The new 2017 Italian budget law introduced interesting innovations with respect to the taxation of corporations and individual entrepreneurs.

As for capital companies (stock companies and limited liability companies), the profits will continue to be subject to the IRES tax (Imposta sul reddito delle società), which is a proportional corporate tax imposed on the net profit of a corporation. Such profit should be calculated on the basis of the financial statements prepared pursuant to the Italian Civil Code, although with the modifications expressly mentioned in the T.U.I.R (the income tax consolidation act).

Whereas, starting from 2008, the IRES rate was set at 27,5% of the profits, starting  from January 2017 it has been reduced to 24%, following a downward sloping trend line in the Italian corporate taxes, aimed to promote investments: for instance, when IRES was introduced in 2004, such rate was set at 33%, so that the overall reduction now reaches 9%.

As for partnerships (società di persone) and individual entrepreneurs, the entrepreneurial income has always been taxed in accordance with the personal income tax (IRPEF), as a particular component of it. In case of collective partnerships with different quotas, the business income of the partnership is considered pro quota as a personal income of each partner. Starting from January 2017, however, it has been introduced an optional and alternative taxation for such incomes, called IRI.

The new IRI allows individual entrepreneurs and collective partnerships to differentiate the taxation of the business income from the personal one, so that only the latter will be still subject to the IRPEF. Whereas IRPEF is a progressive tax, i.e.  a tax in which the tax rate increases as the taxable amount increases (so that lower incomes pay a lower percentage of that income in tax than do those with higher income) the new IRI has a fixed rate set at 24%, which is the same of the new IRES and that applies invariably to every income. It is worth noting that the IRPEF rate is generally much higher than the IRES and IRI one, ranging from 23% to 43%.

It should be however clarified that the new IRI only applies for the profits that remains invested in the company, and not to the income distributed to partners for personal uses.

The new Italian tax policy, in the end, will at any rate reduce the fiscal pressure for stock companies and limited liability companies, and allow individual businessmen and collective partnership to join an optional and alternative tax which is indeed convenient should the entrepreneur decide to reinvest the profits to the benefit of the partnership itself.

D’Andrea & Partners Law Firm will continue to keep you updated on the relevant changes of laws that can be of interest for those willing to invest in Italy.For more information,please write to

This site is registered on as a development site. Switch to a production site key to remove this banner.