancillary costs, such as condominium fees, electricity, heating, or water. The tax base is therefore 2,200 euros per year.

If the employee pays no contribution toward the costs, 2,200 euros must generally be reported as a non-cash benefit on the pay stub. If, however, the employee pays 1,500 euros annually to the employer, the taxable non-cash benefit is reduced to 700 euros.

What if the employer rents the apartment themselves?

It generally makes no difference to the employee whether the apartment belongs to the employer or whether the employer rents it from a third party. The rent actually paid by the employer is not automatically the amount that is taxable for the employee. The specific valuation under Art. 51 TUIR remains decisive.

However, the actual rent is important for the employer, particularly regarding the extent to which the costs are tax-deductible.

What if the apartment is used by multiple employees?

If the same apartment is made available to several employees, the calculated total value must be apportioned. If the apartment is used equally by two employees and the total taxable value is 2,200 euros per year, 1,100 euros per employee would be allocated.

In cases of unequal use, such as rooms of different sizes or differently allocated living spaces, a pro-rata allocation based on actual use may be more appropriate.

Is it necessary for the employee to change their registered residence?

For the employee’s taxation, it is generally not necessary for the employee to change their registered residence to the provided apartment. Even an apartment used only during the week or for professional reasons is relevant for tax purposes.

The change of residence is primarily relevant from the employer’s perspective. Rent and maintenance costs for apartments provided to employees can only be deducted up to the amount of the non-cash benefit taxed to the employee. A more favorable rule applies if the employee moves their registered residence to the municipality where they work for professional reasons: In this case, the costs for the year of the move and the two subsequent tax periods may generally be fully deductible.

Are there special cases in which the above calculation does not apply?

Employees required to live in the accommodation: If there is a genuine work-related obligation to reside in the accommodation—such as for certain janitorial, concierge, or on-call duties—a special rule applies. In this case, only 30 percent of the calculated difference is treated as a taxable non-cash benefit. However, this rule should only be applied if the residency requirement is justified in a comprehensible manner under the employment contract and organizational structure.

Tourism: If an employee is merely provided with a staff room as part of “board and lodging” under the collective agreement, this is not treated as a benefit in kind; instead, the daily rates prescribed by the collective agreement are deducted.

Conclusion

An apartment provided by the employer in Italy must generally be assessed as a potential benefit in kind. If the employee pays nothing, the taxable housing value is included on the pay stub. If the employee contributes to the costs, this reduces the benefit. In the case of shared use, the total value must be apportioned.

Question 20

Employment contract (ital: contratto di lavoro)

Accepted Answer

Il contratto di lavoro disciplina il rapporto tra datore di lavoro e lavoratore. Il lavoratore si impegna a svolgere la propria attività secondo le direttive del datore di lavoro; il datore di lavoro, a sua volta, è tenuto a corrispondere la retribuzione concordata.

Il contratto di lavoro deve essere scritto?

In linea generale, un contratto di lavoro può essere concluso anche verbalmente. Nella pratica, tuttavia, la forma scritta è fondamentale. Alcuni elementi, come il periodo di prova, il termine del rapporto o particolari condizioni di lavoro, devono essere concordati per iscritto e sottoscritti prima dell’inizio dell’attività per essere validi.

Inoltre, in Italia il datore di lavoro è soggetto a specifici obblighi informativi nei confronti del lavoratore. Devono essere comunicate in modo chiaro le condizioni essenziali del rapporto, in particolare mansioni, luogo di lavoro, orario di lavoro, retribuzione e contratto collettivo applicato.

Cosa dovrebbe contenere un contratto di lavoro?

Un contratto di lavoro italiano contiene generalmente le seguenti informazioni:

dati del datore di lavoro e del lavoratore
data di inizio del rapporto di lavoro
luogo di lavoro e mansioni
contratto collettivo applicato
inquadramento e qualifica
periodo di prova
orario di lavoro
retribuzione
ferie, assenze e termini di preavviso
durata determinata, se prevista

Particolarmente importante è il contratto collettivo applicato, il cosiddetto CCNL. Esso disciplina molti aspetti pratici, come retribuzione minima, inquadramento, periodo di prova, termini di preavviso, straordinari, ferie e fondi integrativi. Si veda anche la voce del lessico Contratto collettivo in Italia.

Rapporto con il contratto collettivo

Il contratto individuale di lavoro non può derogare in peggio alle disposizioni di legge e al contratto collettivo. Eventuali deroghe sono generalmente ammesse solo se più favorevoli per il lavoratore. Per questo motivo è particolarmente importante una corretta classificazione in base all’attività svolta e al contratto collettivo applicabile.

Conclusione

Un contratto di lavoro chiaro e ben strutturato crea certezza giuridica ed evita successive incertezze. Per le imprese in Italia rappresenta un documento centrale in ogni assunzione e dovrebbe essere sempre coordinato con le disposizioni di legge e con il contratto collettivo corretto.

Question 21

Enasarco (Ente nazionale di assistenza per gli agenti e i rappresentanti di commercio)

Accepted Answer

ENASARCO is the national welfare and assistance institution for commercial agents and representatives in Italy. Registration and the payment of contributions are mandatory for all commercial agents and representatives operating on Italian territory.

ENASARCO benefits

Old-age pension.
Disability pension.
Pension in case of incapacity for work.
Survivor’s pension.
F.I.R.R. (Fondo Indennità di Risoluzione Rapporto), a fund that pays an indemnity to the agent upon termination of the agency relationship.

Contribution requirements

The contribution obligation to ENASARCO applies to agents and representatives who carry out their activity in Italy on behalf of Italian or foreign principals with a registered office or branch in Italy. Registration must be completed by the principal within 30 days from the beginning of the mandate.

Contributions are calculated quarterly on all amounts due to the agent (commissions, reimbursement of expenses, bonuses), even if they have not yet been paid (accrual principle).

Agents operating as sole proprietorships or partnerships

For agents operating as a sole trader or partnership company, specific contribution rates apply, along with minimum and maximum contribution thresholds, which are adjusted annually.

The minimum and maximum thresholds depend on whether the agent is a Monomandatario or Plurimandatario. A Monomandatario is contractually obliged to work exclusively for one principal, whereas a Plurimandatario may work for multiple principals.

Contribution rate 2026: 17.00%.
Allocation: 8.50% payable by the principal and 8.50% payable by the agent.

Contribution amounts and thresholds (for 2026):

Agency relationship	Maximum commission threshold	Minimum amount
Monomandatario (one principal)	45.717 €	1.026 € (256,50 € per quarter)
Plurimandatario (multiple principals)	30.478 €	515 € (128,75 € per quarter)

Important rules on thresholds

The maximum commission amount cannot be reduced, even if the agency relationship begins or ends during the year.
The minimum contribution is only due if the agency relationship generates commissions during the year (productivity principle).
The difference between the contributions actually paid and the statutory minimum must be fully borne by the principal.

Agents operating as corporations

For commercial representatives operating as corporations, different rules apply:

No minimum or maximum thresholds are provided.
Differentiated contribution rates are applied:

Commission brackets	Total contribution rate	Principal’s share	Agent’s share
Up to 13 million €	4%	3%	1%
From 13 million € to 20 million €	2%	1,5%	0,5%
From 20 million € to 26 million €	1%	0,75%	0,25%
Above 26 million €	0,5%	0,3%	0,2%

Periodic reporting to ENASARCO

The principal is required to submit a quarterly report electronically via the ENASARCO website indicating all commissions, even if the maximum commission threshold has already been reached.

Deadlines for contribution payments

Reference period	Due date
First quarter	20 May
Second quarter	20 August
Third quarter	20 November
Fourth quarter	20 February (of the following year)
F.I.R.R.	31 March (of the following year)

F.I.R.R. (Fondo Indennità di Risoluzione Rapporto)

The FIRR is a severance indemnity payable to the agent upon termination of the mandate. The contributions are paid annually by the principal to ENASARCO. As of 2024, the agent must personally apply to ENASARCO for payment of the accumulated FIRR; only the FIRR relating to the last year of activity is paid directly by the principal to the agent.

Frequently Asked Questions (FAQ)

1. What is the difference between a Monomandatario and a Plurimandatario?
A Monomandatario works exclusively for one principal, whereas a Plurimandatario may work for multiple principals.

2. Who is responsible for registering the agent with ENASARCO?
Registration is mandatory and must be completed by the principal within 30 days.

3. What happens if commissions exceed the annual maximum?
No additional contributions are due on the excess, but it must still be reported.

4. Is the minimum contribution due even without commissions?
No, it applies only if commissions are generated (productivity principle).

5. Who bears the cost if minimum thresholds are not reached?
The principal bears the full difference.

6. What is the FIRR and when is it paid?
It is a severance payment. Contributions are paid annually; since 2024 agents must request payment personally.

Question 22

Equity (ital.: patrimonio netto)

Accepted Answer

In business administration and accounting, equity capital (patrimonio netto) represents the portion of a company's assets that belongs to the owners or shareholders after all liabilities have been deducted. As a key balance sheet item, it forms the basis for assessing the financial substance and stability of a company.

Significance of equity

Equity plays a decisive role in many contexts:

Financial stability: A high equity ratio is considered a sign of financial strength, as the company is less dependent on external capital (e.g. bank loans).
Creditworthiness: Banks and investors often evaluate companies based on their equity ratio – the ratio of equity to total capital. A high value improves creditworthiness.
Risk buffer: In the event of economic difficulties, losses are initially covered by equity before lenders are affected.

What does equity consist of?

Equity consists of various balance sheet components that reflect both the funds contributed by the owners and the profits retained by the company. Examples include:

Shareholders’ capital shares:
The share capital contributed by the shareholders at the time of formation or a capital increase.
Retained earnings:
Profits retained from previous financial years that remain in the company to finance investments or cushion future losses.
Net profit or net loss for the year:
The profit or loss for the current financial year is added to or deducted from equity and reflects the current business performance.

These components provide a comprehensive overview of how much capital the owners have contributed, what funds remain in the company and how profits are used.

Equity in the context of the balance sheet

In the balance sheet, equity is reported on the liabilities side, alongside borrowed capital. It shows how the company’s assets are financed – through the owners’ own funds or through obligations to third parties.

A high equity ratio strengthens a company’s economic resilience, as more of its own funds are available to cover risks. A low equity ratio, on the other hand, indicates a higher dependence on debt and potentially greater risks.

Important equity ratios

The following ratios are particularly relevant for assessing the financial stability and structure of a company:

Equity ratio:
Equity / Total capital × 100
Measures the proportion of equity in relation to total capital. A higher ratio indicates greater independence from borrowed capital.
Debt-to-equity ratio:
Debt / Equity
Shows the ratio of debt to equity. A low value indicates low indebtedness.
Return on equity (ROE):
Net income / Equity × 100
Measures the profitability of equity and indicates how efficiently the owners’ funds are being used.

Conclusion

Equity (patrimonio netto) is a key indicator of a company’s financial health. It shows what proportion of the assets belong to the owners, how stable the financing structure is and how efficiently the capital is being used. Key figures such as the equity ratio, debt ratio and ROE provide entrepreneurs and investors with valuable information for decision-making in the areas of financing, investment and risk management.

Question 23

Excise duty (ital: accisa)

Accepted Answer

Excise duty (accisa) is an indirect tax on the production and consumption of certain goods. It is levied as soon as the products are released for consumption. Formally, the tax is payable by the manufacturer or distributor, but the economic burden is borne by the end consumer via the product price.

In Italian expense reports or invoices, the term excise duty (accisa) is often replaced by one of the following terms: consumption tax, production tax or state tax.

Key features of excise duty

Compared to value added tax, which is also an indirect tax, excise duty has the following special features:

Limited scope of application: Excise duty only applies to selected product categories.
Quantity-based assessment basis: The physical quantity of a product (e.g. litres, kWh) is taxed, not its value.
One-off levy: Excise duty is usually levied once in the production or distribution process, typically when the product is first placed on the market.

Excise duties serve to generate fiscal revenue, but are also used to implement economic, political or social objectives.

Product groups and classification

Excise duties are an important source of revenue for the Italian state and regions. Excise duties and similar levies (production taxes, monopolies) have historically accounted for a significant proportion of indirect taxes.

Typical product groups subject to excise duty in Italy are:

Energy products (including mineral oils and fuels)
Electrical energy
Alcohol and alcoholic beverages
Tobacco products

Which specific goods are subject to excise duty depends on their classification in the Combined Nomenclature (CN) of the European Union.

Administration and legal basis

In Italy, excise duties are administered by the Customs and Monopolies Agency (Agenzia delle Dogane e dei Monopoli).

The central national legal basis is the Consolidated Law on Excise Duties (Testo Unico Accise). At European level, directives on the general excise duty system and, in particular, on energy products and electricity regulate the basic structure and minimum requirements.

Calculation and assessment bases

As excise duties are quantity-based, the tax rates are applied to physical units, for example:

Fuels (petrol, diesel): litres
Alcohol: anhydrous litre (unit of volume without water)
Natural gas / methane: cubic metres
Electricity: kilowatt hour (kWh)
Beer: hectolitres per degree Plato

The specific rates are based on national tariff tables, which are adjusted regularly.

Excise duties in the European context

The structure and basic principles of excise duties are harmonised within the European Union. Member States generally set their own tax rates, but must comply with minimum requirements under EU law.

Important principles:

Taxable liability arises: upon manufacture or importation of the goods into the EU territory.
Maturity: when goods are released for consumption, e.g. when they leave the tax warehouse or after final importation.
Tax suspension: goods may be held in a tax warehouse or during intra-Community transport under tax suspension without excise duty being immediately payable.
Cross-border transport: when goods are transported under duty suspension to another Member State, excise duty is payable in the country of destination at the rates applicable there.
Refund: if goods that have already been taxed are transported to another Member State and taxed again there, a refund of the excise duty paid in the country of origin can be requested.

An electronic administrative document (e-AD – electronic Administrative Document) is used for the movement of excise goods under duty suspension within the EMCS (Excise Movement and Control System); a simplified electronic document (e-SAD) is used for goods that have already been taxed.

Question 24

FAQ: Transfer of an employee to Italy

Accepted Answer

Especially since the Covid-19 pandemic, working from home has become an established and proven work mode. Hence, there is no longer need for a physical workplace. Consequently, more and more employees of German companies move their residence abroad (e.g. to Italy) and continue to work remotely for their employer.

Question: In case of transfer of an employee's residence to Italy, is it possible to file a posting communication?

Answer: No, if employees transfer their residence to Italy and continue to work for the German company, no posting communication in the classic sense of that term may be filed. On the one hand, the requirement of having an employer in Italy (company incorporated under Italian law) is not met. On the other hand, employees are not considered to be posted, if they are resident in the country they work in.

Instead, the company and the employee shall be registered in Italy for payroll processing purposes in accordance with Italian law and for the purposes of paying social security contributions and taxes in Italy.

Question: Which requirements shall be met for the registration of a foreign company in Italy?

Answer: As is the case in Germany, in Italy companies also act as tax withholding agent paying, in this capacity, taxes and contributions, including those payable by the employee, by means of the F24 form to public authorities or bodies.

Hence, companies need to register with the various authorities/bodies using, among others, an Italian fiscal code.

We will be glad to take care of all communications and registrations. For more details with respect to the procedures to be followed for the registration of the company in Italy as an employer please visit https://www.graber-partner.com/en/international-companies/employees-employers-in-italy.html.

Question: In the event of a transfer of residence to Italy, is it necessary to enter into an employment agreement under Italian law?

Answer: Yes, in view of payroll processing under Italian law, both the company and the employee are subject to the applicable Italian collective bargaining agreement (so-called CCNL). The CCNL regulates, inter alia, the remuneration, the number of month's pay, the holidays, the remuneration in the event of illness and accident, the probation period and the notice period.

Hence, it is in any case necessary to enter into an employment agreement under Italian law, referring to the applicable CCNL.

In Italy, both the drafting of the employment agreement and the payroll processing is carried out by accountants/labour law consultants. Hence, there is no need to refer to a law firm for the drafting of the employment agreement, since we offer an one-stop service. For further information please refer to our opinion at https://www.graber-partner.com/en/international-companies/employees-employers-in-italy.html.

Question: Is there any permanent establishment risk of the foreign company in case of an employee working from home in Italy?

Answer: Yes, the remote work does not automatically exclude the permanent establishment risk in Italy. Hence, it is necessary to verify if also other requirements are met. In this regard, please refer to our opinion on permanent establishments in Italy.

Question: Which requirements need to be met by an employee in the event of transfer of residence to Italy?

Answer: Before starting to work form home in Italy, the employee shall request an Italian fiscal code and register with the registration office. Subsequently, it will be possible to file the communications with the competent authorities and bodies.

For advice and assistance to employees with regard to the application for the fiscal code, the real estate purchase/rent, the registration with the registration office, the application of low-tax schemes for employees transferring their residence to Italy etc., the employees shall refer to the competent authority and/or a trade union organisation.

Please do not hesitate to contact us via mail at info@graber-partner.com for a non-binding and free first meeting. According to our experience, it is preferable that the responsible contact person is part of our client company.

Question 25

Fee note (ital.: parcella)

Accepted Answer

In Italy, invoices issued by freelancers (e.g. solicitors, tax advisors or architects) are often referred to as fee notes. These constitute tax-relevant statements of account and, unlike standard invoices, contain industry-specific details, particularly in relation to withholding tax.

Note: In practice, a fee statement is often sent first as a request for payment. However, only the proper invoicing is relevant for tax purposes; depending on the circumstances, the tax liability arises in accordance with the provisions of Italian VAT law (date of performance or payment).

Contents of the fee note

The specific content varies according to the professional group and the type and scope of the mandate, but generally follows a standardised structure. Typical components are:

Fees: Remuneration for the service with details of the service content, billing period and, if applicable, flat rate or hourly rate.
Expenses and incidental costs: Reimbursable expenses to be shown separately (e.g. travel expenses).
Contributions to professional or pension funds: Mandatory contributions required by law or professional regulations, depending on the respective profession.
VAT: Unless the service is tax-exempt or falls outside the scope of Italian VAT.
Withholding tax: Tax deduction to be withheld by the client on the fee, in particular for services between companies and self-employed persons.

Withholding tax on fee notes

With freelance services, there's often a withholding tax deduction. This is an advance payment on the freelancer's income tax, which is withheld and paid by the client as a tax substitute.

The deduction regularly applies to services provided to companies or self-employed clients; private individuals are generally not considered tax substitutes.

Withholding tax is usually 20% of the relevant net fee (excluding VAT); expenses may be included or excluded depending on qualifications. The payment is made using the F24 payment form. For freelancers, the withholding tax is not a final tax, but a creditable advance payment that is offset against the final tax liability in the tax return.

Question 26

Flat Tax Regime in Italy (ital.: regime dei minimi, regime forfettario)

Accepted Answer

The Italian flat tax regime (regime forfettario) is a simplified tax regime for natural persons who carry out a commercial, freelance or artistic activity. It is primarily aimed at sole traders and freelancers with manageable turnover and allows for a lump-sum profit determination with a fixed substitute tax.

Requirements and Turnover Threshold

The key requirement is that the annual revenues achieved in the previous year do not exceed €85,000. If this threshold is exceeded, the regime can no longer be applied in the following year. In the case of revenues exceeding €100,000, exclusion takes place immediately with transition to ordinary taxation including VAT.

