Edited by the TRS Team
The 2025 Budget Law (Law No. 207 of December 30, 2024) was published in the Official Journal on December 31, 2024, “State Budget Forecast for fiscal year 2025 and multi-year budget for 2025-2027” (Official Journal General Series No. 305 of 12/31/2024 – Ordinary Supplement No. 43/L), effective from January 1, 2025.
Below is a brief overview of the main legislative updates introduced regarding corporate income tax for commercial and industrial companies:
Reduction of IRES rate for the year 2025 – Art.1 p. 436-438
As an anticipation of the awaited regulation regarding the general reduction of the IRES rate in relation to the execution of qualified investments, the Legislator has introduced a reduction from 24% to 20% of the IRES due only for the tax period following the one in progress as of 31.12.2024 (year 2025 for companies with a calendar fiscal year) upon the occurrence of certain conditions as explained below:
- at least 80% of the profits emerging from the financial statements in progress as of 31.12.2024 must be allocated to a specific equity reserve;
- execution during the subsequent year (2025 for companies with a calendar year) of qualified investments in new capital goods (including through financial leasing contracts) with a total amount not less than the greater of the following terms: (i) 30% of retained earnings as per the preceding point; (ii) 24% of the profits of the fiscal year in progress as of 31.12.2023 and (iii) the threshold of Eur 20,000;
- the number of employees engaged during the fiscal year following the one in progress as of 31.12.2024 must not be less than the average of the previous three years;
- during the fiscal year following the one in progress as of 31.12.2024, through new hires, an increase of at least 1% in the average number of permanent employees compared to the average of the fiscal year in progress as of 31.12.2024 must be achieved;
- the company has not resorted to the wage guarantee fund (CIG) during the fiscal year in progress as of 31.12.2024.
The regulation also establishes the cases of forfeiture and exclusion from the benefit. The benefit, in fact, is revoked in the event of:
- distribution to shareholders of the profits related to the fiscal year in progress as of 31.12.2024 set aside in reserve (point 1) within the second fiscal year following the one in progress as of 31.12.2024 (i.e., by 2026 for companies with a calendar year);
- disposal, transfer, use for purposes unrelated to the business or permanent allocation to production facilities located abroad (even if belonging to the same entity) of the assets subject to investment within the fifth tax period following the one in which the investment was made (i.e., by 2030 for companies with a calendar year).
Qualified investments refer to investments within the scope of the Industry 4.0 and 5.0 programs. For more information regarding qualified investments, please refer to the TNA of January 8, 2025, titled “Main news relating to incentives and subsidies for enterprises provided for by the Budget law 2025”.
Super deduction for new hires – Extension for 2025, 2026, and 2027 – Art.1 p. 399-400
The so-called super deduction for new permanent hires, as provided by art. 4 of Legislative Decree 216/2023, has been extended for the three tax periods following the fiscal year in progress as of 31.12.2024 (2025, 2026, and 2027 for calendar-year taxpayers).
This regulation allows for an additional deduction equal to 20% of the incremental cost incurred by companies for new permanent hires (30% in the case of hiring certain disadvantaged worker categories). This additional deduction (i.e., to be claimed in the tax return through a corresponding adjustment of the taxable income) is valid only for corporate income tax (IRES) purposes.
To qualify for this deduction, the following conditions must be met:
- the activity must have been carried out continuously for at least 365 days in the previous fiscal year;
- that new employees are hired with a permanent employment contract compared to the previous tax period;
- that the number of permanent employees at the end of the tax period is higher than the average number of permanent employees in the previous tax period;
- that the total number of employees (including those hired on fixed-term contracts) at the end of the tax period is higher than the average in the previous period.
It should be noted that, with regard to the calculation of advance payments, this additional deduction is not taken into account. (E.g.: for companies with a calendar year fiscal period, the advance payments for the year 2025 should be calculated and paid as if the aforementioned additional deduction did not exist.)
Mandatory payment traceability of business trip, entertainment and gift expenses – Art. 1 p. 81-83
The Law has de facto introduced a broad obligation to use traceable payment methods (debit, credit, and prepaid cards, bank and cashier’s checks) for all the cases mentioned above.
Specifically, starting from the tax period following the one in progress as of 31.12.2024, the use of traceable payment methods becomes a prerequisite to ensure (i) the non-inclusion of reimbursements within the worker’s income taxable base and (ii) the deduction from CIT (IRES) and Regional Production Tax (IRAP) taxable base of business trip expenses incurred by employees (meals, accommodation, travel, and transportation).
In practice, the traveling employee must be equipped with a credit card, either personal or corporate, to pay these expenses such as taxi and restaurant.
A similar requirement for traceable payment methods applies to entertainment and gift expenses, to ensure their deductibility from the CIT (IRES) and Regional Production Tax (IRAP) taxable base.
The other requirements currently set by articles 51, 95, 108, and 109 of the TUIR remain unchanged.
Deductibility of depreciation for goodwill and other intangible assets that resulted in the recognition of deferred tax assets (DTA) – Art.1 p. 16-20
The new measure applies to companies for which both elements specified below occur:
(i) in the financial statements for periods prior to the one in progress as of 27.06.2015 (i.e.: the financial statement as of 31.12.2014 for companies with a calendar year), intangible fixed assets (including goodwill) have been booked, for which positive differences were generated between accounting depreciations carried out and depreciations allowed for tax purposes
(ii) these accounting/tax depreciation differences have not been fully deducted within the tax returns related to periods up to the one in progress as of 31.12.2024 (through negative adjustments of the taxable income).
