Question 1

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 2

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 3

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 4

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 5

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 6

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.

Our Services

Question 7

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 8

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 9

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 10

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 11

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 12

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 13

Duties and Liabilities of Directors in Italian Srl Companies

Accepted Answer

Duties and Liabilities of Directors in Italian Limited Liability Companies (Srl)

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.

1. 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.

2. 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.

3. 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.

a) 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.

b) 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.

4. 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.

5. 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 14

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)

1. Since when has electronic invoicing been mandatory in Italy?
Electronic invoicing has been mandatory in Italy since 1 January 2019.

2. Who is obliged to issue electronic invoices?
Companies and self-employed professionals with an Italian VAT number. Healthcare services to private individuals are exc

Question 15

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 2025: 17.00%.
Allocation: 8.50% payable by the principal and 8.50% payable by the agent.

Contribution amounts and thresholds (for 2025):

Agency relationship	Maximum commission threshold	Minimum amount
Monomandatario (one principal)	45.085 €	1.011 € (252,75 € per quarter)
Plurimandatario (multiple principals)	30.057 €	507 € (126,75 € 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 16

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 17

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 18

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 19

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 20

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 21

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 22

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 is planned for taxpayers in the middle-income segment. The second IRPEF rate (income between €28,000 and €50,000) is to be reduced from the current 35% to 33%.

Note: The following measures are part of the current draft of the 2026 Budget Law and are not yet final.

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

23% up to €28,000
33% from €28,001 to €50,000 (instead of the current 35%)
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.

Gross-net calculator 2026

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 23

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 24

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 25

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 26

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 27

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 28

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 29

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 30

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 31

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 32

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 33

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 34

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 35

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 36

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.

Question 37

UniLav

Accepted Answer

UniLav is the unified electronic filing system (“modello Unificato Lav”) for all mandatory employment notifications (communicazioni obbligatorie) in Italy. Through UniLav, data are transmitted centrally to the Ministry of Labour, the public employment services (Centri per l’impiego), INPS/NISF and INAIL and replace the former separate notifications to the various bodies.

Who is required to file?

In principle, all employers in Italy are required to file – regardless of industry and company size – including Italian branches of foreign companies. In practice, filing is usually handled by a labour and payroll consultant (consulente del lavoro) or by the tax adviser. However, legal responsibility remains with the employer.

Which events are reported via UniLav?

Start/Registration of an employment relationship (Assunzione)
Extension of fixed-term contracts (Proroga)
Change/Conversion of the employment relationship (Trasformazione)
Secondment/temporary assignment and transfer (Distacco, Trasferimento)
Termination of the employment relationship (Cessazione)

Deadlines and form

The notification of a new hire must be filed no later than midnight of the day before the employee starts work. Extensions, conversions, secondments and terminations must generally be reported electronically within 5 days of the event. Filing is carried out exclusively online via the regional portals or through an authorised consultant; the electronic acknowledgement of receipt (Ricevuta UniLav) serves as proof.

Our Services

Question 38

Use of cars with foreign licence plates in Italy

Accepted Answer

(Art. 93-bis Codice della Strada, REVE)

Since the reform introduced by the “Security Decree” in 2018 and Law no. 238/2021, strict rules apply in Italy for persons resident in Italy who use a car with a foreign licence plate. The aim is to prevent abusive foreign registrations (“esterovestizione” of vehicles).

Who is considered “resident in Italy”?

Under traffic law, the decisive factor is the residenza anagrafica (registered residence in the municipal register). Anyone registered as resident in an Italian municipality is treated as resident.

Basic rule: own car with foreign licence plate

If the car belongs to a person who moves their residence to Italy, the vehicle must be registered in Italy within 3 months from the date on which residence is established. Otherwise, fines, immobilisation and, in the most serious cases, confiscation of the vehicle may be imposed.

Use of third-party vehicles and REVE

If a person resident in Italy drives a car with foreign registration that is not registered in their name (e.g. company car of a foreign employer, leasing, long-term rental, loan), the following applies:

You must carry a document with a date-certain signature from the owner showing the legal basis (leasing, rental contract, loan, etc.) and the duration of use.
If the right to use the car exists for more than 30 days per year (also non-consecutive), registration in the REVE (Registro dei veicoli esteri - Register of foreign vehices) at the PRA (ACI) is in principle required.
For certain situations – for example employees who use a foreign company car exclusively for work purposes – administrative practice provides for simplifications (no REVE registration, but documentation requirements).

Exceptions for tourists and non-residents

Tourists and persons resident abroad may generally drive in Italy with their foreign-registered car for up to one year without changing the registration, provided they themselves are not resident in Italy.