The regime is available exclusively to natural persons who are tax resident in Italy or resident in an EU or EEA state and who earn more than 75% of their total income in Italy. Corporations are excluded.

Grounds for Exclusion

In addition to the turnover threshold, the following important grounds for exclusion apply:

Participation in partnerships, family businesses or transparently taxed corporations
Non-residence in Italy
Receipt of income from employment or pension exceeding €35,000 in the previous year
Activity carried out predominantly for a current or former employer

An exception applies if the employment relationship was terminated in the previous year and no ongoing employment income exists.

Tax Treatment

The flat tax regime replaces the progressive personal income tax (IRPEF), the regional and municipal surcharges as well as IRAP. Instead, a flat substitute tax of 15% applies. For start-ups, a reduced substitute tax of 5% may apply during the first five years – provided certain requirements are met.

The taxable profit is not determined on the basis of actual operating expenses but is calculated on a lump-sum basis. A sector-specific profitability coefficient (depending on the ATECO code) is decisive. The revenues are multiplied by this percentage and the result represents the taxable profit. Actual costs are not tax-deductible.

Example

An IT consultant generates revenues of €40,000 in 2026. A profitability coefficient of 78% applies to his activity.
€40,000 × 78% = €31,200 taxable profit
€31,200 × 15% = €4,680 substitute tax
Whether the actual costs amounted to €3,000 or €15,000 is irrelevant for tax purposes.

VAT and Social Security

Entrepreneurs under the flat tax regime issue invoices without VAT and are not entitled to deduct input VAT. The periodic VAT settlements do not apply and the invoice must include a corresponding reference to the application of the “regime forfettario”.

Social security contributions to INPS are generally due in the ordinary manner. For commercial activities (craftsmen, traders), there is the possibility of a 35% reduction of INPS contributions upon request.

Who Benefits from the Flat Tax Regime?

The regime is particularly attractive for:

Freelancers and entrepreneurs with low operating costs
Activities with low use of goods
Part-time self-employed persons with limited employment income
Start-ups with manageable investment needs

Disadvantages and Limits

No deduction of actual costs
No input VAT deduction
No use of certain tax deductions
Limited growth potential due to the turnover threshold

The flat tax regime is therefore less suitable in cases of:

High fixed costs
Significant use of goods
Strongly growing activities
Planned larger investments

Minimum Regime (Regime dei minimi)

An obsolete model, however, is the minimum regime (Regime dei minimi). This is also a preferential tax system for small entrepreneurs with prior-year revenues up to €30,000, under which the substitute tax amounts to only 5%. This tax system was abolished in 2015, but may continue to be applied by those taxpayers who had already entered this tax system before and who meet the relevant requirements.

Conclusion

The Italian flat tax regime offers a simple and often tax-efficient solution for smaller entrepreneurial and freelance activities. However, the combination of turnover threshold, lump-sum profit determination and exclusion criteria makes a careful assessment of the individual situation necessary.

Question 27

Foreign companies – When an Italian company is managed from Germany

Accepted Answer

In Germany, the term 'Auslandsbekleidung' (foreign management, ital. esterovestizione) is used when a limited liability company (Srl) is formally based in Italy but is actually managed from abroad (in this case, Germany). This issue often concerns German corporate groups that manage a subsidiary/branch in Italy and whose managing director (amministratore) resides in Germany.

Definition and delimitation

In Italian tax law, however, the term esterovestizione actually refers to the opposite case: a company formally established abroad for the purpose of evading Italian taxes, whose effective management is exercised from Italy. This article deals with the 'reverse' situation, in particular the case of an Italian company managed from Germany (also known in Italian as esterovestizione inversa).

Pursuant to Article 73, paragraph 3, of the Consolidated Income Tax Law (TUIR), a company is considered resident in Italy if it meets at least one of the following criteria:

its registered office (sede legale) is located in Italy,
the place of effective management is located in Italy,
the place where the company's ordinary management is mainly carried out.

Only one of these characteristics is sufficient to determine tax liability in Italy.

When is there a risk?

The risk of so-called 'esterovestizione' (foreign incorporation) only exists if the Italian company does not carry out any real activity in Italy, but exists only on paper.

This would be the case, for example, if:

there are no employees or business premises in Italy,
all decisions and accounting records are made exclusively in Germany,
the company has no customers of its own and does not generate any turnover in Italy.

In such cases, the German tax office could argue that the effective management ("head office") is located in Germany. This would result in dual residence, which would have to be resolved on the basis of the double taxation agreement between Germany and Italy.

When is there no risk?

In practice, this situation does not pose any problems for German entrepreneurs if the Italian company is operational, i.e. it has its own employees, premises, customer relationships or orders in progress and turnover in Italy. In this case, the business clearly remains taxable in Italy, even if the managing director lives in Germany and makes strategic decisions from there.

Example: An Italian limited liability company (Srl) employs five people in Milan, provides services to customers in Italy and is wholly owned by a German limited liability company. The managing director resides in Germany and manages the business from the Italian headquarters.
In this case, there is no tax or foreign relocation risk.
The company is legally resident in Italy and is subject to corporation tax (IRES) and regional tax on productive activities (IRAP).

Recommendation

German entrepreneurs therefore do not need to worry if they manage an Italian company from Germany. It is essential that the company has actual economic substance in Italy, for example through:

local employees or service providers and/or
an office or permanent establishment and/or
the preparation of annual financial statements and tax returns in Italy.

These points clearly demonstrate that the company is not a shell company, but a genuine Italian business.

Conclusion

So-called 'esterovestizione' does not pose a threat to German entrepreneurs who carry out operational activities in Italy.
As long as there are, for example, staff or operational activities in Italy, the company is clearly considered resident in Italy for tax purposes, even if the managing director lives in Germany. Only fictitious or shell companies that exist only on paper and are not operational could be subject to dispute. Nevertheless, taxation in Germany should be clarified between accountants in Germany and Italy.
Further information is available in our glossary entries on corporation tax (IRES) and limited liability companies (Srl) in Italy or permanent establishments in Italy.

Question 28

Income statements

Accepted Answer

Income statements are one of the key management tools in corporate accounting. Expenses and income are systematically presented in the income statement, providing transparency on the factors that have a significant impact on the annual results. Together with balance sheet accounts, income statement accounts form the basis for meaningful annual financial statements and tax profit determination (see glossary entries for balance sheet account, balance sheet in Italy, IRES – corporate income tax).

What is an income statement account?

An income statement account is an accounting account in which all transactions affecting income for a specific period (usually the fiscal year) are recorded. It therefore does not show what a company owns or owes (that is the task of the balance sheet accounts), but rather what income it has generated and what expenses it has incurred to do so.

Examples of income statement accounts

Income statement accounts can be divided into income accounts and expense accounts.

Income accounts (examples):

Revenue from the sale of goods or services
Rental income, commissions, license and interest income
Other operating income (e.g., subsidies)

Expense accounts (examples):

Cost of goods sold, cost of materials
Wages and salaries, social security contributions, TFR provisions
Rent, leasing, energy, insurance
Depreciation (see glossary entry for depreciation – ammortamento)
Interest expense, bank charges
Taxes and duties to be recorded as expenses

The sum of all expense and income accounts results in the operating result. This, in turn, forms the basis for the tax assessment (e.g., IRES, IRAP, IRPEF for sole proprietors).

Significance for entrepreneurs and HR managers

A sound understanding of income statements is an important skill for entrepreneurs, managing directors, and HR managers, as it enables more precise control and evaluation of operational processes.

For entrepreneurs and managing directors
- it serves as a basis for assessing the profitability of individual business areas, products, or projects,
- provides clarity on cost structures and supports the identification of optimization and efficiency potential,
- and provides valuable insights into the factors that significantly drive operating results.
For HR managers
- it places personnel costs in the overall financial context of the company,
- it highlights the budgetary impact of new hires, salary adjustments, and variable compensation models,
- it strengthens the ability to carry out strategic personnel planning based on reliable business indicators.
For private individuals and freelancers
- it facilitates the structured recording of income and expenses,
- improves understanding of one's own tax situation (see glossary entries Tax return in Italy, Self-employment).

A solid understanding of income statements is therefore an essential component of professional corporate management and decision-relevant control instruments.

Question 29

Income types

Accepted Answer

Italian tax law distinguishes between different types of income, each of which is subject to its own tax rules. This system is regulated by the Testo Unico delle Imposte sui Redditi (TUIR) and forms the basis for the taxation of natural persons as well as businesses.

The classification into types of income is not merely formal in nature, but has concrete tax implications:

different methods of calculation (e.g. flat-rate taxation and profit determination)
different tax rates or special provisions
various deduction options

Taxation is generally based on the so-called worldwide income principle: individuals resident in Italy must pay tax on all domestic and foreign income.

Income categories

There are a total of six types of income that form the basis of the entire system of taxes:

Income from land and property (Redditi fondiari)
Income from capital assets (Redditi di capitale)
Income from employment (Redditi di lavoro dipendente)
Income from self-employment (Redditi di lavoro autonomo)
Business income (Redditi d’impresa)
Other income (Redditi diversi)

Together, these categories form the total income (reddito complessivo), which forms the basis for taxation.

Income from land and property (Redditi fondiari)

This income is divided into two main categories:

Income from land (Redditi dominicali)
Income from buildings (Redditi dei fabbricati)

Both are generally based on the cadastral income (rendita catastale) and not necessarily on the actual income received.

Income from land (redditi dominicali)

This relates to land used for agricultural purposes, with taxation based on the cadastral income, regardless of whether actual revenue is generated or not. The income is attributed to the owner.

Income from buildings (redditi dei fabbricati)

a) Rented properties
For rented properties, a comparison is made between the actual rental income (reduced by a standard deduction, usually 5%) and the cadastral income (increased by the statutory surcharge of 5%). The higher of the two values is generally used as the tax assessment basis. In practice, this is usually the actual rental income.

Alternative: Cedolare secca
For residential property, the so-called ‘Cedolare secca’ may be chosen as an alternative, which provides for a flat-rate tax of 21% and may be reduced to 10% in certain cases.

b) Unrented properties
Unrented properties may be taxable, particularly in the case of second homes or vacant properties.

c) Commercial properties
The following special provisions apply to commercially used properties:

the Cedolare secca does not apply
Taxation in accordance with the general rules
For businesses: allocation to business assets with corresponding profit calculation

Income from capital assets (Redditi di capitale)

This includes income from the use of capital, such as:

Dividends from equity participations
Interest on bank deposits or loans
Income from security papers

In many cases, this income is not taxed via personal income tax IRPEF but via withholding tax (imposte sostitutive), usually at 26%, and is therefore not included in total income.

Income from employment (Redditi di lavoro dipendente)

Income from employment is one of the most important types of income under Italian tax law. It includes all remuneration received within the framework of an employment relationship. This includes, for example:

Wages and salaries
Bonus payments
Non-cash benefits (fringe benefits, e.g. company car)
Pensions

Taxable income is calculated as gross remuneration minus social security contributions (INPS). Taxation is based on the progressive personal income tax IRPEF and is normally withheld and paid directly by the employer.

Income from self-employment (Redditi di lavoro autonomo)

This category applies to freelancers and self-employed service providers whose work is primarily based on their personal expertise and who do not have a formal business structure. Typical examples include:

doctors, solicitors
consultants, IT service providers
Freelancers and sole traders not engaged in commercial trade

Taxation is based on profit (income minus expenses) and is subject to the progressive personal income tax IRPEF (unless the flat-rate system is applied).

Business income (Redditi d’impresa)

This includes income from business activities, in particular:

sole trader
Partnerships
Corporations

Taxation:
Profit is determined in accordance with commercial and tax law.

Sole traders: The profit is attributed directly to the trader and is subject to progressive personal income tax IRPEF (unless the flat-rate system is applied).
Partnerships: Profits are attributed to the partners in proportion to their equity participation in accordance with the principle of transparency and are taxed by them under the progressive personal income tax regime IRPEF.
Corporations, on the other hand, are separate taxable entities whose profits are subject to Corporate Income Tax IRES at company level.

Note:
Partnerships (not their partners) and corporations are also subject to the regional production tax IRAP.

Miscellaneous income (Redditi diversi)

This category serves as a ‘catch-all’ category and includes all income that cannot be clearly assigned to any of the other categories but is nevertheless taxable. Some examples are:

Private property sales (within 5 years of acquisition)
Capital gains from shareholdings and financial instruments
Speculative gains (e.g. crypto-assets)
Occasional activities

Taxation:
To determine the profit, income is calculated by deducting directly attributable costs.
The taxation itself then depends heavily on the individual case:

Progressive personal income tax IRPEF, e.g. for occasional activities and property sales.
Substitute tax (imposta sostitutiva), usually 26%: common for financial gains

Question 30

Inheritance declaration

Accepted Answer

The inheritance declaration is a mandatory tax declaration that must be submitted after the death of a taxpayer in Italy. The aim is to report the transfer of assets and rights to the heirs, legatees and beneficiaries and to pay the inheritance taxes due.

The declaration must be submitted within 12 months of the date of opening of the succession (data di apertura della successione), which usually coincides with the date of death of the deceased.

The declaration can be submitted to the Revenue Agency (Agenzia delle Entrate) in various ways:

directly by the taxpayer via the telematic services
via an authorised intermediary (e.g. tax advisor or CAF)
at the competent tax office (ufficio competente dell'Agenzia delle Entrate)

The online service "Dichiarazione di successione web" or special PC software is available for submission. If the notification is submitted electronically, you will receive a confirmation of transmission, which serves as proof of submission.

Who is required to submit an inheritance declaration?

The following persons are required to submit an inheritance declaration:

the heirs (eredi)
the legatees (legatari)
the beneficiaries (i chiamati all'eredità)
the legal representatives of the heirs or legatees
persons who have been placed in possession of the property in the event of the absence or presumed death of the testator
the administrators of the estate (amministratori dell'eredità)
curators of dormant estates (curatori delle eredità giacenti)
executors (esecutori testamentari) and trustees

Note: If several persons are required to report, it is sufficient to submit a single declaration.

Exceptions to the reporting obligation

There is no obligation to submit an inheritance declaration if all of the following conditions are met at the same time:

The inheritance goes to the spouse and/or direct relatives.
The inheritance does not exceed a value of € 100,000.
The inheritance does not include real estate or rights in rem to real estate.

Please note: Anyone who has submitted an inheritance declaration and declared real estate therein is exempt from the separate reporting obligation for municipal property tax (GIS) or municipal property tax (IMU). In such cases, the Revenue Agency will forward a copy of the inheritance declaration to the relevant municipality.

Tax obligations prior to submission

If real estate is inherited, the taxes and duties associated with the inheritance must be calculated and paid before submitting the inheritance declaration. These are:

Mortgage tax (imposta ipotecaria).
The cadastral tax (imposta catastale).
Stamp duty (imposta di bollo).
Fees for mortgage and cadastral services.

Calculation and payment of inheritance tax (imposta di successione)

The method for calculating and paying the actual inheritance tax depends on the date on which the inheritance was opened:

Inheritance cases from 1 January 2025 (reform)

For inheritance cases opened on or after 1 January 2025, the inheritance tax must be calculated by the taxpayer themselves. The self-calculated inheritance tax can be paid at the same time as the inheritance declaration is submitted or no later than 90 days after the deadline for submitting the inheritance declaration.

Inheritance cases before 1 January 2025

For inheritance cases opened before this date, the tax will continue to be calculated by the competent territorial offices of the Revenue Agency. In this case, payment must be made within 60 days of delivery of the assessment notice (avviso di liquidazione) using form F24.

Inheritance tax rates and allowances (aliquote e franchigie)

The tax rates and allowances depend on the degree of kinship to the deceased. The taxes are applied to the total net transfer value:

Beneficiary	Tax rate	Allowance per beneficiary
Spouse and direct relatives	4 %	€ 1,000,000
Siblings	6 %	€ 100,000
Other relatives up to the 4th degree and Collateral relatives up to the 3rd degree	6 %	-
All others	8 %	-

An allowance of € 1,500,000 is provided for beneficiaries with severe disabilities.

Payment of tax in instalments

If the inheritance tax amounts to more than € 1,000, payment by instalments can be requested. In this case, a down payment of at least 20 % must be made.

The remaining payment can be staggered as follows:

Amounts up to € 20,000: Maximum of 8 equal quarterly instalments.
Amounts over € 20,000: Maximum of 12 equal quarterly instalments.

Question 31

Interest Limitation Rule in Italy

Accepted Answer

In Italy, corporations are subject to a special restriction on the tax deductibility of interest on borrowed capital. This rule, known as the interest limitation rule, is intended to counteract excessive debt financing and is based on Art. 96 of the Italian Income Tax Code (TUIR).

The current regulation has been in force since 2019 and transposes the European ATAD Directive (Directive (EU) 2016/1164 on combating tax avoidance practices) into national law through Decree Law No. 142/2018.

Affected entities

The interest limitation rule applies to all companies subject to IRES, in particular:

joint stock companies (SpA), limited liability companies (Srl), cooperatives and consortium companies based in Italy
public and private institutions and trusts that mainly carry out commercial activities
non-resident companies and entities, including trusts, which carry out their activities in Italy through a permanent establishment

Article 96 of the Italian Income Tax Act does not apply to financial intermediaries, IRPEF subjects (partnerships, sole traders) and non-commercial entities.

Functionality and calculation

The interest limitation rule determines the extent to which interest expense is tax deductible. The calculation is carried out in two stages:

Offsetting against active interest: Passive interest (for the current period and carried forward) is subject to deductibility without limit up to the amount of active interest (current and carried forward).

Deductibility of net interest expense: The excess portion of interest expense (after offsetting against interest income) is only deductible up to 30% of the "fiscal ROL" (Risultato Operativo Lordo).

The „Fiscal ROL” (EBITDA-like measure)

In simple terms, ROL corresponds to earnings before interest, taxes, depreciation and amortisation (EBITDA), but is calculated according to tax criteria rather than commercial law criteria.

Since 2019, it has been mandatory to use the "fiscal ROL" for the calculation, which replaces the former "accounting ROL" (ROL contabile). It is calculated as:

Value of production – Production costs (items A – B of the income statement)
+ Depreciation of tangible and intangible assets
+ Leasing instalments for business assets

Tax deduction restrictions must be observed (e.g. telephone expenses are only 80% deductible, car expenses only 20%).

Carry-forward of surpluses

Surplus	Tax treatment	Time limit
Passive interest	Non-deductible passive interest can be carried forward indefinitely and is deductible in subsequent years if there is sufficient active interest or fiscal ROL.	Unlimited
Active interest	Surplus active interest can be carried forward to the next tax period without any time limit and offset against passive interest there.	Unlimited
30% ROL surplus	If 30% of ROL exceeds the passive interest, the surplus ROL can be used for the following five tax periods (FIFO principle).	5 years

Special rule for „old loans“

For loans contracted before 17 June 2016, the unused accounting ROL accumulated up to 31 December 2018 may still be used. This amount can be carried forward without time limitation, but only to offset interest related to those specific pre-2016 loans.

Conclusion

The Italian interest limitation rule (Art. 96 TUIR) is of great importance for the tax planning and financing of companies. Careful calculation of the fiscal ROL and forward-looking design of the financing structure are crucial in order to avoid interest deduction restrictions or make optimum use of them.

