The more you invest and hire, the less you pay. IRES rewards 'virtuous' companies.

The ministerial decree implementing the experimental measure introduced with the latest budget law has been signed.

The implementing decree for the incentive-based corporate income tax (IRES) has been approved. The more you invest and hire, the less you pay: introduced with the latest Budget Law, the reduced corporate income tax (IRES) "rewards" the most virtuous businesses with a 4 percentage point tax cut for innovative spending and the creation of new jobs.

"The ministerial decree implementing the experimental measure introduced with the latest budget law has been signed. This measure provides for a 4-point reduction in the corporate income tax rate—from 24 to 20 percent—for companies that invest in production and hire new staff," announced Deputy Minister of Economy and Finance Maurizio Leo.

"This decree," he explained, "is the result of long and ongoing discussions with the business community" and "addresses all the complex cases required for calculating and granting the incentive, meeting the needs of businesses." "This is an experimental measure, which will be carefully evaluated with a view to making it a permanent feature. We aim to provide businesses with useful tools to grow and innovate, creating new jobs and strengthening the competitiveness of the Italian system," Leo emphasized.

When

The relief will be experimental for the entire 2025 fiscal year, with the possibility of extension or structural stabilization in the next fall budget if it proves successful. For the 2025 tax period, it will appear on the 2026 income tax return.

Innovative investments

Specifically, the rate drops from 24% to 20% for companies that reinvest 80% of their current profits as of December 31, 2024. These profits must remain recognized in equity (and therefore not distributed) for at least three years (2024, 2025, and 2026). Of these, at least 30% must be allocated to investments in Industry 4.0 and Industry 5.0 assets, including through finance leases.

New jobs

Among the conditions for benefiting from the reduced IRES tax is the hiring of 1% more permanent workers. Furthermore, the number of annual employees for the 2025 tax period must be at least equal to or higher than the average for the previous three-year period (2022-2024). Finally, in 2024 or 2025, the company must not have used the Cassa Integrazione Guadagni (CIG).

To whom it does not belong

The relief does not apply to companies in ordinary liquidation or subject to insolvency proceedings, to IRES entities applying flat-rate tax regimes, and to companies that closed at a loss in 2023.