Tax aspects

Once the car is registered in Italy, Italian car tax (bollo auto) as well as Italian insurance premiums and, where applicable, business taxes (e.g. depreciation of the company car, value-added tax) generally become relevant.

Frequently asked questions (FAQ)

1. I have moved to Italy and still own a car with German/Austrian registration. What do I have to do?
You must re-register the car within 3 months of your residence being registered in Italy. Otherwise, you risk fines, immobilisation and, where applicable, confiscation of the vehicle.

2. I live in Italy and my employer in Germany provides me with a company car. Am I allowed to drive it?
In principle yes, provided you carry a written agreement with a date-certain signature (e.g. leasing or use agreement) showing the legal basis and duration of use. If the vehicle is used for more than 30 days per year, REVE registration may also be required; for use strictly for business purposes there are some simplifications.

3. Does every car with a foreign licence plate have to be registered in the REVE?
No. The REVE obligation applies to persons or businesses resident in Italy who use a car with foreign registration for more than 30 days per year. Tourists, persons resident abroad and certain employees with company cars are exempt.

4. What happens if I ignore the documentation or REVE obligations?
You risk administrative fines (amounting to several hundred euros), temporary immobilisation of the vehicle and – if the situation is not remedied within the prescribed period – confiscation/forfeiture of the car.

5. Do the rules also apply to vehicles with number plates from another EU country?
Yes. The provisions of Art. 93-bis of the Italian Highway Code apply regardless of the country of registration, i.e. to number plates from both EU and non-EU states. What matters is your residence/registered office in Italy and the duration of use.

Question 39

VAT rates in Italy (ital.: aliquota iva)

Accepted Answer

In Italy, there are several legally regulated VAT rates. The type of delivery or service is the only determining factor – not the person of the buyer or client.

The starting point is the standard VAT rate of 22%, which applies to all sales.

Reduced VAT rates apply only in exceptional cases expressly provided for by law for social, health policy or economic reasons. These rates are regulated by the Italian VAT Act (DPR 633/72, Table A) and are divided into 4%, 5% and 10%.

10% – reduced tax rate
Applies to certain services, such as accommodation, catering, and selected construction and renovation services.
5% – significantly reduced tax rate
Applies to socially and health-related services, as well as to individual goods that are precisely defined by law.
4% – super-reduced tax rate
Applies to basic necessities and goods of particular social relevance, such as food, books or the purchase of a “prima casa” under certain conditions.

Basic principle of VAT rates

The differentiation of VAT rates is based on tax policy considerations: reduced rates apply to certain goods and services that are legally privileged – often due to their social or societal relevance – while the regular VAT rate applies in all other cases.

The current system has evolved over time and has been adjusted repeatedly to reflect changing economic and political objectives.

Question 40

VAT registers in Italy (registri Iva)

Accepted Answer

VAT registers are used to record all VAT-relevant transactions and form the basis for:

periodic VAT settlement
quarterly VAT report
annual VAT declaration
tax audits

The following three registers must be kept:

1. Register of issued invoices (registro fatture emesse)

This register records issued invoices in sequential order.

The mandatory details for each invoice are:

sequential invoice number
date of issue
VAT tax base
VAT amount
applicable VAT rate (for example 4%, 5%, 10%, 22%)
customer data

2. Register of daily takings (registro dei corrispettivi)

This register mainly concerns transactions with final consumers for which no invoice is normally issued, such as in retail trade or the catering sector. Individual transactions are not recorded; instead, the total daily amount is registered.

The mandatory details per day are:

VAT tax base
VAT amount
applicable VAT rate (for example 4%, 5%, 10%, 22%)

3. Register of incoming invoices (registro acquisti)

The purchase register documents incoming invoices.

The mandatory details for each purchase invoice are:

invoice number
date of issue
VAT tax base
VAT amount
applicable VAT rate (e.g. 4%, 5%, 10%, 22%)
supplier data

Who is required to keep them?

All VAT-liable businesses and self-employed professionals must keep the VAT registers, regardless of whether they use the ordinary or simplified accounting system. Exceptions apply, among others, to taxpayers under the flat-rate scheme (regime forfettario).

These registers must be kept by the tax advisor and presented to the tax authorities upon request.

Question 41

Voluntary Disclosure (ital.: Ravvedimento operoso)

Accepted Answer

Voluntary disclosure (ravvedimento operoso) is an instrument provided for under Italian tax law that allows taxpayers to subsequently correct tax irregularities or omissions on their own initiative. This applies in particular to cases in which taxes were paid late or tax obligations were not fulfilled or were fulfilled only partially.

The distinctive feature of this method, which is recognised by the tax authorities, lies in the possibility of correcting errors proactively and before a formal assessment by the tax authority. In return, the taxpayer benefits from significantly reduced administrative penalties compared to the ordinary sanctions.