Question 32

Internship (ital.: tirocinio)

Accepted Answer

An internship (tirocinio) is primarily intended for orientation and training. It is important to note that an internship is not a standard employment relationship. It is designed to provide practical insights and facilitate entry into the workforce. The actual work performance takes a back seat. This is precisely why a clear distinction is particularly important in practice.

What types of internships are there?

In Italy, a distinction is made between curricular (within the context of school or university and thus as part of formal education) and extracurricular internship (for career orientation or career entry).

The curricular internship is part of an ongoing educational or training program. It is therefore conducted within the framework of a school, university, or recognized training program and is intended to supplement theoretical learning with practical experience. Responsibility for this lies primarily with the respective schools, universities, or training providers.

In contrast, extracurricular internships take place outside of a formal educational program. They are intended to promote career orientation or facilitate entry into—or a return to—the labor market. This type of internship is not uniformly regulated at the national level but is implemented by the regions and autonomous provinces. At the national level, however, there are common minimum standards.

These internships are generally intended for high school and college students, and, under certain conditions, also for individuals who have recently completed their education.

In South Tyrol, training and orientation internships are typically limited to school breaks, particularly the summer months and the Christmas holidays.

What is the minimum age for an internship?

In general, in Italy, access to work is generally only permitted from the age of 16, provided that compulsory schooling has been completed.

This is distinct from special regulations at the regional or provincial level. In South Tyrol, for example, a minimum age of 15 applies to training and orientation internships / summer internships.

How must an internship be reported?

An internship undertaken as part of school, university, or vocational training is part of an educational pathway. Such internships are organized and reported by schools, universities, or training institutions. Consequently, the company is not required to file any reports, including insurance with the National Institute for Insurance against Accidents at Work (INAIL).

The situation is different for internships aimed at career exploration or entering the job market. Such extracurricular internships are generally subject to mandatory reporting by the host company.

Depending on the region or autonomous province, prior approval or authorization from the relevant authority may also be required. In South Tyrol, for example, training and orientation internships are handled through the ProPraktika portal; there, the internship project is submitted and reviewed by the Public Employment Service. Only after approval and signature by all parties involved does the internship become fully legally valid. In addition, the company must insure the intern against workplace accidents with INAIL and have liability insurance covering third parties.

How long can an internship last, and does it have to be paid?

The duration and compensation for an internship depend on the type of internship and which regulations apply.

Training and Orientation Internships

At the national level, the guidelines for extracurricular internships generally stipulate a minimum duration of 2 months and a maximum duration of 12 months. In addition, a minimum gross stipend of at least 300 euros per month is required.

However, these requirements do not apply uniformly throughout Italy. The regions and autonomous provinces may establish more detailed regulations and, in some cases, adopt provisions that differ from them.

For example, South Tyrol has its own regulations regarding training and orientation internships. There, the recommended allowance is at least 650 euros gross per month, with a maximum of 900 euros gross per month. The minimum duration is 2 weeks. The maximum duration is 3 months for students in certain school types and 6 months for university students or certain graduates; the total duration may not exceed 10 months.

School internship

These placements are planned and supervised by the school; they require an agreement with the host company, and students are supported by an in-school tutor as well as a contact person at the company. The duration is usually two weeks, but can also be adjusted on an individual basis.

How many interns can a company take on at the same time?

Here, too, regulations vary from place to place. Depending on the region or province, maximum limits may apply. In South Tyrol, the number of interns that can be accepted at any one time depends on the number of employees. The following applies there:

0 to 5 employees: 1 intern
For 6 to 19 employees: 2 interns
for 20 or more employees: no more than 10% of the workforce.

Do occupational safety regulations apply to interns?

Yes, interns are generally to be treated the same as employees when it comes to occupational safety. Even though an internship does not constitute a regular employment relationship, regulations regarding health and safety in the workplace must be observed. Special care must also be taken with regard to underage interns.

Topic	Orientation Internship	School internship
Purpose	Career orientation, entry into or re-entry into the labor market	Learning as part of school or vocational training
Who can complete an internship	Generally intended for high school students, college students, and recent graduates	Part of a school curriculum, typically for students as part of their education
Minimum age	Available from age 16, provided compulsory education has been completed. In South Tyrol, a special rule applies to training and orientation internships: minimum age 15.	No uniform age requirement; the specific educational path is decisive
Compensation	Nationally, at least €300 gross per month. In South Tyrol: Compensation of €650 to €900 gross per month is recommended.	Typically, no standard internship pay shown on the pay stub
Duration	At least 2 months, up to 12 months. In South Tyrol: at least 2 weeks, usually up to 3 months for high school students and up to 6 months for university students or graduates; total of up to 10 months.	No standard internship duration, but usually 2 weeks
Reporting requirement	Generally subject to registration. In South Tyrol, prior approval from the employment office is required.	Not subject to reporting requirements
Insurance	INAIL accident insurance is required. Additional requirement: Existing liability insurance	Insurance with the accident insurance agency is normally arranged through the school itself
Number of interns	1 intern for 0–5 employees 2 interns for 6–20 employees 10% for more than 20 employees; regional regulations may apply.

Frequantly asked questions (FAQ)

1. Is an internship in Italy considered a normal employment relationship?
No. An internship is generally intended for orientation and training and is not regular employment relationship. It is intended to provide practical insights and must not be to permanently replace a regular employee.

2. What is the minimum age for an internship in Italy?
In general, individuals must be at least 16 years old to work in Italy, provided they have completed their compulsory education. However, special regional or local regulations may apply to certain types of internships. In South Tyrol, for example, vocational and exploratory internships, for example, a minimum age of 15 applies.

3. Does an internship need to be registered?
That depends on the type of internship. School internships are generally not required to be registered. Training and orientation internships outside of a current educational program, on the other hand, are subject to mandatory registration.

4. Does an internship have to be paid?
Compensation is provided for extracurricular internships. In South Tyrol, a gross monthly compensation of between 650 and 900 euros is currently recommended for training and orientation internships. School internships, on the other hand, are not normally paid.

5. How long can an internship last?
This also depends on the type of internship and the applicable regional regulations.

Nationally, extracurricular internships generally last between 2 and 12 months. In South Tyrol, training and orientation internships may have shorter durations, such as a minimum of 2 weeks, and—depending on the group of people—varying maximum durations.

School internships typically last about two weeks, but in practice they are often organized individually by the school.

6. Do occupational safety regulations apply to interns?
Yes. Even though an internship is not a standard employment relationship, interns generally treated the same as employees when it comes to occupational safety.

Question 33

IRPEF (income tax in Italy) - tax brackets & rates in Italy

Accepted Answer

IRPEF (Imposta sul reddito delle persone fisiche) – Personal Income Tax in Italy

The IRPEF is the Italian tax on personal income. The IRPEF is a progressive tax. Calculation of labor costs, gross and net salary: gross-net-cost calculator for Italy

It applies to individuals who are resident in Italy and/or who earn income in Italy (possibly subject to the 183-day rule). Individuals residing in Italy must declare all income to IRPEF, while non-residents are taxed only on income earned in Italy. IRPEF is calculated on income from real estate, employment (dependent and independent), business activities, capital/investment income, and other income sources. IRPEF is often (mistakenly) equated with payroll withholding tax, even though withholding is only one component. The law provides a number of deductions and tax credits that reduce the taxable base or the net tax, as explained below.

IRPEF is usually withheld via payroll for employees and then summarized in the income tax return ("redditi", Form 730, or RED for pensioners). The tax balance with the "redditi" return is normally paid in June of the following year, along with the first instalment. The second instalment is due on November 30. Payments are made using Form F24. If the tax return generates an IRPEF credit, it can be offset against other taxes via F24. When using Form 730 (for employees), credit or debit is normally adjusted in payroll between July and September.

For the calculation of labor costs, gross salary, and the corresponding net salary, you can use our gross-net-cost calculator for Italy.

IRPEF Tax Rates and Income Brackets 2026

As part of the 2026 tax reform, a relief has been made for taxpayers in the middle-income segment. The second IRPEF rate (income between €28,000 and €50,000) was reduced from the 35% to 33%.

Thus, for the 2026 tax year and subsequent years, the following income brackets and IRPEF rates are to apply as of 01.01.2026:

23% up to €28,000
33% from €28,001 to €50,000
43% over €50,000

The following table also shows the effective average tax rates when the respective income bracket is fully utilized.

The maximum relief applies to the portion of income falling within the favorable corridor between €28,000 and €50,000 — i.e., a maximum of €22,000. With the 2-percentage-point reduction (from 35% to 33%), a theoretical annual tax saving of €440 results.

For 2026, the IRPEF tax rates in Italy are therefore as follows: 23% up to €28,000, 33% from €28,001 to €50,000, and 43% above €50,001.

IRPEF Rates and Income Brackets from 2025

The reduction to 3 brackets initially planned only for 2024 was confirmed as a structural measure in the 2025 Budget Law (Law No. 207 of December 30, 2024, published on December 31, 2024).

Therefore, for the 2025 tax year and beyond, the following brackets and progressive rates apply:

As of January 1, 2025, the following IRPEF rates apply in Italy:
– 23 % up to €28,000
– 35 % from €28,001 to €50,000
– 43 % above €50,000
The table below also shows the effective average tax rates when each bracket is fully reached.

Progressive Income Tax Calculation (Example)
Bracket	Rate (%)	Income (€)	Tax (€)	Effective Rate (%)
Up to €28,000	23 %	28,000	6,440	23.0 %
Up to €50,000 (incl. first bracket)	35 %	50,000	6,440 + 7,700 = 14,140	28.28 %
Above €50,000	43 %	> 50,000	6,440 + 7,700 + 43 % × (Income – 50,000)	variable

The adjustment provides slight relief for middle incomes, while incomes up to €12,000 are effectively tax-exempt. For incomes over €50,000, the rate remains unchanged.

Additionally, for employment income up to €40,000, deductions have been slightly increased. The structural increase from €1,880 to €1,955 applies to incomes up to €15,000.

The “Trattamento Integrativo” for incomes up to €15,000, originally limited to 2024, has also been made structural and applies in 2025.

Historical IRPEF Rates in Italy

Until 2022, rates were: up to €15,000: 23%; €15,001–28,000: 27%; €28,001–55,000: 38%; €55,001–75,000: 41%; over €75,000: 43%.

From January 1, 2022, rates were reduced from five to four brackets as follows:

up to €15,000: 23%
€15,001–28,000: 25%
€28,001–50,000: 35%
over €50,000: 43%

Therefore, for 2023 the rates were: up to €15,000: 23%; €15,001–28,000: 25%; €28,001–50,000: 35%; over €50,001: 43%.

IRPEF Rates and Brackets for 2024

With Decree-Law No. 216 of December 30, 2023, progressive rates were restructured from 2024 by reducing brackets from four to three.

From January 1, 2024, the following IRPEF rates apply:

Summary table of 2024 brackets and rates:

Income	IRPEF Rate 2024
< €28,000	23%
€28,001–50,000	35%
> €50,001	43%

The 2024 reform provided benefits ranging from €20 to €260 for incomes between €15,000 and €28,000. For incomes above €28,000, a steady €260 benefit was granted, while higher earners with eligible 19% deductions also benefited by €260 (excluding medical expenses).

New 2025 Measures to Reduce Labour Cost (Cuneo Fiscale)

To compensate for the non-confirmation of the partial social security contribution waiver in 2025, two measures have been introduced for employees. These apply only to employment income.

“Somma integrativa” – Labour cost support

This measure applies to employees with total taxable employment income (RLD) not exceeding €20,000. Exempt income for “impatriati” is included, but not the primary home’s value.

The amount is calculated as a percentage of taxable employment income:

Annual RLD	% somma integrativa
RLD < €8,500	7.1%
€8,500 < RLD < €15,000	5.3%
€15,000 < RLD < €20,000	4.8%

This amount is automatically granted in each payroll period, affecting only net pay, and generates a tax credit for the employer via F24. If unjustified, it is checked at the year-end; if over €60, repayment is spread over 10 installments.

“Ulteriore detrazione d’imposta” – Additional tax deduction

This applies to employees with total income (RC) over €20,000 and up to €40,000.

The deduction is €1,000 annually, reducing from €32,000 until it phases out at €40,000:

Annual RC	Annual Deduction
€20,000 < RC < €32,000	€1,000
€32,000 < RC < €40,000	€1,000 × (40,000 – RC)/8,000
RC > €40,000	0

It is applied through payroll. If tax withheld is insufficient, no credit arises. Year-end checks apply; overages above €60 are recovered in 10 installments.

Adjustment of Deductions for High-Income Taxpayers (2025)

For taxpayers with total income above €75,000, from 2025 limits apply to deductions for qualifying expenses. The maximum deductible amount is based on an income-based base multiplied by a coefficient tied to dependent children.

Income brackets & base amounts:

€75,001–100,000: base €14,000
above €100,000: base €8,000

Child-dependent coefficient:

0 children: 0.50
1 child: 0.70
2 children: 0.85
3+ or child with disability: 1.00

Example calculations:

Income €80,000, 2 children → 14,000 × 0.85 = 11,900 €
Income €110,000, 1 child → 8,000 × 0.70 = 5,600 €

These limits apply to expenses from 2025. Medical expenses are excluded, as are interest on mortgages/insurance contracts entered into by December 31, 2024, and investments in innovative startups and SMEs. For multi-year expenses (e.g., renovations), annual installments count toward limits, excluding those incurred up to December 31, 2024.

See our news “Tax Incentives 2025” for more: https://www.graber-partner.com/de/gutachten-rundschreiben/1314-steuerverguenstigungen-1314.html

Changes to Dependent Family Member Deductions (2025)

Deductions for dependents also change from 2025.

Child deductions

Age limits have been defined. The child deduction (up to €950/year) is granted only for children aged between 21 and under 30. Income threshold for dependent status (not exceeding €2,840.51/year, or €4,000 up to age 24) remains. The age limit doesn’t apply for children with disabilities—they remain eligible beyond age 30. Calculation formula unchanged.

Child deductions for under-18s are no longer claimed via payroll but through the unified family allowance (assegno unico) paid by INPS, based on the ISEE means test.

Other dependent family members

The scope of other dependents has been narrowed. From 2025, deductions are allowed only for ascendants (parents, grandparents, great-grandparents) living with the taxpayer. Until 2024, deductions (up to €750) were also allowed for others under Civil Code art. 433 living with, or maintained by, the taxpayer. Income-based scale remains.

Other Key Tax Updates for 2025

Fringe Benefit Valuation for Company Cars

From 2025, fringe benefit valuation rules for mixed-use company cars change. For vehicles registered and assigned from January 1, 2025, taxable value is 50% based on a notional annual mileage of 15,000 km using ACI rates, net of employee contributions.

The rate is 10% for electric vehicles and 20% for plug-in hybrids. For vehicles registered between July 1, 2020, and December 31, 2024, previous percentage rules (25%, 30%, 50%, 60% depending on CO₂) continue. Pre‑July 2020 vehicles use the earlier 30%.

Fuel Type	% Tax Base
Electric	10 %
Plug-in Hybrid	20 %
Combustion	50 %

Cashless Travel Reimbursements Only

From the 2025 tax year, detailed reimbursements for meals, lodging, travel, and non-scheduled public transport (taxi, hired cars) are tax-free/deductible only if paid via traceable methods (bank transfer, card, or cheque). Cash reimbursements will be taxable and contributory. Exceptions apply for public line-transport commuters, where cash reimbursement remains exempt.

Productivity Bonus Tax Relief

For bonuses paid in 2025, 2026, and 2027, the substitute tax rate of 5% is confirmed (replacing the original 10%). Eligible are variable bonuses tied to productivity, profitability, quality, efficiency, innovation, and profit-sharing under collective or company agreements. The annual maximum remains €3,000 and previous-year employment income cap is €80,000.

Increased Fringe Benefit Exemption (2025–2027)

Departing from the standard €258.23 exemption, for 2025–2027 the exemption increases to €1,000. This applies to fringe in kind, domestic utilities, rent of primary residence, and mortgage interest. It increases to €2,000 for employees with declared dependent children (if CPF provided to employer).

Special Tourism Sector Relief (through September 30, 2025)

From January 1 to September 30, 2025, a special non-taxable supplement equal to 15% of gross pay for night work and holiday overtime is confirmed for hospitality, tourism, and spa sectors. This measure, previously in place, is granted upon employee request and self-certification of under €40,000 employment income in 2024. The employer offsets the credit via F24.

Taxation of Tips in Tourism Sector

Changes to tipping taxation in hotels and catering: while the 5% substitute tax remains, from 2025 the taxable cap rises from 25% to 30% of annual employment income. The prior-year income cap for eligibility increases from €50,000 to €75,000. Customer tips are treated as employment income and, unless explicitly waived, are taxed at 5% up to 30% of income. They are exempt from INPS/INAIL, excluded from TFR calculation, and count for deductions and benefits eligibility.

Adjustment of Regional and Municipal Surcharges

IRPEF is also subject to regional and municipal surcharges. Key rules:

Tax residence: The residence as of January 1 determines regional/municipal surcharge. Moves during the year take effect the following year.

Municipality change: Under art. 58 DPR 600/1973, a municipality change takes effect 60 days after request.

Regional surcharge: Regions may levy an additional IRPEF surcharge; collected in 11 instalments via payroll after settlement, with full deduction in final payroll if employment ends mid-year.

Municipal surcharge: Municipalities may apply up to 0.8% of taxable income (Rome has special rules). Highlights:

Collected in settlement and 11 instalments next year (Jan–Nov).
From March–November, a 30% advance is withheld in 9 instalments.
No advance for new hires during the year.

Municipalities must announce rates annually by a set deadline; otherwise, previous year’s rates continue.

Contact & Services

Contact us for a free initial consultation or email us with your details and request. Tel. +39 0474 572900 or info@graber-partner.com.

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Question 34

ISA (indici sintetici affidabilità)

Accepted Answer

The ISA, short for Indici Sintetici di Affidibilità Fiscale, are standardized questionnaires that companies and freelancers are required to submit as a mandatory part of their tax return. The main purpose of the ISA is to verify the credibility of the income declared by the taxpayer.

Structure and Calculation

Currently, there are 172 different questionnaires, with the correct choice depending on the specific business activity carried out. Regardless of the type of questionnaire, data from financial accounting as well as information on employed personnel (e.g., paid working days of employees) must always be provided. In addition, depending on the industry, specific activity-related data is collected (such as number of beds or charged rates for accommodation businesses).

Based on the entered data, the Revenue Agency’s software assigns a score on a scale from 1 to 10, with 10 being the best value. At the same time, the average score of the last two tax periods is calculated.

Impact of the ISA Score

The ISA score is decisive for tax reliefs or controls:

Advantages (score of at least 8 or a two-year average of at least 8.5):
- Reduction of the statute of limitations for tax violations by one year.
- Increase of the thresholds above which certification by a tax advisor is required for the offsetting of tax credits.

Disadvantages (score of 6 or lower):
- The likelihood of a tax audit increases, especially if a low score is recorded over several tax periods.

Neutral (score above 6 and below 8):
- Neither advantages nor disadvantages are foreseen.

