Irap expiring, who is exempt from paying the regional tax

The tax reform has brought some changes to IRAP. Minor taxpayers, freelancers and individual businesses are exempt from paying this tax. With the sole exception of these individuals, other taxpayers are required to continue paying this tax. The rates based on the production bracket to which they belong must be used.

How IRAP works

Acronym for Regional Tax on Productive Activities , IRAP was established with Legislative Decree no. 446 of 15 December 1997. Since its entry into force, it has been amended several times.

To put it in a nutshell, IRAP must be applied to the value of the net production of companies: this expression refers to the added value that is produced by a given company using a series of production factors, from which the production costs must be subtracted.

The legislator has provided for an ordinary net rate which is equal to 3.9% of the value of production.

Furthermore, there are some specific rates that must be applied to certain sectors:

• for concessionaires other than those for the construction and management of motorways and tunnels it amounts to 4.2%;
• for banks, other institutions and financial companies it amounts to 4.65%;
• for insurance companies it amounts to 5.90%;
• for public administrations and bodies it amounts to 8.5%.

Each individual region or autonomous province can decide to vary the rates by 0.92% – for example, bringing the ordinary rate to 4.82%. The amount paid by companies as IRAP contributes to the financing of the national health service .

How the taxable base is calculated

The Irap taxable base must be deducted from the share of the net production value that companies carry out abroad. For non-resident subjects, however, to calculate the Irap it is necessary to take into consideration the net production value relating to the activities that are carried out exclusively on Italian territory.

The Irap regulation is therefore bent to the principle of territoriality, which was introduced by article 4, paragraph 1 of the Irap Decree . The latter explicitly provides that:

The tax is applied on the value of net production resulting from the activity carried out in the territory of the Region.

When to pay the 2025 Irap advance payment and the 2024 balance

Initially set for June 30, 2025, the IRAP payment must be made on July 21, 2025 (the 20th falls on a Sunday).

Taxpayers have the option to make payments within 30 days of the deadline set for July 21, 2025, increasing the amount by 0.40% . The new payment terms were set through the new fiscal corrective decree that the Council of Ministers approved on June 12, 2025.

Among the new developments that have arrived in recent days are also the new tax codes to be used, which the Revenue Agency has established through resolution no. 38/E/2025 .

Their approval was necessary following the deferral foreseen for banks and insurance companies of the deductions for some items that, at least in principle, should be managed during the last tax year. From the deferral of some items, it was necessary to calculate a higher Irap advance payment.

Taxpayers must therefore use the following tax codes:

• 3881 – Increased advance payment of 1st IRAP instalment – ​​article 1, paragraph 20, of law 30 December 2024, n. 207;
• 3882 – Higher advance payment of 2nd IRAP instalment or higher advance payment in a single IRAP solution – article 1, paragraph 20, of law 30 December 2024, n. 207.

To pay IRAP, interested parties must fill in the Regions section of the F24 form , where the region code and the tax year must also be entered, in the format: YYYY .

The subjects who do not have to pay IRAP

Article 3 of Decree 446/1997 identifies the subjects who do not have to pay IRAP, which has provided for this exemption for:

• the companies and entities referred to in Article 87, paragraph 1, letters a) and b) of the Consolidated Law on Income Taxes, which was approved by Decree no. 917 of 22 December 1986 signed by the President of the Republic;
• general partnerships and limited partnerships, as well as companies that are considered equivalent to them pursuant to Article 5, paragraph 3 of the Consolidated Law on Income Tax, and natural persons carrying out commercial activities;
• private entities, as provided for in Article 87, paragraph 1, letter c) of the Tuir;
• the public administration – at least those provided for by Legislative Decree no. 29 of 3 February 1993 – to which are added the administrations of the Constitutional Court, the Presidency of the Republic, the Chamber of Deputies, the Senate and the legislative bodies of the regions with special statutes.

The 2022 Budget Law introduced an important innovation: it excluded from the obligation to pay IRAP natural persons , simple companies and those equivalent to them pursuant to article 5, paragraph 3, of the TUIR who carry out a professional activity.

Through the 2026 Stability Law , agricultural producers who have agricultural income pursuant to Article 32 of the Consolidated Law on Income Tax (TUIR) have been exempted from paying IRAP. Starting from the 2016 tax period, individuals who declare agricultural income – regardless of whether they carry out the activity as an individual firm, simple partnership or non-commercial entity – and taxpayers who produce business income by carrying out an agricultural activity as a partnership or corporation do not have to pay IRAP.

A somewhat particular situation to keep in mind is that relating to taxpayers with VAT numbers who operate under the minimum regime , who are still in a residual capacity until their natural expiry (which corresponds to their 35th birthday or when they have been five years old). Those who have joined the flat-rate regime are not required to pay IRAP either.

Which subjects are excluded from paying IRAP?

The Irap Decree – specifically Article 3, paragraph 2 – expressly provides for the exclusion of the payment of this tax for the following subjects:

• the pension funds provided for by Legislative Decree no. 124 of 21 April 1993;
• collective investment schemes, with the sole exception of variable capital investment companies;
• the GEIE, i.e. the economic groups of European interest provided for by Legislative Decree no. 240 of 23 July 1991.