Voluntary disclosure promotes early self-correction: the earlier the error is corrected, the lower the administrative penalty. The timing of the correction is therefore decisive for the economic advantage of the ravvedimento operoso.

For violations committed from 1 September 2024 onwards, it is decisive whether the error is corrected on the taxpayer’s own initiative without any notice from the tax office, or only after the tax office has become aware of it.

Voluntary disclosure on the taxpayer’s own initiative

The standard case of voluntary disclosure applies where the taxpayer independently identifies the irregularity and corrects it on their own initiative before the tax office becomes aware of it or takes any measures. In this case, this is referred to as the classic ravvedimento operoso.

The amount of the penalty reduction depends exclusively on the timing of the correction. The earlier the error is corrected, the more favourable the reduced penalty:

1/10 of the penalty if corrected within 30 days,
1/9 of the penalty if corrected within 90 days,
1/8 of the penalty if corrected within one year or by the filing deadline of the tax return for the relevant year,
1/7 of the penalty if corrected after these deadlines, but still within the statute of limitations.

Voluntary disclosure following a notice from the tax authority

As soon as a notice from the tax office has been received, any further handling of the matter should always be examined together with the adviser. In particular, where facts or legal issues have not yet been clarified, where the matter is complex or concerns several tax periods, or where alternative procedural routes may be available, it may be appropriate to analyse the further course of action carefully before deciding on a correction.

In such cases, the law provides for a reduction of 1/6, 1/5 or 1/4 of the ordinary penalty. Further details are deliberately omitted here, as these situations are regularly part of an ongoing procedure and must be assessed on an individual basis.

Both in the case of voluntary disclosure on the taxpayer’s own initiative and following a notice from the tax authority, statutory late-payment interest must be paid in addition to the reduced administrative penalty. This interest is calculated on a daily basis on the basis of the applicable statutory reference interest rate.

Frequently Asked Questions (FAQ)

1. Does voluntary disclosure have to be applied for?
No. Ravvedimento operoso does not require a formal application.
The correction is carried out by:

submitting a corrected tax return (if required), and
paying the tax due, the late-payment interest and the reduced administrative penalty (usually via Form F24).

2. Why is early correction particularly advisable?
The earlier the underlying facts or the tax violation are reviewed, the sooner an appropriate solution can be developed together with the adviser.
Timely self-correction:

reduces the financial burden,
avoids later disputes with the tax authorities,
increases legal certainty for companies and private individuals.

As part of voluntary disclosure, three components must always be paid, only once all three components have paid in full is the correction deemed to be effective:

3. Which amounts must be paid as part of ravvedimento operoso?

the tax due,
statutory late-payment interest (calculated on a daily basis),
a reduced administrative penalty, the amount of which depends on the timing of the correction.

Question 42

Work from home in Italy (for foreign company)

Accepted Answer

Due to the many technical possibilities and with a view to a better work life balance, working from home is becoming more and more attractive for companies and their employees. In fact, due to social distancing and the new provisions to cope with the Covid-19 emergency in 2020/2021, working from home has become the focus of companies. In particular, working from home refers to a work model that allows the employee to perform all or part of his work from home or from places other than the office. In this case, the employee continues to have an employment relationship and is therefore also insured.

For companies without a secondary office in Italy, working from home is often a valuable and cost-effective alternative to renting office spaces, provided that the company is registered as an employer in Italy. For further details please refer to our website at https://www.graber-partner.com/en/international-companies/employees-employers-in-italy.html.

According to the provisions in force in Italy, a written agreement/supplementary employment agreement shall be concluded for remote work. In general, the work equipment and working materials (e.g. computer, printer, mobile phone, stationery, payment of rent or heating costs) are provided by the employer, unless otherwise agreed,

Rules and special regulations of remote work in Italy
Regardless of whether the employee works in the company premises or at home, the same rules apply. Hence, fixed working hours (with guaranteed availability of the employee) will be established and the applicable safety regulations must be complied with. Moreover, a trusting relationship between the employer and the employee is obviously advantageous, as it is impossible or difficult to control the actual working time of the employee.

However, this phenomenon may be handled by entering into specific wage agreements (fixed rate overtime payment). Moreover, collaborative software with features such as monitoring working time, access control, defining working time per task etc. may help to better coordinate remote work and strengthen the trusting relationship between the employer and the employee. A particular aspect of remote work is the liability of the Italian Workers' Compensation Authority (INAIL). Indeed, it is often not possible to determine whether or not an accident at work occurred. If, for example, an employee working at the office were to trip and injure on this way to the bathroom, this event would be considered as an accident at work. However, in the case of a remote worker, it would not.