Important Exceptions

In certain cases, the ISA questionnaire does not have to be completed. The main exceptions are:

Start-up or termination of the business activity during the tax period.
Revenues exceeding € 5.164.000 in the tax period.
Application of the flat-rate taxation regime during the tax period.

Question 35

Limited liability company (ital.: Società a responsabilità limitata)

Accepted Answer

The Società a responsabilità limitata (Srl) is the Italian form of a limited (liability) company and, due to its clear liability limits and flexible organisational structure, is considered the most common type of corporation in Italy, especially for small and medium-sized enterprises (SMEs). It is a legal entity with complete financial autonomy (autonomia patrimoniale perfetta) and is the functional equivalent of the German GmbH.

Key features of the GmbH

Limited liability

The central feature of the GmbH is the limited liability of the shareholders (soci) to the amount of their capital contribution. Only the company's assets are liable for the company's liabilities, which protects the private assets of the shareholders.

Share capital

The minimum share capital for a "normal" GmbH (s.r.l. ordinaria) is €10,000.

However, it is possible to establish a GmbH with a capital of at least €1. In this case, special requirements apply.

Company shares and transfer

The shareholders' shareholdings, equity participations are represented by quotas (quote). The shares are generally freely transferable. However, the articles of association may provide for pre-emptive rights, approval requirements or transfer restrictions.

Establishment and organs

The formation of a limited liability company requires the involvement of an Italian notary (notaio). The company is only established once the deed of incorporation (atto costitutivo) has been entered in the Register of Companies (Registro delle Imprese).

Administrative bodies

Management is the responsibility of the administrator(s) (amministratori), the equivalent of a German managing director. The administration can be organised very flexibly:

Sole administrator (amministratore unico)
Several administrators (with individual or joint power of representation) (collegial administration – conguinta and disgiunta)
Board of directors (consiglio di amministrazione)

Liability of administrators

Administrators are personally and jointly and severally liable to the company, the shareholders and third parties for damages resulting from intentional or negligent breaches of duty.

General assembly

The decision-making process in a limited liability company is flexible.

Regardless of the form chosen, shareholders must decide on the following matters:

Approval of the annual financial statement and distribution of profits.
The appointment and dismissal of administrators (if provided for in the memorandum of association).
Amendments to the articles of association or other far-reaching measures (e.g. capital increase or reduction, conversion, merger or demerger of the company).
Decisions on transactions that result in a significant change in the company's purpose or the rights of shareholders.

Unless otherwise specified in the memorandum of association, the voting rights of the shareholders are calculated in proportion to their shareholding in the share capital.

Control organ and audit

A control organ (collegio sindacale) or an auditor (revisore) is generally not mandatory for a limited liability company. The obligation to appoint one arises from Art. 2477 of the Codice Civile.

The control organ is responsible for monitoring compliance with the law and the articles of association, as well as the principles of proper administration and the suitability of the administrative and accounting systems.

Annual financial statement and filing

The limited liability company is obliged to keep double-entry bookkeeping (contabilità ordinaria) and must keep the books required by law.

The annual financial statements (bilancio d'esercizio) are prepared by the administrators and must generally be submitted to the shareholders' meeting for approval no later than 120 days after the end of the financial year (180 days under certain conditions). The annual financial statements must be filed with the Commercial Register within 30 days of approval.

Tax aspects

The limited liability company is a corporation and as such is taxable. Further details on IRES can be found in our encyclopaedia entry "The corporate income tax IRES".

Taxes (company level):

IRES (Imposta sul Reddito delle Società): Corporation tax, currently 24% on taxable income.
IRAP (Imposta Regionale sulle Attività Produttive): Regional value added tax, varies depending on region and sector (base value approx. 3.9%).

Profit distribution (dividends):

Dividends distributed to shareholders (natural persons) are generally subject to a withholding tax of 26% (final taxation).

Frequently asked questions (FAQ)

1. Who can establish a limited liability company (GmbH) in Italy?
A limited liability company can be established by one or more parties (shareholders) by means of a contract. Shareholders can be both natural persons and legal entities.

2. What is the minimum capital requirement for a limited liability company?
The minimum capital requirement for a standard limited liability company is €10,000.

3. Who is liable for the debts of an Italian limited liability company?
In principle, only the company itself is liable with its assets. The shareholders are only liable up to the amount of their capital contribution.

4. How is taxation carried out?
Taxation is based on the separation principle: taxation at company level (IRES 24%, IRAP approx. 3.9%) and separate taxation on distributions.

5. Does a limited liability company have to appoint a controlling body or an auditor?
The appointment of a controlling body (such as an auditor or supervisory board) is mandatory if certain thresholds are exceeded in two consecutive financial years or if the company is required to prepare a consolidated annual financial statement.

6. Is the filing of annual financial statements mandatory?
Yes. Failure to file may result in sanctions and liability consequences.

Question 36

NISF National Institute for Social Welfare (ital.: INPS Istituto nazionale previdenza sociale)

Accepted Answer

The NISF / INPS (National Institute for Social Welfare) is Italy’s central social security institution for employees. There is no choice between different social security providers in Italy. NISF/INPS is the only statutory social security carrier for employees; private supplementary insurances may be used only as an addition, never as a substitute.

Mandatory insurance

By law, all employees in the private sector – as well as most self-employed workers – must be insured with INPS. The employer registers each employee electronically before the first working day (so-called UniLav notification).

Contributions and financing

Social security contributions to INPS are shared between employer and employee. The employee pays roughly 10% of the gross salary, and the employer approximately 30%. The exact rate varies depending on the company’s sector (e.g. craft/industry or commerce) and the classification/position of the employee. Contributions are calculated on the basis of the actual gross wage.

The obligation to pay contributions ceases only above a contribution ceiling (e.g. approx. € 120,000 in 2025) for “first-time insured persons” from 1996 onwards.

Payment of contributions to INPS takes place monthly. The deadline is the 16th of the month following the salary month. Payment is made using the unified F24 payment form to the Revenue Agency. In addition, every month the employer must electronically transmit a detailed breakdown of all employees and paid contributions (the UniEmens declaration) to the institute.

Benefits provided by NISF

The contributions paid are used to finance statutory social benefits, in particular:

Pensions
Unemployment benefits
Sickness benefits
Maternity benefits
Wage supplementation schemes
Family allowances
etc.

If you need further information or have questions about NISF/INPS, you can contact the institute directly:

From Italian landlines: 803 164
From mobile phones in Italy: 06 164 164
From Germany: 0800 182 11 38

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Question 37

Occasional work: PrestO and Libretto Famiglia

Accepted Answer

Following the abolition of the old vouchers, a new scheme for occasional work was introduced in 2017. Today, a distinction is generally made between the Contratto di prestazione occasionale, or PrestO for short, for companies and freelancers, and the Libretto Famiglia for private individuals.

PrestO can generally only be used by companies and freelancers if certain conditions are met. In particular, there must not, as a rule, be more than ten employees on permanent contracts.

Both schemes operate via the INPS platform and may only be used within clear legal limits.

The general protective regulations also apply to occasional work, particularly regarding working hours, rest periods and health and safety at work.

What is PrestO?

The Contratto di prestazione occasionale is intended for companies, freelancers, associations, foundations, public administrations and certain other organisations. It enables occasional work to be reported and paid through simplified procedures.

Typical use cases include short-term support roles, one-off assignments or very limited support services. Caution is advised as soon as an activity becomes regular, is integrated into the organisation or is subject to instructions.

What is the Libretto Famiglia?

The Libretto Famiglia, on the other hand, is reserved for private individuals who are not acting in the course of a business or freelance activity. It cannot therefore be used by companies.

Only certain activities can be paid for via the Libretto Famiglia, in particular small household chores, gardening, cleaning and maintenance work, domestic care for children, elderly, sick or disabled people, and private tuition. These activities are exhaustively listed in the law.

What are the limits?

Annual limits apply to PrestO and the Libretto Famiglia. The calendar year is the relevant period in each case.

In principle, the following limits apply:

a maximum of €5,000 per year for each occasional worker across all users;
a maximum of €10,000 per year for each individual user across all occasional workers;
a maximum of €2,500 per year between the same user and the same occasional worker.

For certain categories of persons, in particular pensioners, students under the age of 25, unemployed persons and recipients of certain income support benefits, remuneration is taken into account only at 75% for the purpose of calculating the user’s annual limit. The remuneration actually paid to the occasional worker is not reduced.

In certain sectors, such as conferences, trade fairs, events, thermal spas and leisure parks, the annual limit for the user may be increased to €15,000. The above limits refer to the net amount paid to the occasional worker.

Remuneration and reporting

With PrestO, the work must be reported in advance via the INPS platform. The report must be submitted at least 60 minutes before the start of the assignment and must include, among other things, the occasional worker’s details, the place of work, the duration, the type of work and the agreed remuneration.

The hourly wage for PrestO must not be less than €9. Regardless of the actual hours worked, a minimum remuneration corresponding to 4 hours applies for each day of work. This means that one assignment costs the user approximately €50; €36 of this is paid to the worker.

With the Libretto Famiglia, notification is generally provided after the work has been carried out, no later than the third day of the following month. The INPS then pays the remuneration directly to the occasional worker. One hour costs €10, of which the occasional worker receives €8. The remaining amounts cover INPS social security, INAIL accident insurance and administrative costs.

When should caution be exercised?

PrestO and Libretto Famiglia are intended solely for genuine occasional work. PrestO is generally not permitted for individuals with whom the user has already had an employment relationship or coordinated and ongoing collaboration in the last six months.

PrestO also excludes certain users and sectors, particularly in the construction industry.

Question 38

Overtime lump sum

Accepted Answer

An overtime lump sum is commonly referred to in Italy as "straordinario forfettizzato". It is a fixed monthly payment intended to compensate a specific, foreseeable amount of recurring overtime work on a flat-rate basis.

As a general rule, overtime refers to working hours performed beyond normal working time. In Italy, normal working time is generally 40 hours per week; however, the applicable collective bargaining agreement may provide for shorter working hours or specific rules. Even where an overtime lump sum is agreed, statutory and collectively agreed limits on working time must always be observed.

When is an overtime lump sum allowed?

An overtime lump sum may be useful where an employee regularly performs a limited and predictable amount of additional work. It is important that the arrangement is clearly regulated in the employment contract or in a separate addendum.

In particular, the agreement should specify:

the role or activity concerned;
the monthly amount paid;
the indicative number of overtime hours covered by the lump sum;
that statutory rest periods and working time limits continue to apply.

Practical points to consider

A lump-sum payment does not automatically cover any amount of overtime. If the employee works significantly more overtime than the amount covered by the lump sum, an additional payment entitlement may arise. The employer should therefore continue to record the hours actually worked.

Special care is required if the lump sum is paid for a long period regardless of whether overtime is actually performed. In such cases, it may be treated as a stable salary component or as a so-called "superminimo", meaning it may no longer be freely reduced.

Conclusion

An overtime lump sum can be a practical tool, but it must be drafted clearly and monitored over time. The applicable collective bargaining agreement, the actual working hours and a clear contractual arrangement are decisive.

Question 39

Payslip (ital.: busta paga)

Accepted Answer

A payslip (also known as a wage slip or salary statement) is a monthly statement of remuneration. It shows a clear breakdown of gross wages and the deductions (e.g. social security contributions and taxes) that result in net wages. It is based on the information provided by the company on working hours and absences (e.g. hours/attendance list, holidays, sick leave, overtime). The payslip therefore contains all wage components (e.g. basic salary, allowances, overtime, fringe benefits) on the one hand and deductions payable by the employee on the other. In Italy, employers are required to provide employees with a payslip every time they are paid (a legal requirement since 1953).

There is no rigid official template for payslips – the important thing is that the mandatory information is clearly visible. The payslips prepared by our firm typically contain the following information, among other things:

Master data of employer and employee
Details of the employment relationship (e.g. start date, length of service)
Applicable collective agreement (CCNL) and classification, including job description
Working hours/attendance (days, hours, overtime) and absences (e.g. holidays, leave of absence) including balance/remaining hours
Gross remuneration – composition (basic salary and other remuneration components)
Deductions (social security contributions, taxes and any other deductions)
Payment amount (net salary)

Frequently asked questions (FAQ)

1. Are payslips mandatory in Italy?
Yes. Employers must provide a payslip with every wage payment.

2. When must the payslip be handed over?
Generally, at the same time as the remuneration is paid (e.g. for monthly payments).

3. Can the payslip be sent by email?
Yes, this is generally possible – it is important that it is delivered on time and that there is proof that the employee has received it (e.g. suitable delivery/logging).

4. Is an employee portal (login area) sufficient?
A password-protected portal may be permissible if only the respective employee has access and the provision is documented in a traceable manner.

5. What information must be included in any case?
At a minimum: employee data/qualifications, accounting period, all remuneration components and all deductions shown separately.

6. Are employer contributions (e.g. employer's share of NISF) visible on the payslip?
Usually no: the payslip mainly shows the contributions and taxes deducted from the employee's gross salary.

Question 40

Probation period

Accepted Answer

The duration of the probationary period is established by the collective bargaining agreement and serves as a trial phase for both the employer and the employee. During the probationary period, the employment relationship may be terminated at any time without notice and without providing reasons. It is also possible to waive the application of the probationary period.

Probationary Period – Key Elements

Frequently Asked Questions (FAQ)

FAQ – Probation Period

1. What is the probation period and what is its purpose?
The probation period is a clause in the employment contract as well as an element of mutual interest for both contracting parties:

For the employer: It allows them to determine whether the employee's abilities and working methods are suitable for the performance to be rendered.
For the employee: It allows them to check whether the working conditions, job performance, and work environment meet their expectations.

2. When is a probation period void?
For a probation period agreement to be valid, certain formal and substantive criteria must be met:

Written form is mandatory: The probation period must be agreed upon in writing. If this written form is missing, the probation period is void, and the employment relationship is considered permanent and indefinite from the start.
The employer may not assign the employee different areas of responsibility during the probation period than those agreed upon in the employment contract. A deviation from this can also lead to the nullity of the probation period clause.

3. Where is the duration of the probation period determined?
The duration of the probation period is legally regulated and is determined in the individual collective agreements, whereby the duration usually depends on the classification/category.

In principle, the following applies:

Maximum Duration: According to the so-called Transparency Decree, the probation period may last a maximum of six months. Collective agreements can stipulate a shorter duration.
Specific rules for fixed-term contracts (new from 2025):
- For fixed-term employment contracts, the duration of the probation period is determined proportionally to the contract duration.
- It amounts to one day of effective work performance per 15 calendar days starting from the commencement of the employment relationship.
- There are minimum and maximum limits for the duration:
  - For contracts up to six months: minimum 2 days, maximum 15 days.
  - For contracts over six months up to less than twelve months: maximum 30 days.
- Collective agreements may set more favorable regulations for employees but may not deviate from these specific minimum and maximum limits.

4. When is the probation period extended?
The probation period is extended by the corresponding duration in the event of absences due to illness, work accident, maternity/paternity leave, or even work suspension by the employer (e.g., wage compensation). This ensures that the employee is actually given the opportunity to be tested. However, foreseeable absences such as public holidays or weekly rest days do not interrupt the probation period.

5. How can the employment relationship be terminated during the probation period?
A characteristic feature of the probation period is the facilitated termination of the employment relationship. Both the employer and the employee can terminate the employment relationship at any time during or at the end of the probation period, without stating reasons and without observing a notice period. Furthermore, there is no entitlement to compensation.

Question 41

Profit distribution and dividends (ital.: distribuzione utili)

Accepted Answer

Dividends are distributions of profits or retained earnings from a corporation (e.g., LLC) to its shareholders. They must be clearly distinguished from salaries or other remuneration paid to directors/managers. Dividends are investment income and not remuneration for work or services rendered.

Normally, profit distributions are made pro rata to shareholdings, unless otherwise specified in the articles of association or shareholders’ agreement.

The profit distribution is determined by a resolution of the shareholders' meeting. The shareholders' meeting decides on the scope and amount of the profits to be distributed (e.g., from annual profits or retained earnings). The prerequisite is that the capital maintenance rules must be complied with; in particular, the distribution must not impair share capital or non-distributable reserves (e.g., legal reserves or reserve funds).

In practice, distributions should be economically justified, properly approved, and correctly recorded. This includes, in particular, the proper minutes of the shareholders’ meeting and clear evidence of the distributable profit/reserve base.

Taxes: Two levels

Level 1 – Company

Profits are generally taxed at the company level (IRES and IRAP). Dividends are therefore a distribution of after-tax profits and are not deductible as expenses for the distributing company, but reduce equity.

Level 2 – Recipient

Taxation depends on the recipient’s status (individual/entrepreneur/corporation) and tax residence (Italy/abroad). Withholding tax and assessment rules apply here.

Dividends to Italian private individuals

For private individuals resident in Italy, taxation is normally carried out typically via a 26% substitute/withholding tax (depending on the case and intermediary).

Foreign dividends may be subject to reporting and declaration requirements.

Dividends to entrepreneurs and companies: important change from 2026

Historically, dividends in the business/enterprise sphere often benefited from partial relief (e.g., for IRES companies: 95% exemption / 5% taxable).

As of 1 January 2026, partial relief is no longer automatic and applies only if minimum thresholds are met (≥5% participation or ≥EUR 500,000 tax value/acquisition cost); otherwise, dividends may be fully taxable (depending on the recipient’s tax regime).

Dividends abroad: withholding tax, double taxation agreement, and EU rules

If an Italian company pays dividends to recipients not resident in Italy, Italian withholding tax (often 26%) is generally payable, which can be reduced by a double taxation agreement (DTA) (often, for example, to 5% or 15%, depending on the respective DTA and the level of participation).

In certain EU/EEA cases, specific regimes may apply (e.g., exemption under the EU Parent–Subsidiary Directive if conditions are met).

Frequently asked questions (FAQ)

1. Are dividends considered "salary" and subject to social security contributions?

No. Dividends are investment income and are generally not subject to social security contributions.

2. What documents are important for a distribution?

Annual financial statement, resolution on the appropriation of profits, proof of distributable reserves/retained earnings, and correct accounting and payment documentation.

3. Does the company pay IRES again on dividends?

The distributing company regularly taxes the profit before distribution (IRES level). The dividend is then typically not a deductible expense.

4. How are dividends taxed for private individuals in Italy?

Often via a 26% tax/withholding tax.

5. What has changed for companies/holdings since 2026?

Since January 1, 2026, the 95% partial exemption for dividends in business assets has been linked to minimum thresholds (including 5% or EUR 500,000); otherwise, full taxability applies.

6. Can I reduce Italian withholding tax on outbound dividends?

Often yes – via DTA relief, but only if the requirements are met and the correct documentation is provided (certificate of residence, etc.).

Question 42

Quarterly VAT report (ital.: Communicazione delle liquidazioni periodiche IVA "LIPE")

Accepted Answer

The Quarterly VAT report (Italian: Comunicazione delle liquidazioni periodiche IVA, “LIPE”) is a report that has been required to be submitted regularly under Italian VAT law since 2017.

With the Quarterly VAT report, the taxable person communicates the results of their monthly or quarterly VAT settlements. The report is for informational purposes only.

