IRES: the Italian corporate tax
IRES (Imposta sul Reddito delle Società) is the equivalent of Spanish corporate tax. In Italy it is a flat rate of 24% on your company's profits, with no progressive brackets or regional rates as in Spain.
Italian holding companies benefit from a favourable regime: 95% of dividends received and capital gains from the sale of shareholdings are exempt (participation exemption), which makes Italy an interesting option for group structures.
For self-employed individuals and small businesses there is also the forfettario regime, with a flat rate of 15% (5% for the first five years) on a reduced base, although it does not apply to SRLs.
IRAP: the regional tax you pay even if you lose money
IRAP (Imposta Regionale sulle Attività Produttive) is the big difference in taxes in Italy compared to other European countries. It taxes the value of production, not profit: it is calculated on revenue minus production costs, without deducting staff costs or interest.
The standard rate is 3.9%, although each region can raise it up to 4.97%. This means that a company with losses may still have to pay IRAP, something you should take into account when planning your margins.
VAT in Italy: rates and registration
Italian VAT (Imposta sul Valore Aggiunto) has three main rates depending on the category of goods and services. The Italian intra-community VAT number is obtained automatically when the company is incorporated.
Key points
- Standard rate: 22%
- Reduced rate: 10% (food, hospitality, construction)
- Super-reduced rate: 4% (basic products and press)
- Intermediate rate: 5% (certain basic necessities)
Filing obligations for your SRL
If you operate from Spain, a local adviser and a tax representative for VAT will save you from filing errors and penalties. At Filnet we include this in the monthly taxation plan.
Key points
- Annual IRES and IRAP return: by 30 November
- VAT settlement: monthly or quarterly (with a 1% surcharge)
- Annual VAT return: between February and April
- Filing of annual accounts with the Companies Register
Double taxation treaty with Spain
Spain and Italy have had a double taxation treaty in force since 1977. If your company pays IRES in Italy and you are a tax resident in Spain, you will not pay twice on the same profits, and dividends benefit from reduced withholding rates at source.
