Italy: from company profit to money in your pocket

If you own the company you work through, two taxes hit the same money in turn. The company pays corporate tax on its profit. Then you pay income tax on the dividend you take out of what is left. In Italy the second tax gives you no credit for the first one, so the two stack. That is what the numbers below are showing you, and it is why a calculator that works out only one of them is telling you half the story.

Company profit €200,000, taken out in full

€106,708 in your pocket

You keep €106,708
Corporate tax €48,000
Dividend tax €37,492

Typical case: one rate for every company profile.

Where the money goes, step by step

Taking the typical case, one rate for every company profile:

Company profit	€200,000
Corporate income tax	-€48,000	Standard rate 24%
IRAP (regional tax on productive activities)	-€7,800	Lombardy (Milan): 3.9% of taxable profit
Tax on dividends	-€37,492	Final withholding tax of 26%, nothing more to declare
In your hands	€106,708	Total tax rate 46.6%

Italy takes three bites out of the same money, and none of the three knows the other two exist. The company pays IRES on its taxable income and IRAP on a wider base of its own. Then you pay a flat, final tax on the dividend that comes out of what survived. Nothing from the first two reduces the third. The total lands close to half the profit, which is the highest of the four countries on this site.

The chain, one layer at a time

Start with EUR 200,000 of company profit in Milan and walk it down.

Layer one, IRES. A flat 24% of taxable income, the same for every company. There is no small-company rate and no first-year rate in 2026.

Layer two, IRAP. 3.9% in Lombardy, and up to 4.97% in Campania. It is a separate tax on the value of production, not a slice of IRES, and the calculator charges it on the same profit figure for want of anything better to charge it on.

On 200,000 that is 48,000 of IRES plus 7,800 of IRAP in Milan, so 144,200 leaves the company level intact. In Naples the IRAP line is 9,940 instead and 142,060 survives.

Layer three, the dividend. Whatever is left is distributed and taxed at 26%, withheld by the company and final. It never enters your return, so nothing is settled later and no other income changes it.

That takes 37,492 in Milan and 36,935 in Naples, leaving you 106,708 and 105,124 respectively. As a share of the original profit: about 46.6% gone in Lombardy, about 47.4% in Campania. The region moves the total by roughly a point, and it moves it at the company level, before the dividend tax gets its turn.

Nothing is netted off, by design

This is a classical system and the two levels are strangers. The IRES and IRAP the company paid are simply spent; the dividend is then taxed as if it were fresh money. Because the withholding is final, the dividend never appears in your tax return, so there is no personal liability a credit could reduce even if the law wanted to give you one.

It did once give something. Until the 2018 reform, a qualified holding put only part of the dividend into the taxable base, which softened the double charge for exactly the founder-sized shareholding this page is about. That sentence was repealed and the consolidated text now carries the repeal notice in its place. The exclusions that remain, including the participation exemption, relieve a company that holds shares in another company, not a person.

Spain and Portugal do the same thing to their resident founders, so the double charge is not an Italian eccentricity. What is Italian is the size of the first layer, because there are two taxes in it.

For scale: a Polish founder on the small-taxpayer route gives up somewhere in the mid-twenties as a share of profit, a Spanish one lands in the thirties to forty, and a Portuguese one sits near forty on the flat dividend route. Italy is the most expensive chain of the four, and the gap is opened at the company level, not at the dividend.

One line the region decides, and two it does not

IRES is national. The dividend rate is national. IRAP is not, and it is charged on the widest base of the three, so the whole geographic question in an Italian founder’s tax bill runs through that one line. Lombardy, Piedmont and Emilia-Romagna sit at the national ordinary rate; Lazio sits exactly on the ceiling for regional variation; Campania sits above that ceiling, which it is permitted to do because it is under a healthcare deficit recovery plan.

The chain is optimistic, and here is the direction

The IRAP layer above is charged on your taxable profit. The real IRAP base is the value of production, which does not let you deduct interest on your loans, provisions, write-downs, temporary and agency labour, or the fee you pay yourself as an administrator under a coordinated-collaboration mandate. For an owner-managed S.r.l. those are not edge cases, they are the normal cost structure, so the real base is bigger than profit and the real IRAP bill is higher than layer two shows.

Pulling the other way, and by less: the IRAP attributable to permanent staff is deductible from the corporate income tax base, and a further tenth of the IRAP bill is deductible as the part referable to interest. We do not reduce the IRES base by either, so layer one runs slightly high. For a company with real payroll the two errors partly cancel. For a founder company with no staff and a director’s fee, they do not.

What you pay yourself is not in this chain

The chain prices one route: profit, taxed twice at company level, then distributed. It contains no line for what you take out as pay for actually working there, and pay carries social contributions that no part of the arithmetic above accounts for.