Affected companies

In principle, all businesses and self-employed professionals with an Italian VAT number are required to submit the Quarterly VAT report. Taxable persons are exempt only if they are not required to submit the annual VAT return and/or are not required to perform periodic VAT settlements, in the cases provided for by law. This may include, in particular:

Taxable persons who exclusively carry out VAT-exempt transactions
Taxable persons who apply one of the flat-rate systems (regime dei minimi or regime forfettario)
Exempt farmers pursuant to Art. 34(6) DPR 633/72
Associations under the flat tax regime, system pursuant to Law 398/91
Non-established taxpayers who apply the OSS scheme exclusively, where applicable

Deadlines

The quarterly VAT report must be submitted every quarter. The deadlines are:

1st quarter: May 31
2nd quarter: September 30
3rd quarter: November 30
4th quarter: February 28

If the annual VAT declaration is submitted by February 28 and the VP overview is completed in full, the Quarterly VAT report for the 4th quarter does not need to be submitted.

If a deadline falls on a weekend, it is postponed to the next working day.

VAT payment

The Quarterly VAT report is not a payment declaration. VAT payments continue to be made separately, usually using the F24 payment form, in accordance with the applicable billing cycles (monthly or quarterly).

Corrections and penalties

Incorrect or missing Quarterly VAT reports can be corrected by means of correction notices.

be corrected by means of correction returns
lead to administrative penalties in the event of late or omitted levies

Question 43

Regional tax on productive activities IRAP

Accepted Answer

IRAP (Regional Tax on Productive Activities) is a tax introduced in 1998 by Legislative Decree 446/1997, which applies to anyone carrying out an independently organised activity to produce goods or services.

From 2022, IRAP is no longer payable by sole traders and self-employed professionals.

Taxpayers

The tax is payable by limited companies, commercial entities, partnerships and public administrations. Third Sector Entities (ETS) are in theory subject to the tax, but many regions and provinces have introduced concessions or even exemptions.

Taxable base

The taxable base, i.e. the amount on which the tax is levied, is calculated differently depending on the taxpayer (company, professional) and the accounting and tax regime applied (e.g. ordinary accounting, simplified accounting).

A table is provided that summarises the various methods of calculating the taxable base.

Financial intermediaries that adopt a financial reporting framework different from that required for most companies determine their IRAP taxable base according to a specific criterion.

Item	Sign	Financial-statement method (Art. 5)	Tax method (Art. 5-bis)	Cash Basis (Art. 8)	Remuneration method
Type of taxpayer		Companies and commercial entities	Partnerships and de facto partnerships	Professionals and professional associations	Non-commercial entities and public bodies
Revenue to be considered (A)	+	Section A of the financial statements	Revenue, compensation and grants	Fees collected during the year	Income is irrelevant The taxable base is the sum of: Employee salaries Income assimilated to employment income Coordinated and continuous collaborations (Co.Co.Co.) Fees for occasional self-employment work
Costs to be considered (B)	-	Section B of the financial statements, excluding B9 (personnel) B10 (write-downs) B12 (provisions for risks) B13 (other provisions)	Costs for goods and services, depreciation/amortisation, rental fees and leasing fees, to the extent relevant for tax purposes Changes in inventories (only for taxpayers using ordinary accounting)	Production costs, depreciation/amortisation, fees paid to third parties during the year	Irrelevant
Other non-deductible costs	-	credit losses implicit interest in leasing IMU fees for co.co.co. directors	credit losses implicit interest in leasing IMU fees for co.co.co. directors	credit losses implicit interest in leasing IMU fees for co.co.co. directors	Irrelevant
Deductible personnel costs	-	The costs of personnel employed under permanent contracts, expenses for apprentices, disabled workers, research and development staff and, only in certain residual cases, part of the cost of fixed-term employees are deductible.	The costs of personnel employed under permanent contracts, expenses for apprentices, disabled workers, research and development staff and, only in certain cases, part of the cost of fixed-term employees are deductible.	The costs of personnel employed under permanent contracts, expenses for apprentices, disabled workers, research and development staff and, only in certain cases, part of the cost of fixed-term employees are deductible.	The costs of personnel employed under permanent contracts, expenses for apprentices, disabled workers, research and development staff and, only in certain cases, part of the cost of fixed-term employees are deductible.
Other deductions	-	flat-rate deductions for smaller taxpayers	flat-rate deductions for smaller taxpayers	flat-rate deductions for smaller taxpayers	irrelevant

Option for the accounting method

Partnerships that maintain ordinary accounts have the option to calculate IRAP using the same method as that provided for limited companies. By choosing this option, certain expenses that would otherwise be non-deductible or partially deductible under the tax method become deductible (e.g. entertainment expenses, car expenses, telephone expenses, miscellaneous operating costs). The presence of capital gains or losses on business assets or property may also be a factor to consider when assessing the merits of this option: under the tax method, such gains are not taxable, whereas they are taxable under the balance sheet method.

Tax Rates

As this is a regional tax, the Regions and the Autonomous Provinces of Trento and Bolzano may amend the rates or provide for exemptions through their own regulations.

In this regard, it is essential to check annually whether any changes or concessions are in place at local level.

The standard national rate is 3.9%.

There are specific rules under which the following apply:

reductions (e.g. for non-commercial entities, new businesses, disadvantaged areas, to encourage or reward stable employment, etc.)
increases for certain activities such as banks and financial intermediaries, insurance companies, concessionaires, energy sector companies, etc.

Deadlines and Return

The IRAP return must be submitted electronically each year.

Payment follows the same deadlines as income taxes (such as IRES or IRPEF).

What happens if my business operates in more than one region?

If the business is carried out in more than one region, the taxable base must be apportioned among the regions concerned. Generally, the apportionment is made in proportion to the amount of wages paid to staff employed in each region.

Question 44

Registration Tax (ital.: Imposta di registro)

Accepted Answer

Registration tax (Imposta di Registro) is a central tax in Italy that is levied on the registration of certain legal acts. Contracts, deeds, minutes and agreements generally only become fully legally valid once they have been registered with the Revenue Agency, which issues an officially certified date certificate (data certa).

The amount of registration tax depends on the type of document. For many civil law documents – such as rental agreements, minutes of shareholders’ meetings, agreements between parties or declarations with external effect – the tax is levied as a fixed amount of currently €200, provided that there are no value-dependent elements. If, on the other hand, an economic value is transferred or determined, the calculation is made on a proportional basis.

In the case of real estate purchase agreements, the assessment basis is usually the cadastral value (valore catastale). The tax rates are generally 2 % for the purchase of a first home and 9 % for other properties, provided that the seller is a private individual. If the seller is a company or a property developer, the purchase may be subject to VAT instead of registration tax. In this case, only fixed amounts of €200 each are usually payable for registration, mortgage and cadastral taxes.

Question 45

Revenue agency / Tax Office in Italy (ital.: Agenzia delle Entrate)

Accepted Answer

The revenue agency (Italian: Agenzia delle Entrate, abbreviated to AdE) is the central Italian tax authority (tax office) and is assigned to the Ministry of Economy and Finance (Ministero dell'Economia e delle Finanze). As an administratively independent authority, it is responsible in particular for assessing and collecting state taxes. Depending on the procedure, it also performs tasks such as the registration of certain contracts and deeds.

Organisationally, the revenue agency is divided into regional directorates, which in turn oversee the local tax offices. In the autonomous region of Trentino-South Tyrol, there are separate directorates in Trento and Bolzano.

The revenue agency is particularly relevant for companies, managing directors, HR managers and private individuals because it bundles central processes relating to taxes, notifications, payments, data management and digital services.

What does the revenue agency do?

Its typical responsibilities include:

Setting and administering taxes (e.g. income tax, corporation tax, value added tax)
Receiving and processing electronic notifications and declarations
Administration of registration data (master data, tax positions, notices and communications)
Registration services (e.g. certain contracts and deeds)
Digital tax and invoicing services (e.g. electronic invoice)

Digital access: "Area riservata" and the most important portals

Most of the revenue agency's services are available digitally. Access is usually via the protected online area (Area riservata) – mostly using SPID, CIE or CNS. These are common forms of digital identification in Italy that enable secure and fast access to the online services of the public administration. Depending on the service, traditional access data (e.g. Fisconline/Entratel) may still be required.

Access is generally granted to the taxable person themselves. In business practice, access is often delegated to an authorised intermediary (e.g. Chartered Accountant) via a power of attorney so that checks, submissions and queries can be handled efficiently, on time and centrally.

Important portals (examples):

Fatture e Corrispettivi: Platform for electronic invoices and electronic daily receipts (cash register data/receipts)
Depending on the user profile (private individual, company, intermediary), additional services are available via reserved areas or specialist portals.

Cassetto fiscale: the electronic tax box

A central component of the digital services is the online tax box "Cassetto fiscale". It allows users to view tax documents and information and check their current status with the tax office – without having to visit the authorities.

Common use cases include, for example:

Checking submitted declarations and notifications
Checking payments and allocations (F24/F23)
Viewing refunds, offsets and open items
Reconciling registration and master data
Viewing data from the registry office

Typical notifications and declarations that are transmitted electronically to the revenue agency

In current practice, many transactions are transmitted electronically to the revenue agency via an authorised intermediary. Common examples are:

VAT registration, deregistration and change notifications
- Form AA7: for companies/legal entities
- Form AA9: for natural persons (sole traders/freelancers).
Among other things, main and secondary activities (ATECO), legal domicile, permanent establishments PE, place of storage of documents, etc. are reported.
Annual returns (depending on taxable status)
- Tax return, tax declaration
- Irap declaration
- Annual VAT declaration
- Single certification CU (Certificazione Unica)
- Withholding tax return 770
Ongoing accounting reports
- Quartarly VAT report
- Reporting of foreign incoming and outgoing invoices
Tax payments
- Transmission/processing of tax payments with F24 and F23
Rental agreements
- Registration/deregistration and renewal of rental agreements (e.g. RLI model).

Question 46

Reverse Charge

Accepted Answer

The reverse charge procedure is a special rule for VAT. When this is used, the seller or service provider has to issue an invoice without showing the VAT. The buyer or service recipient then has to add the VAT to the invoice they get.

The reverse charge procedure is most commonly used for intra-Community supplies and services. However, it is also used for subcontractors in the construction industry (subcontracts) or for various construction services on buildings.

The procedure can only be applied if the purchaser or recipient of the service can integrate the VAT. This means that it always applies to business transactions between VAT-registered entities. This special rule therefore does not apply to invoices issued to private individuals.

Invoices are issued without showing VAT. In addition, the relevant legal text must be specified according to the service provided. The most common ones are as follows:

Business transaction	Legal reference
Intra-Community supply of goods	Reverse charge – non-taxable turnover in accordance with Art. 41, G.D. 331/1993
Intra-Community service	Reverse charge – non-taxable transaction pursuant to Art. 7-ter DPR 633/1972
Subcontractors in the construction industry	Reverse charge pursuant to Art. 17, para. 6, letter a, DPR 633/1972
Services provided on buildings	Reverse charge pursuant to Art. 17, para. 6, letter a-ter, DPR 633/1972

Upon receipt of an invoice under the reverse charge procedure, the invoice recipient is considered the tax debtor and, as already mentioned, must include VAT on the invoice amount.

The reversal of tax liability is achieved by double-entry accounting of the invoice. By posting the invoice received in the register of incoming invoices and in that of outgoing invoices, a neutral result is achieved in the case of deductible VAT.

Question 47

Reverse charge in the construction industry

Accepted Answer

Anyone building, renovating or buying a flat in Italy will encounter different VAT rates and special rules. Under Italian VAT law, the standard rates are generally 22%, 10%, 5% and 4%. In the construction industry, the 4% and 10% rates are particularly relevant, whilst the 5% rate is of no practical significance. The standard rate of 22% applies whenever no preferential treatment or special rule applies. Depending on the type of building, the work carried out and the principal, client, the reverse charge mechanism may also apply.

Purchase of a flat

Here, a distinction must first be made between a “primary residence” and a “main residence”. The primary residence is the first property purchased, whereas the main residence is the one that is actually used predominantly.

First home “Prima casa” tax relief (4% VAT)
When purchasing a primary residence, the “prima casa” tax relief may be claimed under certain conditions. In this case, the VAT rate of 4% applies.

Conditions:

The buyer must not own a property in the same municipality, either alone or jointly with their spouse, nor must they hold any other property suitable for residential purposes over which there are rights in rem such as usufruct, right of residence or right of use.
The buyer must not have previously purchased any other property anywhere in the country whilst claiming the “prima casa” benefit.
The property must be situated in the municipality where the buyer already has their residence or establishes it within 18 months of the purchase. Alternatively, it is sufficient for the buyer to work there. However, the residence does not necessarily have to be in the property itself.

Exception:
The benefit may be claimed again if the property that previously qualified for the benefit is sold within two years.

Inportant:

The primary residence purchased under the “prima casa” scheme does not automatically have to be the same as the main residence where the buyer actually lives.
The benefit does not apply to luxury properties (cadastral categories A/1, A/8 and A/9).

Without the benefit
If the preferential rate cannot be applied, the VAT rate of 10% generally applies.

Construction and renovation work (redevelopment)

For construction and renovation works, both the type of work and the type of building are decisive for VAT purposes. Italian building law distinguishes between four categories:

routine maintenance: e.g. painting, minor repairs, replacement of floor coverings
extraordinary maintenance: e.g. replacement of systems, bathrooms, windows or doors, without fundamentally altering the building
Renovation / conservative restoration: measures for preservation and renewal, including work on load-bearing structures
structural redesign: comprehensive interventions ranging from extensive alterations to demolition and reconstruction.

For residential buildings that are “redevelopment”, the preferential VAT rate of 10% applies to all types of work mentioned, regardless of whether it is a primary residence or main residence.

For commercial properties (e.g. workshops, offices, halls or warehouses), however, the reduced rate of 10% applies only to renovation and structural redesign. For routine and extraordinary maintenance, the standard rate of 22% applies.

Special rule for “significant goods” (beni significativi)
Of particular practical relevance is the provision concerning so called “significant goods”, which include, amongst others:

Lifts and goods lifts
Windows and doors
Boilers
Video intercom systems
Air conditioning systems
Sanitary facilities and bathroom fittings
Security systems

If these are supplied and installed as part of routine or extraordinary maintenance work on residential buildings, the 10% VAT rate does not apply to the entire invoice amount. The concession applies only up to the value of the labour and the other, insignificant components. The portion of the significant goods exceeding this amount is subject to the standard rate of 22%.

Example:

Total invoice: € 10,000
of which major items, such as windows: € 6,000
Other work, including labour: € 4,000

In this case:

10% VAT on the full € 4,000 of the other services,
10% VAT additionally on the € 4,000 for the major item,
22% VAT on the remaining € 2,000 of the major item.

Reverse charge in the construction industry

In the construction industry, the reverse charge is frequently applied. In such cases, the invoice is issued without VAT. A prerequisite is that the principal is a VAT-registered entity. The relevant provisions are governed by Article 17(6) of the Italian VAT Decree (Presidential Decree No. 633/72).

Reverse charge for subcontractors in the construction industry
For services in the construction industry, such as bricklaying, installations and plastering work, provided by a subcontractor, the invoice is issued to the main contractor without VAT in accordance with Article 17(6) a) of DPR 633/72.

Reverse charge for finishing and installation work on construction sites and demolition work
The reverse charge procedure was introduced for various services in the construction and ancillary construction sectors pursuant to Article 17(6) a-ter) of DPR 633/72. It applies not only to subcontractors but also to companies commissioned directly by the client.

The relevant services relating to buildings include, for example:

Electrical installations
Plumbing and heating installations
Installation of lifts
Plastering work
Painting
Flooring and wall cladding
Installation of windows and doors

The key factor is that the service is carried out on a building. In the case of pure supplies of goods with incidental installation, where from a VAT perspective the supply of the goods rather than the service is the primary focus, the reverse charge does not apply.

Which reverse charge takes precedence?
A supply may fall under both the reverse charge mechanism for subcontractors under point (a) and under point (a-ter). In such cases, point (a-ter) generally takes precedence.

Question 48

RLI form (Registrazione locazione immobili)

Accepted Answer

The RLI form (Registrazione locazione immobili) is a key tax form in Italy that is used for the registration and administration of rental and lease agreements for real estate. Since 2014, it has replaced various older forms and summarises numerous obligations relating to real estate rentals and leases.

What is the RLI form?

The RLI form is an official form issued by the Italian Revenue Agency (Agenzia delle Entrate) for:

initial registration of a rental or lease agreement,
notifying changes (e.g. extension, assignment, change of subject),
terminating the contract,
exercising or revoking tax options such as the flat-rate tax "cedolare secca" (flat-rate taxation)

What do you need to bear in mind?

Under Italian law, a rental or lease agreement must generally be registered with the tax office within 30 days of signing.

Important points:

Registration requirement: In principle, almost all rental agreements are subject to registration – with the exception of short-term leases of less than 30 days per year, known as short-term rental agreements.
Legal deadline: The 30-day period begins with the conclusion of the contract or the start of the tenancy if this is before the date of signing.
Legal certainty: Registration gives the contracts a certain date (Italian: data certa).

Who must submit the RLI form?

In principle, the landlord is obliged to carry out or arrange for the registration. However, the obligation applies to both parties, i.e. the landlord and the tenant.

The form can be submitted by:

the landlord themselves,
the tenant with power of attorney,
an authorised representative (e.g. Chartered Accountant, agent),
authorised intermediaries such as estate agents or CAF (tax assistance offices).

How and where does registration take place?

1. In person at the tax office
It is possible to submit the paper form to a local office of the revenue agency (Agenzia delle Entrate).

2. Via a third party
An authorised representative can complete the registration for you (e.g. Chartered Accountant).

3. Online (RLI Web)
The RLI form can be submitted electronically via the official portal of the revenue agency (Agenzia delle Entrate) – using SPID, CIE or CNS (these are digital identity documents commonly used in Italy that enable secure and fast access to the online services of the public administration).

Typical contents of the RLI form

The RLI form covers several areas, including:

General information about the transaction: Type of notification (e.g. initial registration, renewal, termination).
Details of the parties: Identification of landlord and tenant.
Property details: address, cadastral information (cadastral category, parcel, building unit, etc.).
Tax options: choice or revocation of flat-rate taxation (cedolare secca).

Taxes, deadlines and formalities

Registry tax: Depends on the type of rental agreement. For residential property rentals, the registry tax is 2% of the annual rent and is payable annually, usually split between the landlord and tenant.
Stamp tax: €16.00 per 4 pages of the contract.
Flat-rate tax option (cedolare secca): If you opt for flat-rate taxation, both registration tax and stamp tax are waived.

Avoid delays: Late registration may result in interest and penalties. Registration is considered complete once a copied, registered version of the contract has been issued or confirmed electronically.

Conclusion

The RLI form is a key tool for complying with tax obligations for property rental contracts in Italy.

Question 49

Service Companies in Italy – Definition, Advantages, Transfer Pricing

Accepted Answer

Service companies play an important role in international corporate structures. Especially in the Italian market, many foreign companies establish their own service companies in order to manage operational tasks, customer relations, or market development directly on site.

Definition and purpose of service companies

A service company (Italian: società di servizi) is an independent legal entity within a corporate group that provides services to other companies within the same group. Typical activities include:

customer support
marketing and sales support
logistics and administration
technical support

In Italy, such a company is usually incorporated as a limited liability company (LLC; Italian: Srl). It operates independently vis-à-vis third parties but works in close economic cooperation with the parent company or affiliated companies.

