Italy

The major recent changes in the Italian tax rules that occurred in the last 12 months are the following:

Please note that Italy tax updates are generally expected to occur between November and December in connection with the Budget Law and approval of related implementing laws.

Incentives

On 1 January 2026, the Incentives Code entered into force and new incentives have been introduced for corporations.

The new Incentives Code allows blocking the extreme fragmentation of current incentive policies and achieving full efficiency of measures for businesses.

In addition an increase in the tax relevant cost of investments in capital goods (so-called 'new hyper-depreciation') has been introduced. The incentive applies to investments carried out from 1 January 2026 to 30 September 2028, provided that the eligible assets are produced in a Member State of the European Union or in a State that is part of the European Economic Area (EEA).

The tax credit for investments in the Single Special Economic Zone (ZES unica) of Southern Italy has been extended for the years 2026, 2027, and 2028.

Repealing of specific tax rules

As from 1 January 2026, the limits introduced with the 2026 Budget Law have been repealed in relation to the minimum shareholding threshold or minimum participation value for the partial tax exemption of dividends and capital gains on shareholdings.

Approval of corporate income tax (IRES) provisions

A number of different provisions on IRES have been introduced with the 2026 Budget Law.

Below are the main measures applicable as of fiscal year (FY) 2026:

• The option to tax capital gains realised on fixed assets, non-current assets, and so-called 'non-PEX' shareholdings in instalments has been repealed.
• The prohibition on offsetting tax credits applies where the taxpayer's overdue debts exceed EUR 50,000.

Other measures are the following:

• The 2026 access threshold to the cooperative compliance regime is reduced to EUR 500 million in turnover or revenues.
• The Ministry of Economy and Finance (MEF) has issued tax decrees providing operational guidelines on the global minimum tax (GMT) matters, including obligations relating to declaration and payment.
• From the tax period following the one in progress as at 31 December 2024, the rules on discrepancies between accounting and tax values arising from changes in accounting standards also apply to tax-neutral extraordinary transactions carried out between entities adopting the same accounting standards.
• As of 1 December 2025, 'non-significant accounting errors' are tax-relevant for entities required to have their annual financial statements audited, provided the correction takes place: (i) before approval of the financial statements of the subsequent year and (ii) prior to formal notification of audits, inspections, checks, or other assessment activities. For regional production tax (IRAP) purposes, the net production value must not be negative in either the correction tax period or the period in which the items should have been recognised. For 'significant accounting errors', an amended tax return is required.
• In the case of unilateral suspension by a foreign State of a double taxation treaty (DTT) entered into with Italy, the suspension also takes effect in Italy’s legal system through a notice in the Official Gazette of the Italian Republic; during such a period, the WHTs provided for by Italian tax law apply.

Introduction of value-added tax (VAT) and other taxes modifications

Please find below the main developments as of FY 2026:

• The Italian tax authorities may directly issue a tax assessment in the event of an omitted annual VAT return.

• New rules have been introduced for determining the VATable base for barter transactions. The taxable amount for barter transactions is the monetary value of the goods and services that are the subject of each transaction, as determined by the agreement. In any event, that value may not be lower than the aggregate amount of the costs attributable to the supplies made, and the services rendered by each of the parties, as determined at the time those transactions are carried out.

• Tobin tax rates have been doubled on financial transactions (0.4% for non-listed, 0.2% for listed, 0.04% for high-frequency).

The effective date of the 'plastic tax' and 'sugar tax' has been postponed to 1 January 2027.

Amendments to the Carbon Border Adjustment Mechanism have been introduced.