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Retained

  • Statutory Tax Rate 24
  • Surtax Based on Taxable Income 3.9
  • Surtax Based on Statutory Tax 0
  • Surtax Deductible from Taxable Income 0
  • Statutory Tax Deductable 0
  • Effective Tax Rate 27.9

Statutory Tax Rate

Italy Budget Law for 2016 (Law No. 208 of 28 December 2015) includes a reduction in the standard corporate tax rate from 27.5% to 24% in 2017. However, the rate remains 27.5% for banks and other financial institutions. Assuming the 3.9% regional tax on production activities (IRAP) is maintained, this results in a standard effective tax rate of 27.9% for resident companies.

Surtax Based on Taxable Income

IRAP (the tax on regional production) is levied on the net value of the production derived in each Italian region by resident companies. The standard IRAP rate is 3.9%, although regional authorities may increase or decrease the rate by up to 0.92% (the standard IRAP rate was reduced to 3.5% for fiscal years starting after 31 December 2013, but reverted to 3.9% in 2015 with retroactive effect). The standard rates for financial institutions and insurance companies are 4.65% and 5.9%, respectively. These rates may not be adjusted by regional authorities.
IRAP is calculated on the production of “net added value” as defined by the tax rules (but basically derived from the statutory accounts). Net added value comprises the value of production minus some costs of production. In particular, subordinate employment costs (excluding social contributions), extraordinary revenue and expenses and financial revenue and expenses are not relevant in determining the taxable base for IRAP. Contributions for all forms of compulsory insurance against work-related accidents and expenses related to apprentices are deductible for IRAP purposes.

Capital Gains

  • Statutory Tax Rate 1.65
  • Surtax Based on Taxable Income 0
  • Surtax Based on Statutory Tax 0
  • Surtax Deductible from Taxable Income 0
  • Statutory Tax Deductable 0
  • Effective Tax Rate 1.65