As an ATECO activity code, 82.99.99 is most commonly used, with the following description:
establishment of a customer network and development of the Italian sales market on behalf of the parent company.

This approach offers significant advantages in terms of operational management and the company’s accounting.

Tax classification and transfer pricing of service companies

Since service companies often provide intra-group services or services to the parent company, transfer pricing is central to the tax assessment. Under Italian tax law, the transfer prices applied must comply with the arm’s length principle, as provided for in Art. 110(7) of the Italian Income Tax Code (TUIR – Testo Unico delle Imposte sui Redditi) and the OECD Transfer Pricing Guidelines.

The cost-plus method

In practice, service companies usually apply the cost-plus method. Under this approach, the company’s own costs (e.g. personnel, administration, infrastructure) are increased by an appropriate profit mark-up.

A typical approach is a mark-up of 5% or more, which in Italy and internationally is considered market standard for pure, low-risk service companies.

This method is particularly suitable when:

the company does not bear any significant risks of its own (e.g. no inventory, no warranty risks),
it operates exclusively for affiliated companies, and
the services are standardized and of a supportive nature.

When the cost-plus method becomes critical

A flat mark-up can become problematic if the company effectively assumes entrepreneurial functions, for example:

independent responsibility for distribution or pricing,
marketing decisions involving profit risk,
or strategic management of the Italian market.

In such cases, the pure cost-plus approach no longer satisfies the arm’s length principle. The Italian tax authorities (Agenzia delle Entrate) may then require a higher profit mark-up or a different method, such as the net margin method (TNMM – Transactional Net Margin Method). This method compares the net margin, i.e. profit in relation to turnover, of the affiliated company with that of independent companies carrying out similar activities. In the case of comparable structures, indicators between subsidiary and parent company may also serve as benchmarks.

Transfer pricing documentation for service companies

In Italy, there is in principle no obligation to prepare transfer pricing documentation. In the tax return, it is only necessary to indicate whether such documentation exists.

If transfer pricing documentation is available, the tax authorities are bound by the method chosen therein. Both the content (master file and local file, clear functional and risk analysis, indication of the transfer pricing method, etc.) and the formal requirements (digital signature and time stamp) must comply with the statutory provisions.

In the absence of transfer pricing documentation, there is no binding to a specific method. Nevertheless, it is recommended to document internal transfer prices with affiliated or controlled companies. Irrespective of this, the tax return must always disclose the income (componenti positivi) and expenses (componenti negativi) arising from transactions with affiliated, controlling, or sister companies.

Conclusion

Service companies offer international businesses an efficient way to become active in the Italian market without operating a main operational establishment. However, it is essential that transfer prices are documented and appropriate, and that the company does not bear entrepreneurial risks. Otherwise, an excessively low mark-up or a de facto management function can quickly lead to tax adjustments and penalty payments.

Further information on the Italian LLC (Srl): https://www.graber-partner.com/en/international-companies/setting-up-a-subsidiary-in-italy.html

Question 50

Settlement Payments Upon Termination of Employment

Accepted Answer

Settlement agreements between employers and employees may arise in connection with the termination of employment relationships. However, this is not the norm; rather, it primarily applies to situations where the termination occurs without a clear or legally valid reason, or where there is a disagreement between the parties regarding existing claims. In such cases, so-called “accordi transattivi” are concluded, which serve to resolve existing or potential disputes out of court. In practice, various forms of payment are agreed upon, the tax and social security treatment of which depends largely on their actual economic substance.

Legally, a settlement constitutes an agreement by which the parties resolve a dispute or prevent its emergence through mutual concessions. Typically, it includes the termination of the employment relationship, the payment of one or more amounts, and the waiver of further claims. However, for the purposes of wage and tax law, it is not the designation of the individual amounts in the settlement that is decisive, but their actual substance.

In practice, several typical types of payments can be distinguished. A common form is the so-called “transattivo novativo.” This is a settlement payment whereby existing claims are replaced by a new obligation. This payment generally does not constitute direct compensation, but is typically subject to income tax. Social security contributions are usually not due, provided the payment is not classified as a substitute for wages.

This must be distinguished from the “transattivo risarcitorio,” i.e., a payment of a compensatory nature. This is used, for example, in cases of alleged wrongful termination or other labor law disputes. Genuine compensation payments are generally tax-exempt and not subject to social security contributions. In practice, however, this classification is particularly prone to scrutiny. As soon as the payment is economically regarded as a substitute for lost wages, it is reclassified, resulting in corresponding tax and contribution obligations.

Another common component is the so-called “incentivo all’esodo.” This is a severance payment granted to the employee to encourage a mutually agreed termination of the employment relationship. This payment is subject to preferential taxation, similar to severance pay (TFR), and is not subject to social security contributions. It should also be noted that such payments may affect eligibility for unemployment benefits (NASpI).

In addition to these typical settlement payments, agreements often also address back payments of standard wage components. These include, for example, outstanding salaries, overtime pay, or bonuses. These amounts are considered wages regardless of their inclusion in the settlement and are therefore subject to both income tax and social security contributions.

The practical process typically begins with the emergence of a conflict, such as in connection with a dismissal or outstanding claims. This is followed by negotiations between the parties, often involving lawyers or labor unions. The goal is to reach an agreement on the amount and structure of the payments as well as the timing of the disbursement. The settlement is then documented in writing, often as part of arbitration before a labor union, the labor inspectorate, or a court, to enhance legal certainty.

For payment via the pay stub, it is crucial that a signed settlement agreement is available, clearly outlining the individual components. Only on this basis can the amounts be correctly handled under wage and tax law. A clear distinction between wages, severance pay, and any potential damages is essential. Taxation generally occurs at the time of payment and may therefore also be relevant in a subsequent tax year.

Documentation is of particular importance. Companies should carefully retain the settlement agreement as well as the internal classification of the individual amounts in order to be able to provide a comprehensible justification in the event of an audit. Unclear or general wording in the settlement agreement can lead to significant risks, particularly if payments are subsequently classified as taxable wages.

In summary, it can be stated that settlement payments under Italian labor law constitute a complex matter in which the correct classification of the individual components is of central importance. A clear structuring of the settlement and careful implementation in payroll accounting are crucial to avoiding tax and social security risks.

Question 51

Shareholder financing

Accepted Answer

Shareholder financing is a frequently used instrument with which shareholders provide their company with financial resources. It primarily serves to secure liquidity, bridge bottlenecks or finance investments. In contrast to a capital increas, this does not involve equity capital, but rather financing with a repayment claim.

What is shareholder financing?

Shareholder financing refers to the granting of a loan by a shareholder to their own company. The shareholder provides the company with funds without increasing the share capital or company capital.

In contrast to an equity injection (e.g. capital increase or shareholder contribution):

the shareholding ratio remains unchanged
there is no permanent capital commitment
there is a contractual repayment obligation

Shareholder financing is therefore more flexible than a capital increase, but has specific legal consequences.

Contractual requirements

Shareholder financing must be documented by a written loan agreement.

The loan agreement should in particular regulate the following points:

Contracting parties (shareholders / company)
Amount of financing
Repayment date and terms
Any interest: if interest is agreed, the terms should be in line with market conditions so that the financing is legally recognised as a loan
Term of the loan

The contract must clearly state that the company is obliged to repay the loan. By concluding the loan agreement, the shareholder becomes a creditor of the company and acquires a claim to repayment of the funds provided.

Accounting classification

Shareholder financing is recognised in the company’s balance sheet under liabilities and must be clearly distinguished from equity.

Creditor status: the shareholder is legally a creditor of the company and is entitled to repayment of the financing.
Balance sheet item: depending on its term, the loan is recognised as a current or non-current liability.
Disclosure in the notes: the amount, term and interest arrangements should be disclosed in the notes to the balance sheet to ensure transparency for shareholders and authorities.

Shareholder loans are borrowed funds that are treated like other liabilities in the balance sheet. Proper documentation ensures a clear distinction from equity and is particularly relevant when assessing the company’s financial structure.

Special features of undercapitalised companies

Caution is required when an undercapitalised company receives additional funds from shareholders. Undercapitalised means that equity is insufficient to cover the existing risks and liabilities of the company.

If a financial imbalance exists in which a capital increase would be economically appropriate, but shareholders grant a loan instead, special creditor-protection mechanisms apply.

In such cases, Article 2467 of the Italian Civil Code provides that:

repayment of shareholder financing is subordinated to other liabilities
shareholders rank behind external creditors
this applies in particular in insolvency or bankruptcy proceedings

This so-called subordination is intended to prevent shareholders from recovering their financing before other creditors, thereby weakening the creditors’ position.

Conclusion

Shareholder financing is an effective and flexible instrument for corporate financing. It allows shareholders to support their company in the short term without changing the company’s capital.

At the same time, it requires clear contractual arrangements, correct accounting treatment and particular caution in financially distressed companies. Only in this way can legal risks and disadvantages in the event of a crisis be avoided.

Question 52

Shell companies (ital.: società di comodo)

Accepted Answer

In Italy, shell companies or non-operating companies (società di comodo or società non operative) are companies that have no or very little operating activity over a long period of time, even though they have significant assets (e.g. real estate, shareholdings, financial investments).

The regulation is based on Art. 30, Law No. 724/1994, and was last amended as part of the tax reform (Law No. 192/2024 – "Revisione IRPEF/IRES"). The aim is to combat abusive arrangements in which companies primarily serve as "asset shells" for their shareholders.

Who is affected?

This regulation on shell companies basically affects:

Corporations (Ltd., Stock corporation, Partnership limited by shares)
Partnerships (Ordinary Partnership, Limited partnership)
Non-resident companies and corporations with a permanent establishment (branch) in Italy

Operational test

Whether a company is considered non-operational is determined using the so-called operational test:

The arithmetic mean of the actual declared revenues, inventory increases and other ordinary income for the last three years (current year + two previous years)
is compared with the presumed minimum income.

Result:

If the actual revenues are below the presumed minimum revenues, the company is considered a shell company or a non-operating company.
In this case, special tax consequences apply (minimum taxation, limitation of loss carryforwards, restrictions on VAT credits).

Calculation of minimum income

The presumed minimum income is determined by applying specific percentages to the average value of certain asset items. These include in particular:

Security papers, shareholdings and financial receivables
Real estate (including leased properties)
Other tangible and intangible capital goods, investment goods, fixed assets (e.g. machinery, trademarks)

The average value is calculated based on the current financial year and the two previous financial years.

With the tax reform (Law No. 192/2024), the coefficients for minimum income and minimum revenue were largely halved from the 2024 taxation period onwards. The following percentages are used to calculate minimum income:

1% on shareholdings, security papers, commercial paper and financial receivables
3% on other real estate
2.5% on properties in cadastral category A/10 (offices)
2% on residential properties acquired or revalued in the current year or in the two previous years
0.5% on all properties in municipalities with fewer than 1,000 inhabitants
6% on commercial vessels
15% on other fixed assets (e.g. machinery, business equipment).

Tax consequences of a shell company

Direct taxes (IRES/IRPEF) and IRAP

If a company is considered a shell company (società di comodo), it must:

pay tax on a minimum income calculated on a flat-rate basis from its assets, even if the actual result is lower. The following percentages (also reduced as part of the tax reform) apply to the calculation of this minimum income:
- 0.75% on shareholdings, security papers, financial receivables
- 2.38% on other real estate
- 2% on real estate in cadastral category A/10 (offices)
- 1.5% on residential property acquired or subject to a revaluation in the current year or in the two previous years
- 0.45% on all properties in municipalities with fewer than 1,000 inhabitants
- 4.75% on commercial vessels
- 12% on other fixed assets (e.g. machinery, business equipment)
as a corporation, pay an IRES surcharge of 10.5% on this minimum income
determine a minimum tax base for IRAP
offset losses from previous years only against that part of income that exceeds the minimum income.

Value added tax (IVA)

For companies classified as non-operational, VAT credits are subject to severe restrictions on their use: they cannot be refunded or offset horizontally against other taxes, but only against future VAT (vertical offsetting). In addition, if the company remains non-operational for several years, the further use of the credit may also be restricted.

Exemption

In certain cases, the regulation on shell companies does not apply. Automatic grounds for exclusion exist, among other things, for:

the first financial year
companies with at least 50 shareholders
companies with a permanently high number of employees (at least 10 employees)
companies against which bankruptcy proceedings have been initiated
companies whose total operating performance (item A P&L) exceeds their assets
companies with a high reliability index (ISA) or that have agreed to a tax settlement in advance (Concordato preventivo biennale – CPB).

In addition, there are grounds for non-application, for example in the case of real estate that is leased to public institutions or subject to strict rent controls, certain holding companies or companies in advanced liquidation.

Interpello (application for suspension)

A so-called "Interpello" can be used to apply to the revenue agency for suspension of the regulation for a specific year. However, Law 219/2023 has severely restricted this option.

Question 53

Sistema di Interscambio (SdI) - Italian electronic invoices

Accepted Answer

1. Introduction

Since 1 January 2019, electronic invoicing has been mandatory in Italy for most transactions between companies, freelancers and private individuals based in Italy. Invoices are only valid if they have been sent to the SDI and accepted by it; an invoice sent directly to the customer is therefore no longer a legally valid document. The Sistema di Interscambio (SdI), a central IT system, acts as a "digital postman" for processing and forwarding electronic invoices. This article explains the crucial role and functioning of the SdI in Italian accounting.

2. Main section

2.1 What is the Sistema di Interscambio (SdI)?

The SdI is an IT system managed by the Italian revenue agency (Agenzia delle Entrate). It was introduced in 2008 for mandatory electronic invoicing to public institutions (FatturaPA) and, since 2019, has also been responsible for transactions between private companies (B2B), B2C and with the public administration (PA). It acts as a "virtual postman" that ensures the secure and standardised flow of invoice data.

In Italy, the SDI plays a very central role: it is not only a technical intermediary, but also a supervisory authority. Every invoice must pass through the SDI before it reaches the recipient. This gives the Agenzia delle Entrate immediate access to all transactions in a structured form. This model – often referred to as a "clearance system" – enables near real-time control of VAT data and is strongly focused on combating tax fraud.

In other European countries, on the other hand, the "post-audit system" is usually used. There, companies send their invoices in electronic form directly to their business partners without the involvement of a central authority. The tax authorities only access the invoice information for the purpose of checks or through periodic reports (e.g. advance return for tax on sales, purchases, SAF-T files, SII in Spain). In other words, the authorities carry out checks retrospectively, whereas in Italy the checks are carried out before the invoice is delivered.

The difference therefore lies in the role of the tax administration: while in Italy the SDI is effectively the bottleneck through which every invoice must pass, in most other EU countries communication between companies remains decentralised and is only reported to the tax office on a supplementary basis. Italy thus places greater emphasis on transparency and real-time data, while other countries allow companies more flexibility in transmission and the tax authorities are only involved at a later stage.

Here are some country examples, as of 09/2025:

Feature	Italy (SDI)	Germany	France	Spain	Netherlands
Model	Clearance system	Post-audit system (planned by 2028: mandatory e-invoicing, but not via a central authority)	Post-audit system (introduction of a clearance-like system called "PPF" planned by 2026)	Mixed system: Suministro Inmediato de Información (SII) = almost real-time reporting, but invoices go directly between companies	Post-audit system
Role of the tax authority	Central point of contact: SDI checks and forwards	Only indirectly involved: invoices go directly between companies, reports via advance returns/declarations	No central point of contact to date; central platform for forwarding planned for the future	Tax administration receives transaction data in near real time (SII), but is not involved in the transmission	No central office, only obligation to provide data for audits
Time of inspection	Real-time check before delivery	Downstream for audits and advance notifications	Downstream, but reform towards real time from 2026	Near real time: data must be reported to the tax office within 4 days	Downstream, only in the context of checks
Transmission channels	PEC, web portal, API/web services, FTP – always to SDI	Multiple (EDI, e-mail, ZUGFeRD, PDF)	Multiple (EDI, PDF, Factur-X), central platform in future	Directly to business partners + parallel notification to SII system	Multiple (EDI, XML, UBL, PDF)
Format	Uniform XML (FatturaPA)	Multiple standards (ZUGFeRD, XRechnung, PDF)	Multiple standards, planned: harmonised XML via PPF	Free, but notification to SII in structured XML	UBL-based, no uniform requirement
Advantage for tax administration	Complete control in real time	Lower technical complexity	Flexible, planned reform increases transparency	High transparency through SII reports	Minimal intervention, focus on personal responsibility
Disadvantage for companies	Mandatory SDI connection, no direct dispatch	Different formats depending on partner/authority	Obligation to adapt to new PPF system from 2026	Double burden: invoice + report to SII	Different formats, no uniform specifications

2.2 The core functions of the SdI in Italy: Receipt, verification and forwarding

The SdI fulfils three main functions:

Receipt: It accepts electronic invoices exclusively in the legally prescribed XML format.
Verification: It performs automatic checks on these XML files.
Forwarding: After successful verification, it forwards the invoices to the intended recipients.

The SdI ensures the authenticity and integrity of the XML files by checking the format, size and (optionally) the digital signature. The invoice issuer remains responsible for the tax correctness of the content.

The verification includes detailed checks:

Mandatory information: Are the identification details of the supplier and customer, invoice number, date, description, amounts and VAT present?
Existence of tax numbers: Are the tax numbers of the supplier and customer listed in the Italian tax register?
Delivery address: Is an electronic delivery address (recipient code or PEC address) specified?
Amount consistency: Do the calculated figures for the amount, tax rate and VAT match?
Duplicates: Duplicate invoices are rejected.

2.3 SdI feedback and delivery methods

After an invoice has been submitted, the SdI informs the invoice issuer of the status:

Delivery confirmation ("Ricevuta di consegna"): Successful verification and delivery; includes date and time. Duration: a few hours to five calendar days.
Confirmation of non-delivery ("Ricevuta di impossibilità di consegna"): In the event of technical problems (e.g. full PEC mailbox), the invoice is made available in the "Fatture e Corrispettivi" portal. The sender must inform the customer. The invoice is considered issued for the supplier, but only received by the customer once they have accessed it in the portal.
Confirmation of rejection ("Ricevuta di scarto"): In the event of errors, the invoice is rejected and is considered not to have been issued. Correction and resubmission within five calendar days is required.

Three delivery methods must be specified in the electronic invoice:

Recipient code: Seven-digit alphanumeric code of the recipient service.
PEC address: If used, "0000000" must be entered in the recipient code field and the PEC address in the PEC destinatario field.
"0000000": If no specific address has been communicated, "0000000" is entered in the recipient code field and the SdI makes the invoice available on the "Fatture e Corrispettivi" portal.

Companies can register their preferred receiving channel (PEC or recipient code) once in the "Fatture e Corrispettivi" portal. The SdI then ignores the invoice address and always delivers to the registered channel.

2.4 Definition of terms: Codice Destinatario, Codice SDI and Codice Univoco

Codice Destinatario and Codice SDI are synonyms. They refer to the seven-digit alphanumeric code for receiving invoices between private companies (B2B and B2C). It is provided by software companies.
The Codice Univoco is a separate, six-digit code that is used specifically for the transmission of electronic invoices to public authorities.

