Tax & International Structuring in Italy

Essentials guide · Source-checked research100% of statements checked against a source44 checked against an official source7 checked against a secondary sourceChecked 2026-10-19Not yet professionally reviewed

• The corporate income tax (IRES) rate is 24 percent.

  Standard rate; banks and financial entities pay an additional 3.5 percent surtax (ICE, Paying Taxes).PwC Worldwide Tax Summaries · checked 2026-10-19

• The regional tax on productive activities (IRAP) has a standard rate of 3.9 percent and is collected by the region where activities take place.

  Standard rate.PwC Worldwide Tax Summaries · checked 2026-10-19

• The standard VAT rate in Italy is 22 percent, with reduced rates of 4, 5 and 10 percent for listed goods and services.

  Reduced rates apply to listed supplies only.PwC Worldwide Tax Summaries · checked 2026-10-19

• Mandatory electronic invoicing through the Exchange System (SdI) has applied since 1 January 2019 to supplies between persons resident or established in Italy.

  Does not cover non-established taxable persons, even when VAT-registered in Italy.PwC Worldwide Tax Summaries · checked 2026-10-19

• Domestic withholding tax on dividends and interest paid to non-residents is 26 percent, and on royalties 30 percent applied to 75 percent of the gross amount.

  Non-treaty rates. EU group payments can be exempt under the EU directives with a 10 percent (dividends) or 25 percent (interest and royalties) holding for one year; otherwise 1.2 percent applies to dividends paid to EU and EEA resident companies.PwC Worldwide Tax Summaries · checked 2026-10-19

• Legislative Decree 209/2023 amended the Italian CFC rules to align the effective tax rate test with Pillar Two rules, with effect from FY 2024.

  CFC rules only; this source does not describe the Pillar Two income inclusion, undertaxed profits or domestic minimum tax rules.PwC Worldwide Tax Summaries · checked 2026-10-19

• Italian transfer pricing documentation is prepared each year company by company and must be provided to the tax authority on request within 20 days in electronic format.

  Penalty protection requires a Master File and Local File in the prescribed format; companies with turnover under EUR 50 million may update the economic analysis every three years.PwC Worldwide Tax Summaries · checked 2026-10-19

• Italy's Patent Box regime allows an extra 110 percent deduction of qualifying R&D expenses relating to software protected by copyright, industrial patents, and designs and models.

  Voluntary regime; conditions apply.ICE - Italian Trade Agency (Ministry of Foreign Affairs and International Cooperation / Ministry of Enterprises and Made in Italy) · checked 2026-10-19

Read the full guide: Tax, accounting and reporting