Two taxes land on Italian company profit, and only the first of them is actually charged on profit. IRES takes a flat 24% of taxable income, the same rate for a company in its first month as for one that has traded for thirty years. IRAP takes between 3.9% and 4.97% depending on the region, and it takes it from a base of its own. The calculator prints both lines from the single profit figure you type, because a form cannot ask you for an income statement. That shortcut is wrong in one direction only, and the next section is about which.
IRAP is not a surcharge on IRES. It is a tax on some of your costs
The IRAP base is the value of net production: the trading section of the statutory income statement, headings A and B, with several cost lines struck out of the deduction and the financial section left out altogether. Staff costs, provisions and certain write-downs are among the lines struck out.
What survives that filter, for a small company, is a list of things you paid and cannot deduct: interest on your loans, provisions, write-downs, temporary and agency labour, and the fee you pay your own founder as an administrator under a coordinated-collaboration mandate. Permanent employees are the exception. Their cost comes back through a later deduction and effectively stops being taxed.
So read the IRAP line above as a floor. The form applies the regional rate to the same taxable profit it applies IRES to, because profit is the only base it has, and for a founder company that pays itself through director’s fees and funds itself with debt the real base is bigger than that profit. The tax is understated, not approximated. Add back what you paid yourself and what you paid the bank, apply the regional rate to that instead, and you are much closer to the return you will file.
Five regions, and one of them sits above the legal ceiling
The national ordinary rate is the 3.9% charged in Lombardy, Piedmont and Emilia-Romagna. Those three are on the floor. Regions may move the rate by up to 0.92 percentage points in either direction, which is why Lazio’s 4.82% is not a round number that happens to be higher: it is the ceiling, to the decimal.
Campania charges 4.97%, above that ceiling, and it is entitled to. The limit on regional variation does not switch off the automatic increases imposed on regions under a healthcare deficit recovery plan. Anything telling you Italian IRAP cannot exceed 4.82% has read one paragraph of the decree and stopped there.
A worked example, and the correction it needs
Take a Milan S.r.l. with EUR 300,000 of taxable profit and no capital transactions.
IRES takes 72,000. IRAP at the Lombardy rate takes 11,700. Together that is 83,700, or 27.9% of profit, leaving 216,300 inside the company. Move the identical company to Naples and IRAP becomes 14,910, the total 86,910, and what stays behind falls to 213,090. Roughly 3,210 of tax decided by nothing but an address.
Now the correction the form cannot make. Suppose 60,000 of that year’s costs was the founder’s own administrator fee, paid under a co.co.co. mandate. For IRAP that 60,000 was never a cost, so it goes back into the base: 2,340 more tax in Milan, 2,982 more in Naples. Neither figure appears in the receipt above, because nothing asked how you pay yourself.
There is no small-company rate this year
Italy does not discount corporate tax for being new or being small. No turnover ladder of the Portuguese kind, no small-taxpayer rate of the Polish kind, no first-year relief. One rate, 24%, from the first invoice.
A 20% rate did exist. It was written for a single tax period, 2025, for companies that reinvested profit in fixed assets, with every condition anchored to the 2023 to 2025 financial years. The 2026 budget law does not extend it and does not touch the rate article at all; the 2025 law itself computes the 2026 advance payment as though the relief had never been granted. A company that paid the reduced rate last year is on the standard rate this year without having changed anything.
What changed for 2026
The IRES rate did not move. The change that matters is a deletion, and it makes the bill go up for exactly the companies that qualified for the relief last year.
Two IRAP movements are in force and are not in the rate you see. Emilia-Romagna raised its rate by 0.30 points, to 4.20%, from 2026, for businesses whose activity appears on an ATECO list annexed to its regional law of March 2025; the Emilia-Romagna figure here is the ordinary rate that everyone off that list pays. Separately, businesses whose prevailing activity is in the energy sector pay two points more for 2026 and 2027. This page has no activity input, so it charges the ordinary rate to everybody.
Where this number is wrong
- The IRAP base. The one that matters. Costs that reduced your profit did not reduce the IRAP base, so the IRAP line is understated, and most of all for an owner-managed company that pays its founder as a director.
- IRAP is partly deductible from the IRES base. The IRAP attributable to permanent staff comes off the corporate income tax base in full, and a further tenth of the IRAP bill comes off as the part referable to interest. We do not reduce the IRES base by either, so the IRES line reads slightly high.
- IRAP labour deductions are ignored. A fixed deduction per employee other than an open-ended one, the lump sums for small production values, and the residual cost of open-ended staff. A company with payroll pays less IRAP than shown.
- Regional reliefs are not asked about. New businesses in marginal municipalities, third-sector bodies, social cooperatives, cultural activities and local publishing can get a cut rate or nothing at all. Where one applies, this page runs high.
- The non-operating company test. An asset-heavy or dormant company that fails it pays corporate tax with a surcharge of ten and a half percentage points, on an income deemed from its assets rather than on the profit you entered. That base cannot be derived from this form, so the rule is not applied.
- Banks, financial intermediaries and insurers pay a higher corporate rate and materially higher IRAP, raised again for 2026. This page models an ordinary trading company.
- One region at a time. A company producing in several regions splits the value of production between them and each region taxes its share at its own rate. We tax the whole profit at the rate you pick.
Corporate tax is the first cut, not the last
Getting this money into your own hands is a second tax event with no credit for the first: that is the dividend calculator, and the founder page runs the whole chain from profit to what reaches your account. If the company does not exist yet, the same work taxed as a freelancer follows completely different logic. And if the company does not have to be Italian, Poland’s small-taxpayer rate and Portugal’s municipal surtax are different shapes of the same question.