3. Conclusion

The Sistema di Interscambio is a central pillar of the Italian tax system, which automates, standardises and checks compliance with electronic invoicing. Understanding how it works is essential in order to comply with legal obligations and leverage the efficiency of digital processes.

Question 54

Special deduction for personnel costs

Accepted Answer

The special deduction for personnel costs (Super deduzione per nuove assunzioni) is a tax measure designed to promote new hires in Italy. The benefit allows companies and free-lancers to claim a higher amount of the costs for newly hired personnel with permanent labour contracts for tax purposes.

Legal basis and period of validity

The regulation was introduced by Art. 4 of GD 216/2023 in implementation of the framework law on tax reform (Law 111/2023) and initially applied only to the reference year 2024. With the 2025 budget law (Act 207/2024), this measure was extended to the years 2025, 2026 and 2027.

The special deduction normally amounts to 20 per cent of the eligible increase in personnel costs (30 per cent for certain categories worthy of protection) and is claimed in the tax return, tax declaration. This means that the eligible increase in personnel costs is 120% (or 130%) tax-deductible (100% "normal" cost deduction + 20% or 30% special deduction).

The benefit applies to income tax (IRPEF, IRES), but not to value added tax (IRAP).

Affected parties

The special deduction is available to all companies and freelancers who determine their in-come according to the ordinary taxation rules, i.e. analytically. These include:

Sole traders, partnerships and corporations
Permanent establishments PE of foreign companies in Italy
Commercial and non-commercial entities with income from commercial activities
Freelancers and freelance associations

However, the following are excluded from this benefit:

Companies and freelancers who calculate their income on a flat-rate basis (e.g. flat tax regime)
Companies that are in liquidation or insolvency proceedings
Companies and freelancers who have been in business for less than 365 days in the taxation period prior to applying for the benefit (i.e. in order to be eligible for the benefit for a taxation period, the business must have been established on 1 January of the previous year)

Double eligibility requirements

The following conditions must be met simultaneously in order to claim the special deduc-tion. This is checked annually in comparison with the previous year:

Increase in permanent employees (incremento occupazionale): The number of perma-nent employees at the end of the preferential taxation period must be higher than the average number of permanent employees in the previous taxation period.
Increase in total employees (incremento occupazionale complessivo): The total num-ber of employees (permanent and temporary) at the end of the taxation period must be higher than the average number of total employees in the previous taxation period.

The conversion of a fixed-term labour contract, employment contract into a permanent la-bour contract, employment contract is considered a new hire for the purposes of the as-sessment. However, only personnel expenses incurred from the date of conversion are rele-vant for the calculation of the special deduction.

Please note: In the case of groups of companies, the above requirements must also be checked at group level, taking into account only employees employed in Italy.

Calculation of the special deduction

The basis for calculating the special deduction is the lower of:

the personnel costs for the new permanent employees (including conversions), and
the increase in total personnel costs for the beneficiary year compared to the previous year.

Personnel costs are defined as the expenses reported in the income statement, profit and loss statement under item B.9 (wages and salaries, social security contributions, employee leaving indemnity (TFR) and other personnel costs). Costs recorded in other P&L items ( ) are not taken into account (e.g. meal vouchers, field service costs, travel expenses, etc.).

The special deduction of 20% or 30% for certain categories worthy of protection is calcu-lated from the assessment basis determined in this way.

Increased benefits for certain categories worthy of protection

For the recruitment of certain categories of employees deserving of greater protection, the special deduction increases by an additional 10 percentage points, i.e. to a total of 30%.

These include people with disabilities, women with at least two minor children who have been unemployed for at least six months and reside in certain regions, and young people who are eligible for certain youth employment incentives.

Question 55

Split payment of VAT

Accepted Answer

The procedure for splitting VAT payments, known as “split payment” or “scissione dei pagamenti” in Italian, is a particular form of VAT settlement. It was introduced by the 2015 Stability Law to combat tax evasion, particularly in the public administration sector.

Definition and functioning

In split payment, the VAT due on a transaction is not paid to the supplier, but directly by the purchaser to the tax authority, provided that the latter is a public body or a specific company.
The supplier therefore only receives the net amount of the invoice.
The legal basis is Article 17-ter of Presidential Decree (DPR) No. 633/72.

Scope of application: who is affected?

The procedure applies to the supply of goods and services to a number of specific public and private entities:

Public Administration (PA): includes state bodies, schools, regions, provinces, municipalities, Chambers of Commerce, universities and local health authorities (ASL).
Subsidiaries: companies directly or indirectly controlled by the State, ministries and, in general, the Public Administration.

The Ministry of Economy and Finance (MEF) publishes the official lists of affected companies on its website every year. Companies should check these lists regularly.

Obligations for the supplier

If you provide a service to a customer subject to the split payment procedure, you must bear in mind the following:

Issuing the invoice: the invoice is issued as normal with VAT indicated.
Mandatory annotation: the invoice must bear the words “Split payment pursuant to Article 17-ter of Presidential Decree 633/72”.
Accounting treatment: the invoice is recorded like any other, but the VAT indicated is not included in the periodic VAT liability, as it is not collected from the customer.

Exceptions to split payment

Not all invoices are subject to this procedure.
In particular, invoices relating to the following are excluded:

Reverse charge procedure: if the recipient of the service is already liable for tax (e.g. for certain construction works or intra-Community purchases), the reverse charge procedure applies.
Freelancers: services provided by self-employed persons whose fees are subject to withholding tax are excluded from split payment.
Special schemes: turnover subject to special VAT regulations (e.g. flat-rate agricultural regulations or travel agency regulations).
Small amounts: supplies or services documented exclusively by simple receipts or tax receipts.

Effects on liquidity and VAT refunds

As suppliers do not collect VAT but continue to pay input tax on their incoming services, VAT credits often arise.
To mitigate this disadvantage in terms of liquidity, the law provides for preferential (priority) refunds of such credits, provided that the legal requirements are met.

Frequently asked questions (FAQ)

1. How can I check whether my customer is subject to the split payment procedure?
You can consult the official lists on the Department of Finance website and check whether the customer is registered using their tax code.
Upon request, the customer is also required to confirm their membership of the system. Link: Minstery of Economy and Finance

2. Who is responsible in the event of errors?
The Revenue Agency has clarified in its response 604/2020 that the responsibility for classifying the transaction as split payment always lies with the issuer of the invoice. This applies regardless of the information provided by the customer/client.

3. Does split payment also apply to freelancers?
No. The tax authorities have clarified that fees subject to withholding tax are excluded from the split payment procedure.

Question 56

Supplementary pension funds (ital.: fondo previdenza complementare)

Accepted Answer

Supplementary pension funds are forms of supplementary retirement provision. They are designed to supplement the state pension and build up additional income for retirement in the long term. In Italy, this is referred to as the ‘second pillar’ of retirement provision. The legal basis is primarily Legislative Decree No. 252/2005.

What is a supplementary pension fund?

A supplementary pension fund collects contributions from the employee and, where applicable, contributions from the employer. Often, severance pay, i.e. the TFR (trattamento di fine rapporto), is also paid into the fund. The accumulated amounts are invested by the fund and later paid out as a supplementary pension or, in part, as a lump sum. The individual position depends on how much has been paid in, the duration of membership and the returns achieved by the fund.

What types of supplementary pension funds are there?

In Italy, there are various forms of supplementary pension provision:

closedend or collective agreement funds, which are often provided for in collective agreements;
openended funds, offered by banks, insurance companies or asset managers, for example;
individual pension plans (PIPs), individual pension arrangements offered by insurance companies and implemented through life insurance policies.

For the employer, the most important factors are whether the applicable collective agree-ment provides for a specific fund and whether an employer contribution is required.

Role of severance pay

Employees can generally decide whether the severance pay accruing in future remains with the company or is transferred to a supplementary pension fund. If the severance pay is transferred to a fund, it is no longer paid out by the employer upon leaving the company, but becomes part of the individual’s pension provision. The severance pay is transferred to the fund on an ongoing basis; the exact payment dates depend on the specific fund.

For employees who were first subject to compulsory insurance after 28 April 1993, the entire accruing severance pay is transferred to the fund when they join a supplementary pension scheme. Employees who were already subject to compulsory insurance prior to this, however, may transfer only a portion of their severance pay into the supplementary pension fund.

New rules from 1 July 2026

From 1 July 2026, new rules will apply to new employees in the private sector. If no express decision is made within 60 days of hiring, an automatic allocation to supplementary pension provision may apply.

Within this period, the employee can decide whether the severance pay should remain with the company or be paid into a supplementary pension scheme. For employers, it will therefore become even more important to properly inform employees and document their decision.

Tax benefits

Contributions to supplementary pension funds are tax-deductible. From the 2026 tax year, the annual maximum amount for the tax deductibility of contributions has been raised from €5,164.57 to €5,300. This applies to both the employee’s and the employer’s contributions. Severance pay is not included in this limit.

The contributions paid reduce the employee’s taxable income. As a result, income tax is calculated at a lower rate and less payroll tax is payable.

In addition, voluntary contributions may be paid into the fund. These may be taken into account in the tax return within the statutory maximum limits.

Payment of the supplementary pension fund

The supplementary pension is generally paid out once the requirements for the statutory pension have been met, provided that the conditions of the relevant fund are also satisfied. The benefit may be paid as a regular supplementary pension or, within certain limits, as a lump sum.

When paid out, the accumulated amounts are taxed at a favourable rate. The tax rate is generally 15% and may gradually decrease to 9% in the case of longer participation.

Early withdrawal

Under certain conditions, employees may also apply to withdraw funds from the supplementary pension fund before retirement. Typical cases include significant medical expenses, the purchase or renovation of a primary residence, or other personal needs within the statutory limits.

In certain cases, withdrawals of up to 75% of the accumulated balance are possible; for other reasons, up to 30%.

What do employers need to bear in mind?

For employers, supplementary pension provision is primarily a matter of correct payroll processing and proper application of the collective agreement. In particular, the following must be checked:

which collective agreement applies;
whether a specific pension fund is designated;
whether an employer’s contribution is due;
how employees must be informed about severance pay (TFR) and supplementary pension schemes;
how contributions are correctly processed via the payslip.

Question 57

Tax form F24 (ital.: Modello F24)

Accepted Answer

The F24 tax form in Italy is the standardised, summary payment form used to pay almost all important taxes, social security contributions and other levies to the state, regions, municipalities and social security institutions. Anyone who is economically active in Italy – whether as an entrepreneur, freelancer, employer or private individual – can hardly avoid using the F24 payment form.

For entrepreneurs and freelancers, the F24 payment form is used in particular to pay value added tax (VAT), income tax (IRPEF), corporation tax (IRES), regional value added tax (IRAP) and various substitute taxes. Employers use it to pay the withheld wage tax (IRPEF) and social security contributions to the welfare institution INPS/NISF and accident insurance contributions to the accident insurance office INAIL. Private individuals also use the F24 payment form, for example to pay property tax (IMU/GIS) or to settle instalments from tax assessments.

What is the F24 tax form?

The F24 tax form is a standardised payment form. It is used to combine payments to various public authorities and clearly assign them to a specific tax or levy.

A particularly practical feature of the F24 is that it allows several taxes and contributions to be paid in a single transaction. For example, wage tax, INPS contributions, VAT and property tax can all be paid at the same time on a single maturity, expiration date – provided that the tax code, reference year and amounts are entered correctly.

The F24 form is therefore a central instrument in the Italian tax and levy system, comparable to a collective payment receipt for different types of taxes.

What is the F24 form used for?

The F24 is used to process almost all relevant payments to the state, regions, municipalities and social security institutions. These include in particular:

State taxes

Value added tax (Italian: IVA)
Income tax for natural persons (Italian: IRPEF)
Corporation tax (Italian: IRES)
Regional value added tax (Italian: IRAP)
Wage taxes
Withholding taxes on fees

Regional and municipal taxes

Property tax (Italian: IMU)
Other local taxes, depending on the municipality or region

Social security contributions

Contributions to the state pension and social security scheme (Italian: INPS)
Contributions to accident insurance (Italian: INAIL)
Contributions to bilateral bodies, health or pension funds

Penalties, interest and instalment payments

Late payment penalties and interest on arrears
Instalment payments from tax assessments or settlements
Other subsequent payment obligations to the tax authorities

Who uses the F24 tax form?

Companies and freelancers

Monthly or quarterly VAT payments
Advance and balance payments of IRPEF/IRES/IRAP
Other direct taxes (e.g. IMU/GIS, certain substitute taxes)

Employer

IRPEF wage tax withheld
Social security contributions to INPS/NISF
Contributions to INAIL
Contributions to bilateral bodies, health and pension funds

Private individuals without VAT number

Property tax IMU/GIS
Certain registration and stamp taxes
Instalment payments from tax assessments or settlements

Central importance of the F24 in the Italian tax system

The F24 form plays a central role for several reasons:

a) Uniform form for all
All taxable individuals use the same form – from private property owners to multinational companies. This ensures structured processes, facilitates processing by banks and authorities, and reduces formal errors.

b) Offsetting tax credits
A particular advantage is that tax credits can be offset directly in the form against taxes and contributions that have reached their maturity or expiration date. Examples:

Value added tax credits
Income or corporation tax credits
Credits from social security contributions

This function improves liquidity and reduces bureaucratic effort.

c) Electronic submission (telematic transmission)
Companies and freelancers with a VAT number (Italian: partita IVA) must generally submit their F24 payments electronically, for example via:

the revenue agency's online services or
the bank's online banking service

This facilitates payment allocation, reduces data entry errors and enables better traceability.

Private individuals without a VAT number can still make certain payments in paper form at the bank or post office, but are increasingly using online banking or Chartered Accountants.

It should be noted that not all Italian banks support the electronic transmission of the F24 form, which may lead to difficulties in some cases (often at branches of major international banks).

Types of F24 tax form

In practice, there are several different types:

F24 ordinario (standard form): The "classic" F24 payment form for the state, regions, municipalities and many contributions. It also allows tax credits to be offset against tax liabilities.
F24 semplificato (simplified form): A simplified, usually one-page version, especially for local taxes such as IMU and other municipal taxes.
F24 "Elide" – with identification features (Elementi identificativi): Used when additional information is required, e.g. contract numbers, identification of a specific rental or leasing agreement or a property.
F24 Accise (for excise duties): Special variant for excise duties on energy products, alcohol, etc.

Maturity dates

As the F24 tax form is used for a wide range of taxes and contributions, there are different due dates. As a general rule:

Monthly maturity dates

Many taxes and contributions paid via F24 have their maturity on the 16th of the following month.

Monthly VAT payments
Wage tax and withholding tax on fees
Social security contributions to the pension and social security fund (INPS)

Quarterly maturity dates

VAT payments generally mature on the 16th of the second month after the end of the quarter (16 May, 16 August, 16 November).

Annual maturity dates

Income tax: 30 June (balance and 1st advance payment) & 30 November (2nd advance payment)
Corporation tax and regional value added tax: same dates
Property tax: 16 June and 16 December

If the 16th falls on a Saturday, Sunday or public holiday, the deadline is postponed to the next working day.

Common tax codes (selection)

Each tax or levy has its own tax code. The complete list of these codes is continuously updated by the tax authorities and is very extensive.

The form is divided into different sections. Below is a description of these sections, as well as the most frequently used codes (*).

Accounting:

Codes (*)	Description	Section
6001 – 6012 6031 – 6033 6035 6099	Monthly VAT liability from January to December Quarterly VAT liability from 1st - 3rd quarter VAT advance payment debt VAT liability or credit from the annual VAT declaration	I - Treasury
1040	Withholding tax liability	I - Treasury
2003 2001 - 2002	Corporation tax Ires - balance payment Corporation tax Ires - 1st and 2nd advance payment	I - Treasury
4001 4033 - 4034	Income tax Irpef - balance payment Income tax Irpef - 1st or 2nd advance payment	I - Treasury
4041 4044 - 4045	Property tax IVIE on real estate abroad - balance payment Property tax IVIE on real estate abroad - 1st or 2nd advance payment	I - Treasury
4043 4047 - 4048	IVAFE wealth tax on financial assets abroad - balance payment IVAFE wealth tax on financial assets abroad - 1st or 2nd advance payment	I - Treasury
1792 1790 - 1791	Substitute tax flat tax regime (regime forfettario) - balance payment Substitute tax flat tax regime (regime forfettario) - 1st or 2nd advance payment	I - Treasury
1842 1840	Flat tax (Cedolare Secca) on rental income - balance payment Flat-rate tax (Cedolare Secca) on rental income - 1st and 2nd advance payments	I - Treasury
2501	Virtual stamp duty	I - Treasury
AF AP	Fixed INPS contributions for artisans Variable INPS contributions for artisans	II – INPS/NISF
CF CP	Fixed INPS contributions for merchants Variable INPS contributions for merchants	II – INPS/NISF
P10	INPS contributions for professionals under separate management - pension holders	II – INPS/NISF
PXX	INPS contributions for professionals under separate management - non-pensioners	II – INPS/NISF
LAA	INPS contributions - special management (CD, CM, IA)	II – INPS/NISF
3800 3812 - 3813	Value added tax Irap - balance payment Value added tax Irap - 1st and 2nd advance payment	III - Regions
3801	Regional supplementary tax - balance payment	III - Regions
3844 3843	Municipal supplementary tax - balance payment Municipal supplementary tax - advance payment	IV – Local taxes
3850	Annual chamber of Commerce fee dept	IV – Local taxes
3912 - 3930	IMU / GIS debt	IV – Local taxes
E065	Debt for contributions to the Agronomists' Fund (EPAP)	V - Other insurance contributions
E066 - E068	Debt for contributions to the Industrial Experts Fund (EPPI)	V - Other insurance contributions
E085 - E090	Contributions owed to the Engineers and Architects Fund (Inarcassa)	V - Other insurance contributions
E100 - E107	Debt contributions to the Lawyers' Fund (Cassa Forense)	V - Other insurance contributions

Payroll:

Codes (*)	Description	Section
1001	Taxes Income tax (IRPEF)	I - Treasury
1012	Tax on severance pay (TFR)	I - Treasury
1701	Tax reduction “trattamento integrativo” This code normally represents a credit, as the employer pays the amount via payroll and subsequently offsets it in the F24 form.	I - Treasury
1704	Additional allowance (“Somma integrativa”) This code normally represents a credit, as the employer pays the amount via payroll and subsequently offsets it in the F24 form.	I - Treasury
1712/1713	Tax on revaluation of severance pay (TFR) Advance payment (1712) due 16 December; balance payment (1713) due 16 February each year.	I - Treasury
6781	Payroll tax credit (IRPEF credit)	I - Treasury
DM10	Social security contributions Social security contributions (INPS/NISF) Employee contributions (total contributions borne by employee and employer)	II – INPS
DMRA	Back payment of INPS contributions	II – INPS
DMRP	Offset of excess INPS contributions paid	II – INPS
C10	INPS contributions for directors - ordinary contribution	II – INPS
CXX	INPS contributions for directors - reduced contribution	II – INPS
MET1	Health funds / Bilateral funds Health Fund “Metasalute” for employees under the Metal Industry collective agreement	II – INPS
EST1	Health Fund “Fondo EST” for employees under the Commerce and Services collective agreement	II – INPS
QUAS	Health Fund “Quas” for employees classified as “Quadro” under the Commerce and Services collective agreement	II – INPS
ASSP	Health Fund “CadiProf” for employees under the Professional Services collective agreement	II – INPS
EBNA	Bilateral body for artisans for employees under artisan collective agreements in the Province of Bolzano	II – INPS
3802	Regional surtax the abbreviation of the respective region is indicated in the left column	III - Regions
3847/3848	Municipal surtax the abbreviation of the respective municipality is indicated in the left column	IV – Local taxes
P	Accident insurance premium (INAIL) paid annually by 16 February or upon opening a new risk classification	V – Other insurance contributions
COLL	Pension fund Laborfonds and Raiffeisenfonds settlements are made quarterly	V – Other insurance contributions

Frequently asked questions (FAQ)

1. What is the F24 tax form used for?
In Italy, the F24 is used to process almost all important payments to the state and other public authorities: taxes (e.g. income tax IRPEF, corporation tax IRES, regional value added tax IRAP, VAT), social security contributions (INPS/NISF), accident insurance (INAIL), property tax IMU/GIS and numerous municipal and regional taxes.