Through several regulatory measures issued starting from 2018 (2019 Budget Law), a restructuring of the amounts allowed for deduction (on an extra-accounting basis, through adjustments of the taxable income to be indicated in the tax returns) of the aforementioned excesses of depreciations carried out over tax allowed ones was arranged for these companies.
With the 2025 Budget law, the deductions foreseen for the tax periods in progress as of 31.12.2025 and 31.12.2026 have been (again) deferred in equal installments.
The deferral effect of the deduction illustrated here, therefore, does not affect the determination of taxable income for the fiscal years in progress as of 31.12.2024.
The regulation clearly and undeniably aims to increase Italian tax revenue for the following years (particularly 2025 and 2026). To make this increase effective, the legislator has also imposed further limitations:
(i) with reference to the higher taxable incomes resulting from the application of the mentioned regulation, the use of tax losses and NID carry forward is limited to 54% of those higher taxable amounts;
(ii) for estimating tax advance prepayments due for the financial years following those in progress as of 31.12.2024, the taxable income of the previous year should be assumed as what would have been estimated without any of the adjustments provided since 2018.
Regarding this latter point (tax advance payments), it is worth noting that the provision in question applies to tax periods for which previous reconstructed depreciations ended up making more significant portions of depreciation deductible (rectius: negative adjustments, reversal, due to depreciations not previously deducted). In this sense, an additional financial burden will likely arise for companies for the tax periods in progress as of 31.12.2025 and 31.12.2026. This increased burden, moreover, will necessarily lead to higher tax payments as it will not be possible to offset these (higher tax advance payments due) with tax credits.
Expansion of the subjective scope of application of the web tax – Art.1 p. 21-22
Law No. 145 of 30.12.2018 (Budget Law 2019) introduced the digital services tax (DST; s.c. web tax).
The tax applies at the rate of 3% on revenues from the provision of the following digital services:
- delivery on a digital interface of targeted advertising to the users of the same interface;
- provision of a multilateral digital interface that enables users to be in contact with and interact with each other, including for the purpose of facilitating the direct supply of goods or services;
- transmission of data collected from users and generated by the use of a digital interface.
Subjects exercising business activities that realise revenues from the aforementioned services in Italy are subject to payment of the tax. Until the year 2024 (inclusive), the companies subject to this tax were those that met the following requirements: (i) consolidated group revenues (or of the sole company operating in Italy) not less than Eur 750 million annually of which (ii) at least Eur 5.5 million of revenue earned in Italy.
The regulation under discussion has eliminated, starting from the year 2025, the requirement under point (ii): the minimum threshold of revenues earned in Italy.
Another news introduced by the Budget Law concerns the payment methods. The amount due will no longer be paid in a single installment but in two annual installments: an advance payment equal to 30% of the tax due in relation to the previous year, to be paid by November 30th of the current year, and the balance to be paid by May 16th of the following year.
Tourist Accommodation and Short-Term Rentals: National Identification Code (CIN) – Art. 1 p. 78
The new measure concerns entities operating in the real estate brokerage sector and the operators managing online platforms for short-term and tourist rentals of properties and other tourist accommodation facilities
Starting from 1.1.2025, owners of said properties and facilities must request the s.c. National Identification Code (CIN) from the Ministry of Tourism for each of the facilities, or properties owned and used for the aforementioned rentals. These CINs must be, by the same owners, transmitted to those involved in the real estate brokerage of the rental of these properties.
The above-mentioned intermediaries, including those who manage online platforms for rental property searches, as well as owners, must include the CIN in the tax returns they submit, in the WHT Certifications, or in other communications sent by those engaged in real estate brokerage activities (art. 4, p. 4 DL 50/2017).
The law delegates to forthcoming measures by the Italian Tax Authority the definition of the terms and methods of the communications mentioned above.
Facilitated assignment of assets to shareholders – Art. 1 p. 31-36
The new measure concerns corporations and partnerships interested in assigning their real estate assets (except for instrumental ones) and non-instrumental registered movable assets to individual shareholders, excluding instrumental assets.
The tax benefits apply to transactions that will be carried out by 30.09.2025 and mainly consist of applying an 8% substitutive tax to the company on the difference between the fair market value of the assigned assets and their fiscally recognized cost (capital gain). The substitutive tax replaces the ordinary taxes that would apply in the event of assignment to shareholders of company assets and attributable to the capital gains on those assets.
This tax is increased to 10.5% for companies deemed non-operational in at least two of the three fiscal periods preceding the one in progress at the time of the assignment.
Where applicable, proportional registration taxes are reduced by 50%, and mortgage and cadastral taxes are set at a fixed rate.
In order to benefit of this measure, it is necessary that by the date of 30.09.2024, all shareholders are enrolled in the shareholders’ register, where required, or are registered within 30 days from the date of entry into force of the Budget Law referred to, based on a transfer document with a certain date prior to 01.10.2024.
The same provisions also apply in the case of transformation into a simple partnership ( a type of general partnership used for non-commercial purposes) of entities whose exclusive or main purpose is the management of the aforementioned assets.
Deductibility of costs from stock option plans – Art. 1 p. 862-863
For entities that adopt IAS/IFRS international accounting standards, costs related to stock option plans will be deductible only at the time of actual assignment to beneficiaries.
The new provisions apply to the plans whose costs are booked for the first time in the financial statements for the fiscal year in progress as of 31.12.2025 or later.
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