IRES for your Italian SRL: rate, calculation, and how to reduce it

In a nutshell

IRES (Imposta sul Reddito delle Società -- Italy's corporate income tax) is the annual tax your SRL pays on its profits. The rate is a flat 24%, with no brackets: it applies equally from the first euro. The key point is that the base it is calculated on is not your accounting profit, but the fiscal taxable income, which can differ -- often upward -- because of adjustments required by Italy's consolidated tax code (TUIR).

At a glance

Cost	24% on taxable income. 20% with incentive IRES (2025 requirements). 34.5% for dormant companies.
Timeline	Redditi SC return due by 30 November of the following year. Instalments and balance via F24 (the universal Italian payment form for taxes and contributions).
How	Exclusively electronic (Entratel/Fisconline or via an authorised intermediary).
Documents	Approved financial statements, fiscal adjustments schedule, Redditi SC form.

Who pays IRES (and who does not)

IRES applies to all limited companies resident in Italy: SRL, SRLS, SPA, SAPA, cooperative societies. If you have one of these corporate forms, you are in scope.

Partnerships (SNC, SAS, general partnerships) and sole traders do not pay IRES: tax falls instead directly on the partners or owner through IRPEF (Italian personal income tax), in proportion to their ownership stake.

IRES also applies to permanent establishments in Italy of foreign companies, but only on income generated through the permanent establishment on Italian territory.

How taxable income is calculated

This is the heart of the matter. You do not pay IRES on the profit shown in your accounts, but on a figure obtained after applying upward adjustments and downward adjustments under the TUIR (art. 83).

The calculation runs as follows:

Accounting profit before tax
+ Upward adjustments (non-deductible costs)
- Downward adjustments (exempt income or extra deductions)
- Carried-forward losses available
= IRES taxable income
x 24%
= IRES due
- Advance payments already made and tax credits
= IRES to pay (or credit)

The most common upward adjustments involve costs with limited deductibility: non-essential company cars are deductible at only 20% (capped at a historical cost of 18,075.99 euro); phone expenses at 80%; entertainment expenses within the limits of art. 108 TUIR; directors' fees only on a cash basis (in the year actually paid, not when accrued). Tax and administrative penalties are never deductible.

The most significant downward adjustments: dividends received from other companies are 95% excluded if the participation-exemption conditions are met (art. 89 TUIR); the same applies to capital gains on qualifying stakes (art. 87 TUIR). Also available: the enhanced deduction for new hires and investment tax credits.

The enhanced deduction for companies that hire

If your SRL has increased its permanent headcount, for the 2024-2027 tax years you can deduct an amount higher than the actual payroll cost:

• 20% extra on the cost of new hires (base case)
• 30% extra for protected categories: workers under 30 in their first job, women with at least two minor children, former recipients of the Reddito di Cittadinanza or the Assegno di Inclusione (Italy's income-support schemes), people with disabilities

This benefit can be combined with other hiring incentives, subject to any specific caps.

The incentive IRES rate of 20% in 2025

For the 2025 tax year, the Budget Law (L. 207/2024) introduced a reduced rate of 20% for companies that simultaneously meet five conditions:

1. At least 80% of 2024 profit set aside in an undistributed reserve
2. At least 30% of that reserved profit (and no less than 24% of 2023 profit) invested in new Industry 4.0 or 5.0 capital goods by 31 October 2026
3. No reduction in average workforce compared with the previous three years
4. At least +1% new permanent hires compared with 2024
5. No extraordinary short-time working scheme (Cassa Integrazione Straordinaria) in 2024 or 2025

The conditions are cumulative: fail any single one and the benefit is lost. Early disposal of the 4.0 assets or early distribution of the reserves triggers a clawback of the tax saving plus penalties.

Losses: how the carry-forward works

If your SRL closed previous years at a loss, you can use those losses to reduce taxable income in future years. The rules (art. 84 TUIR) distinguish two situations:

• Losses in the first 3 years from incorporation: carried forward without limit (100% of taxable income) and with no time expiry
• Ordinary losses (after the first 3 years): carried forward indefinitely, but capped at 80% of each year's taxable income

Watch out: if majority ownership changes hands and the company's principal activity also changes at the same time, the loss carry-forward is blocked. This rule is designed to prevent the purchase of shell companies carrying accumulated losses.

When and how to pay

The return is called Redditi SC (Modello Redditi SC) and must be filed by 30 November of the year following the close of the financial year (for SRLs on a calendar-year basis). Submission is exclusively electronic, via Entratel/Fisconline or through an authorised intermediary.

All payments go via F24 with these tax codes:

• 2003 -- IRES balance
• 2001 -- First IRES instalment (40%)
• 2002 -- Second IRES instalment (60%)

Deadlines for calendar-year entities: balance and first instalment by 30 June (or 30 July with a 0.40% surcharge), second instalment by 30 November.

Instalments are generally calculated on 100% of the previous year's tax liability (historical method). The forecast method is possible but risky: if the actual tax exceeds your instalments by more than 20%, penalties apply.

Mistakes to avoid

1. Confusing accounting profit with taxable income. The accounts say one thing; the tax is calculated on a different figure. Fiscal adjustments can significantly increase the taxable base.
2. Not deducting the IRAP portion on payroll costs. The IRAP amount attributable to employee payroll is deductible from IRES (art. 6 DL 185/2008). It is frequently forgotten, resulting in an avoidable tax overcharge.
3. Deducting directors' fees on an accrual basis instead of cash. Art. 95 TUIR is clear: directors' compensation is deducted in the year it is actually paid, not when it is resolved or accrued.

Special cases

SRLS: the tax treatment is identical to an ordinary SRL. The "simplified" element covers only incorporation and minimum share capital (1 to 9,999.99 euro) -- not the IRES rules.

Dormant companies (non-operative under art. 30 L. 724/1994) and systematically loss-making companies: these face a surcharge of 10.5 percentage points, bringing the effective rate to 34.5%.

Permanent establishment of a foreign company in Italy: subject to IRES on the income generated through the permanent establishment, determined under TUIR rules with specific criteria for allocating attributable income.

Non-resident shareholders: the SRL withholds 26% on dividends distributed, but the rate may be reduced (typically to 5-15%) if a double-taxation treaty exists between Italy and the shareholder's country of residence. Dividends paid to EU parent companies may be exempt under the EU Parent-Subsidiary Directive.

Official sources

• Agenzia Entrate -- Direct taxes
• Agenzia Entrate -- Redditi SC return 2025
• Agenzia Entrate -- Redditi SC information sheet
• MEF -- National taxation: direct taxes
• Normattiva -- TUIR (DPR 917/1986)

Legal references: DPR 917/1986 (TUIR) arts. 72-184; D.Lgs. 209/2023; L. 207/2024 (incentive IRES 2025); L. 197/2022 (abolition of ACE); arts. 83 and 84 TUIR; arts. 87 and 89 TUIR (participation exemption); art. 95 TUIR; D.Lgs. 216/2023 (enhanced deduction); art. 30 L. 724/1994 (dormant companies).