Edited by Teams Tax Incentives & Grants and Global Compliance Services
By Decree of 8 August 2025, published in the Official Gazette no. 190 of 18 August, the Ministry of Economy and Finance has implemented the reduction of the corporate income tax rate to 20% provided for under Article 1, paragraphs 436–444, of Law no. 207 of 30 December 2024. This so-called “IRES Premiale” establishes, for the year 2025 only, a reduction of four percentage points in the corporate income tax rate for companies that reinvest profits in qualifying projects, in particular in the areas of digital innovation, production process automation, and the energy transition. The measure, adopted within the framework of the tax delegation (Law 111/2023), constitutes a central component of the government’s strategy to foster competitiveness and innovation, and complements the existing system of incentives (ranging from the 4.0 Industry plan to the 5.0 Transition tax credit).
The regulatory framework and eligibility requirements
The decree specifies the conditions under which companies may benefit from the reduced rate. In particular, it requires that at least 80% of the profit for the year 2024 be allocated to reserves, and that at least 30% of that amount be applied to eligible investments; alternatively, the amount invested must not be less than 24% of the profit for 2023.
Eligible investments include new capital goods as defined in Annexes A and B of Law 232/2016 (tangible and intangible 4.0 assets), as well as those referred to in Article 38 of Decree-Law 19/2024, designed to achieve a reduction in energy consumption (5.0 Transition).
A crucial condition is the interconnection: 4.0 assets must be integrated into production management systems or into the supply chain, and such interconnection must remain in place for more than half of the five-year monitoring period. With regard to assets falling under 5.0 Transition, the enterprise must additionally demonstrate a reduction in energy consumption of at least 3% at production-facility level, or at least 5% at the level of the individual production process.
In addition to the investment requirement, the provision establishes an employment requirement: the company must guarantee stability of its workforce compared with the average of the preceding three years and must also make new permanent hires equal to at least 1% of its workforce, with a minimum of one unit. Enterprises that have resorted to wage supplementation schemes (cassa integrazione), except in limited circumstances, are excluded, thereby confirming the legislature’s intention to link the benefit to genuine economic and employment growth.
Safeguards clauses and grounds for forfeiture
The legislation establishes a strict system of monitoring and of so-called “recapture rules”. The benefit shall lapse if the reserved profit is distributed within the second financial year following 2024, or if the assets acquired by way of eligible investment are disposed of, removed, or relocated abroad within the fifth tax period.
Nevertheless, it is permitted to replace the assets while retaining entitlement to the benefit, provided that the replacement assets meet the requirements laid down by Law 205/2017. Particular attention is given to leasing contracts: transfer of a lease contract during the monitoring period is deemed equivalent to removal of the asset, with consequent loss of the benefit.
The provisions are coordinated with the rules on tax consolidation and on the transparency regime, with specific criteria for the attribution of the facilitated rate within groups and to shareholders subject to transparency. The decree is thus of a complex nature, intended to prevent arbitrage and to ensure consistency of the tax system.
Operational implications for companies
From a practical standpoint, the IRES Premiale constitutes a highly conditional incentive. It is not sufficient for companies merely to generate profits; they must also demonstrate a reinvestment strategy directed towards advanced technological assets and employment growth.
The measure intersects with other existing incentives: 4.0 assets and energy-efficiency assets are also those that give entitlement to tax credits under the 4.0 Industry and 5.0 Transition regimes. However, the Ministerial Decree clarifies that, for the purposes of the IRES Premiale, the reporting requirements relating to reservations and monitoring, which apply to tax credits, are not applicable, thereby alleviating the administrative burden in part.
Method of use
The IRES Premiale is applied automatically in the context of the corporate income tax return, without the need to submit preliminary applications or electronic notifications. The enterprise meeting the requirements set by the decree simply applies the reduced rate (20% instead of 24%) in the tax return (Modello Redditi) for the relevant financial year.
While this simplifies access compared with other incentive regimes, it makes it essential to conduct a preliminary analysis of applicability and to prepare appropriate supporting documentation. The taxpayer bears responsibility for retaining, for possible future audits, all documents evidencing compliance with the requirements, including sworn expert reports concerning 4.0 assets and certifications of energy consumption reductions for 5.0 Transition projects.
Cumulability with other incentives
The IRES reduction is fully cumulative with other incentive measures already in force, in particular tax credits for investments in 4.0 capital goods and for energy-efficiency projects under the 5.0 Transition plan. In practice, the same expenditure may benefit both from the reduced taxation of reinvested profits and from the tax credit, provided that no double advantage is obtained in relation to the same costs, within the limit of the eligible cost base.
Final considerations
The introduction of the IRES Premiale represents a significant development in Italian fiscal policy, offering a unique opportunity for enterprises. It marks a shift from mere support of business profitability to a model that rewards productive reinvestment, technological innovation, and energy sustainability. Nevertheless, the complexity of the eligibility conditions and the rigidity of the forfeiture provisions risk limiting its effective application. For this reason, enterprises will need to adopt robust tax-planning and compliance systems in order to benefit fully.
Ultimately, the IRES Premiale should not be regarded as an automatic entitlement, but rather as a selective instrument aimed at directing resources towards innovative projects with genuine added value. If properly applied, it will strengthen the link between taxation and development, rewarding enterprises that invest in the technological and energy future of the country.
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