For the calculation of labor costs, gross salary, and the corresponding net salary, you can use our gross-net-cost calculator for Italy.
Special aspects to consider for companies without secondary office in Italy: In any case, working from home per se does not constitute a permanent establishment in Italy. However, before registering the employee in Italy it is necessary to verify the work to be carried out and the tasks to be performed. Under certain conditions, such an employment relationship may create a permanent establishment, e.g. in the case of sales force. For further details please refer to our website at https://www.graber-partner.com/en/international-companies/incorporation-secondary-office-in-italy.html. For all details concerning the registration of employees in Italy, please refer to https://www.graber-partner.com/en/international-companies/employees-employers-in-italy.html. For further information on posting/secondment to Italy please visit https://www.graber-partner.com/en/international-companies/posting-secondment-of-employees-to-italy.html.

SMART WORKING
Smart working is a working model aiming at greater flexibility, increased work autonomy and better work life balance. In effect, it is a specific way of executing the employment relationship that, thanks to an agreement between the parties, is provided for in certain work phases or for the purpose of achieving certain business goals.

Unlike remote working, no prescribed working hours apply and no fixed place of work is established. However, smart workers may be supervised/controlled by the employer, if this is provided for in the agreement. However, a trustful relationship with the employee is a useful prerequisite.
Moreover, the salary remains unchanged. In any case, only the payment of meal vouchers may be suspended during smart working.

For smart working it is necessary to:
- enter into a specific agreement
- file the mandatory e-communication to the Italian Ministry of Labour.

WORKING FROM HOME DURING THE COVID-19 EMERGENCY
During the Covid-19 pandemic, for various reasons it was necessary for employees to work not at their usual office, but from home. Among the main reasons were:

the government's provision according to which employers should allow remote work where possible
the prohibition of employees to leave home because of quarantine
the need for parents to stay at home for home-schooling

For the sake of simplicity and in order not to create other working models, the Italian government provided for "smart working" (see above), simplifying the relevant regulations and communications during the emergency. Hence, it was not necessary to enter into a supplementary agreement and it was possible to submit the e-communication to the Italian Ministry of Labour in a simplified and abbreviated form.

All employee who, due to their type of work, were not able to work from home (e.g. hairdressers, dentists etc.), could apply for extraordinary parental leave at the Italian Institute of Social Insurance (INPS). During this time, they were exempted from work, but continued to receive 50 % of their salary.

Question 43

Working for a German company in Italy, things to know

Accepted Answer

Persons resident in Italy are often contacted directly by German companies for the purpose of penetration and expansion in the Italian market. If they wish to work in Italy for a German (or Austrian) company and, hence, for a foreign company, they will have to check if the company is duly registered in Italy. After doing so (e.g. by registration as an employer or by incorporation of a limited liability company under Italian law), an employment agreement in accordance with Italian law and payroll processing in compliance with Italian law needs to be established.

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

Working from home, service personnel, field staff, sales consultants? Things to consider

Besides the above-mentioned registration, remote office workers will not have to consider many other things. In fact, the place of residence will be registered as workplace (also for insurance purposes) and the remote worker, like any other employee, will have to abide by the rules laid down by the employer. The only difference is that the remote worker performs all or part of his work from home. In general, the work equipment and working materials (e.g. computer, printer, mobile phone, stationery) are provided by the employer, unless otherwise agreed. However, expressly regulated working hours apply. Moreover, a trusting relationship between both parties is obviously advantageous, as it is impossible or difficult to control the actual working time of the employee. However, the remote worker does not have to be available at any time.

In the case of service personnel/field staff (e.g. help desk personnel, programmers, maintenance staff), the employee's place of residence is normally considered for the purpose of registration of the place of work, as the German employer often does not have or need a secondary office in Italy. Since service personnel/field staff sometimes need to travel to customers/suppliers, the company often provides a company car or the employees use their own private car, charging the costs to the employer on a pro rata basis. In Italy, vehicle regulations and laws are very complex and subject to constant change. Hence, they need to be checked carefully together with the tax consultant/payroll consultant.

One case in point is that of sales representative/sales force. In fact, their work mainly consists of sales promotion and expansion in Italy and they often get better contractual conditions. Under the OECD Model, employees who play a key role in sales, even if they do not participate in the conclusion of final contracts, constitute a personal permanent establishment. In this case, the company shall register in Italy (usually under the business name "XY Italy Srl"). Hence, the employees will carry out their work for the Italian company.

Our services for your project in Italy

Please feel free to contact us for a first meeting that does not place you under any obligation and is free of charge, or send us an email with your request and contact details. We will reply to your e-mail in the shortest possible time. Tel. +39 0474 572900 or info@graber-partner.com.

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