The IRAP asymmetry matters when you compare the two routes. A fee paid to yourself as an administrator under a coordinated-collaboration mandate stays inside the IRAP base, so it does not shrink layer two by a cent. Whatever the pay route saves you, it does not save you that. Price it properly on the income tax calculator instead of assuming a salary is deductible against everything.

The alternative this page does not price

An S.r.l. with no more than ten individual shareholders and revenue below the statutory threshold may elect fiscal transparency. The company then drops out of corporate income tax and the profit is taxed directly on each shareholder’s personal income tax, with nothing further due when it is distributed: one layer instead of the stack above. Whether it beats this chain depends on where the profit lands on your own scale, which runs 23%, 33% and 43% before regional and municipal surcharges, and it comes with conditions of its own. This page models the default arrangement, which is what almost every S.r.l. is on.

What else the chain leaves out

A company producing in more than one region splits the value of production between them and each region charges its own rate. We apply one region to the whole profit.
An asset-heavy or dormant company that fails the non-operating test pays corporate tax with a surcharge of ten and a half percentage points on income deemed from its assets, which cannot be derived from a profit figure.
Sector uplifts. Energy businesses pay two IRAP points more for 2026 and 2027, banks and insurers pay more of both taxes, and Emilia-Romagna has raised its rate for a list of activities. The chain charges ordinary rates to everyone.
Anything before the profit line. We take the taxable profit you enter and trust it: which costs are deductible, and how the profit got that size, is your accountant’s question and not this page’s.

The two calculators behind this page are the corporate tax and the dividend tax. Each explains its own layer in detail. This page is only where they meet, and where the arithmetic stops being reassuring.

Questions people actually ask

How much of my company profit do I actually keep in Italy?

A little over half. On the Lombardy IRAP rate, 100 of company profit loses 24 to IRES and 3.90 to IRAP, and the 26% dividend tax then takes 18.75 of what is left, so about 53 reaches you and the combined rate is roughly 46.6%. In Campania, where IRAP is higher, you keep about 52.6. Both figures assume you take the whole post-tax profit out as a dividend, and both are optimistic for the reason in the last section.

Does Italy credit the corporate tax against my dividend tax?

No. Italy runs a classical system for a resident individual: IRES and IRAP are the company's taxes, the 26% is yours, and nothing passes between them. Because the dividend withholding is final, the dividend never appears in your return, so there is no personal tax bill against which a credit could be set even in principle. The relief that used to soften this for large shareholdings was repealed in 2017.

Does my region change what I keep as a founder?

Yes, through IRAP, and only through IRAP. IRES and the dividend tax are national and identical everywhere. Between the cheapest of the five regions here and the most expensive there is about one percentage point of company profit, charged on the whole base rather than on a slice, and it lands before the dividend tax rather than after it. On a founder-sized profit that is real money every year, not a rounding difference.

Should I pay myself a dividend or a salary?

The two routes are priced on different pages and this one only prices the dividend. What is worth knowing before you compare them: a fee paid to yourself as an administrator under a coordinated-collaboration mandate does not come out of the IRAP base, so that half of the company saving does not happen, and any pay you take carries social contributions that appear nowhere in the chain below. The dividend route has one tax and no contribution line. Price the pay route on the income tax page and put the two side by side rather than trusting a rule of thumb.

Would the transparency election beat this chain?

It might, and this page does not model it. An S.r.l. with no more than ten individual shareholders and revenue below the statutory threshold can elect fiscal transparency: the company drops out of corporate income tax and the profit is taxed directly on each shareholder's IRPEF, with nothing further due when it is distributed. Whether that wins depends on where the profit lands on your personal scale, which runs 23%, 33% and 43% before regional and municipal surcharges. It is a real election with its own conditions, so treat the chain here as the default, not the ceiling.

What this assumes

One owner, resident in Italy, taking the whole post-tax profit as a dividend.
A small owner-operated company: no group, no consolidation, no transfer pricing.
Under “Final withholding tax (ritenuta a titolo d'imposta, 26%)” the rate does not depend on the rest of your income: the tax is taken at payout and that is the end of it.
Salary you pay yourself is a different route with different numbers: see the income tax calculator.

Your result can move: personal deductions, family status and special regimes we do not model can make your real tax lower in 3 cases, and higher in 6 cases.

Important limitations 13

Every rule below is real and is left out on purpose. Modelling it would need information this form does not ask you for, or a mechanism we have not built yet. What matters is not that something is missing, but which way it moves your number, so that is what we tell you.

