One of the major taxes a company has to pay for its business activities in Italy is the corporate tax. The rates for corporate tax decreased in the last years from 53.20% in 1996, to 37.25% in 2006 and 31.4% in 2014. These rates include the so-called IRES (27,5%) and IRAP (3.9%), the components of the tax that must by paid by most companies, with some exceptions.
The companies that are running businesses in the energy field are required to pay an IRES increased by 6.5% and the same rate applies also for legal entities that are “dormant” or that have tax losses for the last three years. The companies that operate in fields such as finance or insurance have to pay a corporate tax increased by 8.5%.
The IRAP is a regional tax for productive activities and it is calculated on the added value of the production, minus the costs for the production, obtained by the company in Italy. The rate for this tax may vary from region to region, but the standard rate is 3.9% and it can be increased by 1%.
The corporate tax in Italy is calculated on the net total income of the companies during one business year and it is an important source for the public budget in Italy.
A company that has the main part of its business in Italy or that is managed from this country has to pay taxes for the Italian authorities. This is considered a resident company that is required to pay the income tax calculated on its income from all over the world, while the companies that are not residents in Italy have to pay only for their income from Italy.
The corporate tax is owed also for capital gains that are considered ordinary income. The rate for this type of income is 27.5%. There are some exemptions applied to capital gains obtained from sale of participations – 95% of this income is exempt if some conditions are fulfilled, according to the Italian laws.
Foreign entrepreneurs interested in corporate tax in Italy may find out more about the taxation in this country from our law firm in Italy. Our Italian lawyers will help them with information and provide also legal services.