Corporate Tax Calculator for Italian Companies
Italy corporate tax is 28%. See how much you could save.
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How Italy companies reduce their corporate tax
Italian companies face a combined corporate tax burden of approximately 27.5%, comprising 24% IRES (Imposta sul Reddito delle Società) and 3.9% IRAP (Imposta Regionale sulle Attività Produttive). IRAP, a regional production tax levied on gross value added rather than net profit, applies even to loss-making companies, making Italy's effective tax burden one of the highest in the EU for medium-sized businesses. International structuring for Italian companies typically focuses on relocating IP ownership, establishing foreign consulting or service subsidiaries, or creating holding structures to receive dividends tax-efficiently. Cyprus and Malta are the most commonly used EU jurisdictions — Cyprus for IP and consulting income at 12.5% with a 2.5% IP Box option, and Malta for holding income at an effective 5%. Ireland's KDB at 6.25% applies to Italian companies with qualifying software and patent income. IRAP specifically cannot be eliminated through international structures on Italian-source production activities.
Top tax corridors for Italy companies
Cyprus IP Box (2.5%)
3% effectiveCyprus IP Box taxes qualifying income from patents, software, and trademarks at 2.5%. Italian SaaS companies can migrate IP ownership to a Cyprus entity and receive royalty income taxed at 2.5% vs Italy's 24% IRES. Italy–Cyprus treaty covers withholding tax treatment.
Malta IP Box (5%)
5% effectiveMalta's refundable credit system delivers an effective 5% rate on qualifying IP income. For Italian digital product companies, Malta provides EU access, English legal system, and a clear regulatory framework for IP holding companies.
Ireland LTD (12.5%)
13% effectiveIreland's standard 12.5% corporation tax on trading income applies to all qualifying active businesses. Italian consulting and service companies establishing Irish subsidiaries with genuine operations benefit from Ireland's extensive treaty network and EU Single Market access.
Savings example: 🇮🇹 Italy → 🇨🇾 Cyprus IP Box (2.5%)
Annual Revenue
€1.3M
assumed
Tax in Italy
€344K
at 28%
Tax Optimised
€63K
at 5%
Indicative estimate based on statutory rates. Actual savings depend on structure, substance, and individual circumstances.
Frequently asked questions — Italy corporate tax
Can Italian companies avoid IRAP through international structuring?
IRAP applies to productive activities carried out in Italy and cannot be eliminated by establishing foreign subsidiaries if the Italian entity continues to operate. However, by shifting production, IP development, or service delivery to foreign subsidiaries, the Italian entity's IRAP base can be reduced significantly over time.
What is Italy's participation exemption (PEX)?
Italy's Participation Exemption (PEX) exempts 95% of capital gains from the disposal of qualifying shareholdings from IRES. For dividend income, 95% is also excluded. This makes Italian holding companies efficient vehicles for managing portfolios of operating subsidiaries, including those in lower-tax jurisdictions.
Is Cyprus a good jurisdiction for Italian business owners?
Yes — Cyprus is one of the most popular choices for Italian founders due to the active Italy–Cyprus tax treaty, Cyprus's 60-day tax residency rule (vs Italy's 183-day rule), and the availability of non-domicile status in Cyprus that exempts foreign-source income from SDC tax for 17 years.
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