Your real tax may be HIGHER: IRAP is charged on a different base from corporate income tax: the value of production, from which interest expense, provisions, write-downs, temporary labour and directors' fees paid under a coordinated-collaboration mandate cannot be deducted. This calculator applies the regional IRAP rate to the same taxable profit it uses for IRES, so for a founder company that pays itself through director's fees the real IRAP base, and the real IRAP bill, is higher than what is shown here. Applies to: Every company shown an IRAP line, and most of all owner-managed companies that pay the founder as a director rather than as an employee.
Your real tax may be LOWER: The IRAP attributable to permanent staff costs is fully deductible from the corporate income tax base, and a further flat 10% of IRAP is deductible as the part referable to interest. This calculator does not reduce the IRES base by either amount, so the IRES figure is slightly higher than the amount actually due. Applies to: Any company that pays IRAP, and especially companies with payroll.
Your real tax may be LOWER: IRAP deductions for labour are ignored: EUR 1,850 per employee other than an open-ended one, for up to five employees, where positive components of production do not exceed EUR 400,000; the lump-sum deductions for small production values; and the deduction of the residual cost of employees on open-ended contracts. A company with staff pays less IRAP than shown. Applies to: Companies with employees, and small companies close to the lump-sum deduction thresholds.
Your real tax may be LOWER: Regions grant sector and situation reliefs that this page cannot ask about: reduced or zero IRAP rates for new businesses in small or marginal municipalities, for third-sector entities, social cooperatives, cultural activities and local publishing, among others. Where one applies the regional rate can fall to 2.98%, or to zero. Applies to: Companies qualifying for a regional IRAP relief in Lombardy, Piedmont, Emilia-Romagna, Lazio or Campania.
Your real tax may be HIGHER: Regions may also move the rate the other way for chosen sectors, and one of the five listed here has: Emilia-Romagna raised its IRAP by 0.30 percentage points, from 3.90% to 4.20%, with effect from 2026, for businesses whose activity falls in a list of ATECO codes annexed to regional law 1 of 31 March 2025. The 3.90% shown for Emilia-Romagna is the ordinary rate, which is what a company outside that list pays; this page has no activity input and cannot tell the two apart. Applies to: Companies producing in Emilia-Romagna whose activity is on the ATECO list annexed to regional law 1/2025.
Your real tax may be HIGHER: Businesses whose main activity is in the energy sector (oil and gas extraction and support services, refining, electricity generation, transmission and distribution, gas production and distribution, energy brokerage, gas pipeline transport) pay IRAP two percentage points higher for 2026 and 2027. This page has no activity input and applies the ordinary regional rate to everyone. Applies to: Companies whose prevailing ATECO activity is 06, 09.1, 19.2, 35.1, 35.2, 35.4 or 49.50.1.
Your real tax may be HIGHER: Banks, other financial intermediaries and insurance undertakings pay corporate income tax at 27.5% instead of 24% and IRAP at materially higher rates, raised by a further two points for 2026-2028. This page models an ordinary trading company only. Applies to: Banks, financial intermediaries and insurance undertakings.
Your real tax may be HIGHER: A company that fails the non-operating-company test pays corporate income tax with a surcharge of 10.5 percentage points, 34.5% instead of 24%, on a minimum income deemed from the value of its assets rather than on its actual profit. The deemed base cannot be derived from the figure entered here, so the rule is not applied. Applies to: Asset-heavy or dormant companies that fail the operativity test of art. 30 of Law 724/1994.
May not apply to you: An S.r.l. with no more than ten individual shareholders and revenues below the statutory threshold may elect fiscal transparency: the company then pays no corporate income tax and the profit is taxed directly on each shareholder's personal income tax, with no further tax when it is distributed. This page models the default arrangement (corporate income tax at company level, then a dividend tax), not the transparency election. Applies to: Small S.r.l. companies that elect transparency under art. 116 of the TUIR.
May not apply to you: Only five regions are offered: Lombardy, Lazio, Campania, Emilia-Romagna and Piedmont. Companies producing in more than one region must split the value of production between them, and each region taxes its own share at its own rate; the calculator taxes the whole profit at one regional rate. Applies to: Companies with establishments in more than one Italian region, or in a region not listed here.
May not apply to you: If the shares are held in a business capacity (booked among the business assets of a sole trader, or held by a partnership), the 26% final withholding does not apply. Instead 58.14% of the dividend goes into the progressive personal income tax base on top of the recipient's other income, which for a high earner costs more than 26% and for a low earner costs less. This page assumes shares held privately. Applies to: Individuals whose shareholding is recorded among the assets of their own business, and partners of an Italian partnership.
Your real tax may be HIGHER: Dividends paid out of profits of companies resident in a low-tax jurisdiction are taxed in full on the progressive scale rather than at the flat 26%. This page assumes an ordinary Italian company. Applies to: Shareholders of companies resident or located in a privileged tax regime under art. 47-bis of the TUIR.
May not apply to you: The calculation shows the dividend tax on its own and, in the founder chain, on top of corporate tax computed on the same profit figure. It does not model an S.r.l. that has elected fiscal transparency, where the company pays no corporate income tax and the member is taxed directly on the personal income tax scale with nothing further due on distribution. Applies to: Members of a small S.r.l. that has elected transparency under art. 116 of the TUIR.

This calculator is for information only and is not tax advice. Rates and thresholds change; check the methodology page for sources and verification dates, and confirm your own situation with a qualified adviser.