Unrest, the primary reason for recent discussions.
The IRES Discount in the 2025 Italian Budget Bill: Boosting Sustainable Corporate Growth
The 2025 Italian Budget Bill, Law No. 207/2024, introduces a conditional corporate income tax rate reduction, known as the IRES discount. This measure aims to encourage responsible corporate growth with a focus on innovation and energy efficiency.
Purpose
The IRES discount is designed to promote companies investing in innovation projects that reduce energy consumption through the acquisition of specified capital goods linked to production or supply chain systems. It encourages sustainable investments aligned with energy-saving targets, employment growth, and social stability.
Eligibility Criteria
To qualify for the IRES discount, companies must invest between January 1, 2025, and the 2025 tax return deadline in capital goods listed in Italian regulations. The investments must meet a minimum threshold, either 30% of retained profits, 24% of 2023 profits, or €20,000.
Additionally, beneficiaries must maintain the average employment levels of the past three years and increase permanent staff by at least 1% (at least one new hire) in 2025. The use of wage supplementation schemes is generally prohibited during 2024-2025, except for statutory exceptions.
The tax benefit can be revoked if the retained profits are distributed within two years, or if related assets are sold, transferred abroad, or used outside the company's business within five years. If revoked, the ordinary IRES applies retroactively, and tax differences must be repaid.
Funding Source
The funding for this tax benefit comes mainly from foregone tax revenue by the government, effectively incentivizing specific investment and employment targets. The eligibility and clawback rules ensure that the tax reduction supports genuine business growth and sustainability within Italy.
Notable Details
- Approximately 1.3 million companies and entities pay Ires, with approximately 1.2 million being LLCs.
- Joint-stock companies, entities, cooperatives, mutual insurance companies, and public and private entities, consortia, trusts, CIS, and non-profit organizations (including 473 foundations) must also pay Ires.
- Ires is a tax that is regulated by a ministerial decree signed on August 8, 2025.
- The Budget Bill for 2025 does not specify which types of companies are eligible for the discounted Ires rate.
- The reduction of Ires rate to 20% is associated with investment in production and hiring of new staff.
- The "premium" version of Ires, with a 20% rate, is reserved for businesses that invest in production and hire new staff, as regulated by the August 8, 2025, ministerial decree.
- The discount on Ires is not mentioned in the August 8, 2025, ministerial decree.
- The "premium" version of Ires, as regulated by the August 8, 2025, ministerial decree, is still reserved for businesses that invest in production and hire new staff.
- No information was provided about mini-Ires in this context.
The IRES discount, a part of the 2025 Italian Budget Bill, targets businesses that invest in innovation projects, specifically those reducing energy consumption through capital goods acquisition, with the aim of promoting sustainable investments in line with energy-saving targets, employment growth, and social stability. The financing for this tax benefit primarily comes from foregone tax revenue by the government, incentivizing specific investment and employment targets.