2. How is the F24 tax form structured?
The F24 form comprises:

a header section with the taxable person's details (tax number, VAT number if applicable, name/company name, address),
a section for bank details and payment method, and
several sections for the state, social security, regions, municipalities and other institutions.

The individual lines use tax codes, reference years and amounts to identify the respective taxes and contributions precisely. This allows multiple payments to be combined in a single form.

3. Who has to submit the F24 electronically?
Entrepreneurs and freelancers with a VAT number must always submit their F24 payments electronically (telematically) via the revenue agency or bank. Private individuals without a VAT number are only required to submit electronically in certain cases, for example when tax credits are offset or certain tax codes are used.

4. When is the F24 due?
Monthly payments via F24 are due on the 16th day of the following month (e.g. wage tax and social security contributions for October → 16 November). Quarterly VAT payments are usually due on the 16th of the second month after the end of the quarter. If the maturity date falls on a weekend or public holiday, the maturity date is postponed to the next working day.

5. What happens in the event of late payment?
Late payments are subject to penalties and interest on arrears. In many cases, missed payments can be made up for via the "voluntary late payment" system, whereby penalties can be reduced if the correction is made early.

6. Can tax credits be offset against the F24?
Yes. Offsetting tax credits against taxes due is one of the main advantages of the F24. However, this requires correct entries and, if necessary, certain notifications to the revenue agency.

7. Can a submitted F24 form be corrected?
If an F24 form is submitted with errors (e.g. incorrect tax code or incorrect reference year), it is not usually possible to simply cancel it. Corrections are made via an official procedure at the revenue agency and should ideally be carried out with the assistance of a tax specialist.

Question 58

Tax identification number (ital.: Codice fiscale)

Accepted Answer

In Italy, the tax identification number is the central tax identification number. It is used to uniquely identify individuals and organizations, especially for dealings with public authorities and in many other legal and contractual relationships.

Note: for business activities, a VAT number (Partita IVA) is also required.

Who has/needs a tax identification number?

Private individuals (Italians and non-Italian nationals) as soon as they act in Italy in a legal or administrative capacity, for example for contracts, studies, work, etc.
Companies and other organizations, for example corporations, associations, and foundations.

Structure of the Codice Fiscale

Private individuals: 16 characters consisting of letters and digits. The code is formed from elements of the name, date of birth, gender, place of birth, and a check character.
Companies/organizations: 11 digits.

Examples of what the tax identification number is required for

Employment relationships (hiring, payroll, social security)
Real estate (purchase or rental)
Banks and insurance companies (opening an account, insurance policies)
Administrative and tax procedures (tax returns, payments, registrations)
Healthcare (for example services within the public system)
Contracts in general (for example telephone, internet, car, notarial deeds)

Applying for the tax identification number

1. Application in Italy at the Agenzia delle Entrate

Private individuals: the standard route is to apply at a territorially competent office of the Agenzia delle Entrate (Italian tax office) using form AA4/8. For this, a passport/identity card and, depending on legal status, possibly additional documentation are usually required. In addition, a justification or purpose must be stated (for example taking up employment, rental/purchase contract, bank, procedure).
Companies/organizations: the application is made using form AA5/6; normally, the tax identification number is requested as part of the incorporation process.

2. Application abroad via a power of attorney or via the Italian consulate

Persons not resident in Italy must generally delegate an authorized person in Italy to submit the application to the Agenzia delle Entrate (Italian tax office). According to the Ministry of Foreign Affairs, an application through the Italian consulate is only possible in exceptional cases.

General note: Graber & Partner handles tax identification number applications exclusively in the context of company incorporations, both for the company and for related private individuals (for example legal representatives).

Frequently Asked Questions (FAQ)

1. Is the tax identification number (Codice Fiscale) the same as the VAT number (Partita IVA)?
No. The tax identification number is the general identification number for private individuals and companies. The VAT number is additionally required for business activities.

2. Who, as a non-Italian citizen, needs a tax identification number?
Foreign private individuals need a tax identification number as soon as they act in Italy in a legal or administrative capacity (for example purchasing real estate, studying, entering into various contracts).

3. Can the tax identification number be applied for abroad?
Yes, normally by delegating a person in Italy. Applying through the Italian consulate is only possible in certain exceptional cases (in particular, where online procedures are required and delegation is not possible).

4. What documents are required?
As a rule, a valid ID document (identity card/passport) as well as a reason why the tax identification number is required.

5. How long is the tax identification number valid?
The tax identification number is valid indefinitely.

Our Services

Question 59

Tax incentive for equity increases (ACE)

Accepted Answer

Tax incentive for equity increases (ACE)

In Italy, up until the 2023 tax year, the ACE tax incentive was available. This allowed companies applying double-entry bookkeeping to claim an additional deduction from their taxable income, based on the increase in equity compared to 31.12.2010. For the calculation of the equity increase, both retained earnings and capital contributions, including shareholders’ contributions to cover possible losses, could be considered. The equity increase was multiplied by a notional interest rate of 1.3%, and the resulting amount could be deducted from the taxable income base. Limited to the year 2021, an alternative to ACE was introduced: the Super-ACE. Further details can be found below.

Super ACE

Introduced as part of Covid-19 support measures, it allowed taxpayers eligible for ACE to apply, on the equity increase of 2021, a special deduction of 15% from the 2021 taxable income base. The benefit was subject to the condition that the 2021 equity increase could not be withdrawn in the following two years, 2022 and 2023.

Question 60

Tax withholdings (ital.:ritenute fiscali)

Accepted Answer

Tax withholdings (ritenute fiscali) are a central component of the Italian tax system. They do not constitute a separate type of tax, but rather a method of collection whereby the tax is withheld in full or in part at the time of payment.

The party liable for the payment acts as the tax substitute (sostituto d’imposta), for example an employer, a customer or a bank. They withhold the tax in full or in part and pay it to the Revenue Agency/tax office (Agenzia delle Entrate). This simplifies tax collection and reduces the risk of tax losses.

For the recipient, this means that they receive only the net amount. The tax withheld may either be final or be credited as an advance payment against their tax return, tax declaration.

Types of tax withholding

In Italy, a distinction is made between two basic forms:

Ritenuta a titolo di acconto (advance payment)

constitutes an advance payment on income tax
is credited against tax liability in the tax return, tax declaration
typically applies to self-employed activities

Ritenuta a titolo d’imposta (final taxation)

is final; no further taxation
typically applies to investment income

Key areas of application

Tax deductions apply to various types of income, in particular:

Income from self-employment (lavoro autonomo)
Income from employment
Occasional services (prestazioni occasionali)
Commissions
Investment income
Cross-border payments

Income from self-employment (lavoro autonomo)

For self-employed services (e.g. from consultants, solicitors), a tax deduction of usually 20% is withheld from the fee and thus serves as an advance payment of taxes.

Special provisions:

Does not apply to taxable individuals under the flat tax regime (regime forfettario)
is credited against personal income tax
must be included in the tax return, tax declaration

Income from employment

For employees, income tax is deducted directly by the employer. He calculates the taxes according to the progressive IRPEF rates as well as regional and local surcharges.

Characteristics:

monthly deduction
annual adjustment by the employer
account taken of tax deductions and allowances

Occasional services (prestazioni occasionali)

Occasional services refer to one-off or irregular activities that are not carried out on a permanent basis. A key characteristic is that these activities do not require any business organisation. They therefore do not constitute a continuous self-employed activity, but rather one-off services. As a rule, a 20% tax deduction is applied, which serves as an advance payment.

Commissions

Here too, this constitutes an advance payment of taxes. For sales representatives and similar activities, 23% is therefore generally withheld on 50% of the commission, amounting to an effective rate of 11.5%.

Investment income

Investment income (e.g. interest, dividends) is generally subject to a tax deduction of 26%.

Features:

Withholding by banks or distributing companies
usually final taxation and therefore no further inclusion in the progressive income tax

Cross-border payments

Special rules apply to cross-border payments, which usually require a withholding tax of 30%.

Some examples are:

Dividends, interest and royalties
self-employed services
Company profits
Artists and sportspeople

In international situations, this can therefore lead to double taxation. This is avoided by:

Crediting of foreign tax withholdings
Refund procedures in the source country
EU directives (e.g. Parent-Subsidiary Directive)
Application of double taxation agreements (DTAs), which either reduce the withholdings or eliminate them entirely.

Documentation and evidence

Key documents relating to tax withholdings:

Unified certification CU (Certificazione Unica): proof of taxes withheld
Modell 770: Annual return of the withholding agent (sostituto d’imposta)
Proof of payment (using Form F24)

These documents are crucial for the correct crediting of withheld taxes in the tax return, tax declaration, and for international refund procedures.

Question 61

Temporary Staffing (ital.: somministrazione)

Accepted Answer

Temporary staffing (somministrazione di lavoro) is a model in which an employee is not directly employed by the company where they actually work, but by an authorized staffing agency (agenzia di somministrazione). The agency assigns the employee to the so-called “using- company”, where the work is actually performed. In other words, there is a triangular relationship between the staffing agency, the employee, and the using company.

Temporary staffing in Italy is not freely configurable but is strictly regulated by law. This is precisely why it is important to distinguish legal temporary staffing from other models. Not everything that appears similar in practice is automatically lawful. In particular, modern terms (such as “Employer of Record”) or contractual wording do not alter the fact that the actual arrangement is always subject to verification.

How does temporary staffing function?

In temporary staffing, the employee enters into an employment contract with the staffing agency. The agency remains the formal employer and is specifically responsible for payroll, payment, social security contributions, and many administrative duties. The client company, on the other hand, utilizes the employee’s services and exercises the right to give work-related instructions.

This model can be attractive for companies when personnel needs need to be met flexibly and often at short notice.

Who is permitted to offer temporary staffing in Italy?

In Italy, temporary staffing may generally only be offered by authorized agencies. These must be registered in the relevant registry (“Albo nazionale delle Agenzie per il lavoro”). Registration is granted only if legal and financial requirements are met.

For companies, this point is crucial: anyone wishing to use temporary staffing services must verify that the provider is actually licensed as a staffing agency. This is where, in practice, a significant risk lies.

Conclusion

Temporary staffing in Italy is a legally regulated model of labor supply. It can be beneficial for companies but is subject to clear legal requirements. Above all, it is crucial that an authorized employment agency is involved and that the model is implemented correctly not only contractually but also in practice. Anyone wishing to deploy personnel flexibly in Italy should therefore carefully distinguish between permissible temporary staffing, direct employment, and other employment models.

Frequently Asked Questions(FAQ)

1. What is temporary staffing in Italy?

Temporary staffing involves an authorized staffing agency providing an employee to a client company.

2. Who is the employer in temporary staffing?

The formal employer is generally the employment agency. The using company utilizes the worker’s services on-site and exercises the right to issue work instructions.

3. Can any company in Italy offer temporary staffing?

No, it can only be provided by authorized employment agencies registered in the national registry.

4. How can you identify a problematic arrangement?

Primarily by the fact that employees are effectively transferred to another company without the involvement of an authorized staffing agency. In such cases, there is a risk of legal consequences and penalties.

Question 62

The cash principle and accrual basis accounting

Accepted Answer

Italian tax law recognises two key points in time at which income and expenses become "taxable" under tax law: the cash principle (Italian: principio di cassa) and the accrual basis principle (Italian: principio di competenza). Both principles determine in which tax year income is taxed or expenses are deducted – and are therefore of great practical importance for entrepreneurs, freelancers and private individuals in Italy.

While the cash principle is based on the actual date of payment, the accrual basis principle is based on the economic occurrence of income or expenditure – regardless of cash flow.

This distinction is important because it has a direct impact on the tax base, accounting and accrual accounting.

What does the cash principle mean?

Under the cash principle (Italian: principio di cassa), income and expenses are recorded at the time when payment is actually made.

Income is taxed in the year in which the money is actually received.
Expenses are deductible in the year in which they are actually paid.

In Italy, the cash principle applies in particular to:

Freelancers (Italian: liberi professionisti)
Small businesses in the flat tax regime (Italian: regime forfettario)
Companies using simple accounting: since the 2017 budget legislation, a special cash principle has been introduced for these companies; although this is formally a cash principle, it contains mixed rules with elements of the accrual basis principle.

Advantages

Easy to use
Clear traceability
Taxation only upon actual receipt

Example

An architect issues an invoice in December 2025 that is not paid until February 2026. According to the cash principle, the fee is taxable in 2026 because that is when the payment is received.

What does the accrual principle mean?

The accrual principle (Italian: principio di competenza) records income and expenses in the year to which they economically belong, regardless of when payment is made.

It forms the basis of double-entry bookkeeping and is mandatory for corporations.

Typical application in Italy

The accrual principle applies to:

Corporations (Srl, Spa, Sapa)
Partnerships with proper accounting (Snc, Sas)
Companies with accounting obligations

Advantages

More realistic presentation of economic results
Correct accrual accounting for periods
Comparability of annual financial statements

Example

A company receives an invoice for € 10,000 for consulting services rendered in November and December 2025, but which will not be paid until February 2026.

→ Recognition in 2025, because that is when the economic expense was incurred.

Which rule applies to whom? – Overview

Corporations and companies using double-entry bookkeeping
- Basic principle of competence for the company's taxable income
Companies using single-entry bookkeeping
- Special mixed system: current operating income and expenses follow the cash principle, certain items (e.g. amortisation, depreciation and write-downs, write offs) continue to follow the accrual principle.
Freelancers
- Cash principle: taxation of fees received minus expenses paid
Flat tax regime, system
- Cash principle for determining the tax base, combined with a flat-rate cost deduction using the income coefficient (Italian: coefficiente di redditività) provided for by law.

Why is the distinction important?

The choice or specification of the cash or accrual principle influences:

The timing of the tax burden (earlier or later taxation of income)
Liquidity planning (e.g. whether taxes are due before payment is received)
Structuring options around the end of the year (e.g. deferral of payments)
Comparability of annual financial statements and business analyses

For most taxable individuals, the system is prescribed by law and cannot be freely chosen. In individual cases (e.g. change from simplified to regular accounting), transitional rules must be observed in order to avoid double taxation or unaccounted costs.

Cash principle vs. accrual basis – the most important differences

Criterion	Cash principle	Accrual basis
Decisive	Payment	Economic affiliation
Typical users	Freelancers, flat-rate taxpayers	Companies with accounting
Complexity	Low	Higher
Focus	Liquidity	Period-based result
Impact on taxes	Only upon payment	Independent of cash flow

Question 63

Training as a tax advisor and auditor in Italy (professional internship)

Accepted Answer

Those who wish to work in Italy as tax advisor (Dottore Commercialista), accounting expert (Esperto Contabile) or auditor (Revisore Legale) must follow a well-defined path that includes university studies, professional training, a state exam and continuing education.

Overview of professional profiles

Tax advisor (Section A – Dottori Commercialisti)

Tax advisors are qualified experts in economics and taxation who assist companies and individuals in tax, accounting and business management matters.

Their main tasks include:

annual financial statements, tax returns and tax planning
representation before the tax authorities
business consulting, business plans, financial and liquidity analysis
company and shareholding valuations
assistance with restructuring, liquidations and appraisals

Accounting expert (Section B – Esperti Contabili)

They mainly deal with operational and accounting tasks:

day-to-day accounting
preparation of annual financial statements and tax returns
standard economic analyses
assistance with administrative and compliance matters

Their skills are more limited than those of tax advisors, particularly in areas such as appraisals, valuations and complex legal issues.

Auditors

Statutory auditors are responsible for the annual audits required by law.

Their activities include:

Verification of annual financial statements in accordance with national and international auditing standards
Checking the accounting and internal control systems
Preparing audit reports for shareholders and administrative bodies
Compliance with auditing, ethical and independence requirements

Study requirements

Access depends on the specific professional qualification:

Tax advisor (Section A – Dottore Commercialista):
Three-year degree in Economics and two-year master's degree in economics (LM-56, LM-77, 64/S, 84/S).
Accounting expert (Section B – Esperto Contabile):
three-year degree in economics (L-18, L-33, classes 17 and 28).
Auditor (Revisore Legale):
same educational requirements as for tax advisors and accounting experts.

Professional internship (Tirocinio)

Duration

18 months for tax advisors and accounting experts
3 years for auditors
mandatory registration in the Register of Trainees of the Association of Tax advisors or the MEF
mandatory documentation in the internship booklet with six-monthly verification

State examination (Esame di Stato)

At the end of the internship, candidates can take the State Examination, which is a prerequisite for registration in the professional register.

Tax Advisor (Section A)

three written tests, one of which is practical
one oral examination
Topics: tax law, accounting, economic and corporate law, corporate crisis and insolvency, civil law

Accounting Experts (Section B)

again, three written tests
one oral examination
main topics: accounting and tax law

Auditors

one written examination
one oral examination
Topics: auditing in accordance with national and international standards, accounting, professional ethics

Only after passing the relevant state examination is it possible to register with the Association of Tax advisors or the Register of Auditors.

Continuing professional development requirement

Tax advisors and auditors are required to undergo continuing professional development to ensure the quality and relevance of their advice.

Question 64

UniEmens

Accepted Answer

UniEmens is the monthly electronic report that employers in Italy are required to submit to the National Social Security Institute INPS/NISF. Since 2009, it has replaced the former DM10/2 and EMENS systems and consolidates all relevant wage and contribution data into a single standardized data flow.

Purpose of the report

Through UniEmens, all wage, salary and contribution data of employees are transmitted. This enables INPS/NISF to correctly record social security contributions and accurately assign individual entitlements – such as pension, sickness or unemployment benefits.

What information does UniEmens contain?

The reporting system includes both company data and detailed information for each employee, in particular:

Gross wages and contribution-relevant earnings
Working hours, type of contract (full-time/part-time), fixed-term employment
Applicable collective bargaining agreement (CCNL)
Absences such as sickness, vacation or maternity leave
Calculated social security contributions and any applicable benefits

This information forms the basis of each employee’s individual social security account.

Deadline & submission

UniEmens must be submitted monthly and no later than the last day of the following month via the INPS/NISF online portal. Access requires SPID, CIE or CNS authentication.

Responsibility of the employer

Employers are required to submit UniEmens completely and on time and to pay the corresponding contributions. Incorrect or late submissions may result in adjustments, correction requests or contribution gaps.

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