NEWSLETTER TAX JANUARY 2025

Main Novelties of the 2025 Budget Law

The Budget Law 2025, introduced by Law No. 207 of December 30, 2024, presents a range of fiscal, employment, and incentive measures. Significant updates include reduced IRES rates, initiatives under Transition 4.0 and 5.0, regulations for crypto assets, revaluation of shareholdings and land, and building-related incentives.

 

Direct Taxes

IRPEF Reduction:
The reduction from four to three IRPEF brackets has been confirmed for 2025, with an expansion of the no-tax area to €8,500 for employment income. The new IRPEF rates are 23%, 35%, and 43%.

Deductions for Other Expenses:
A cap on deductions applies for taxpayers with incomes exceeding €75,000. Exceptions include deductions for medical expenses, mortgage interest for primary residences, investments in start-ups and innovative SMEs, and insurance premiums.

Family Tax Deductions:
Starting in 2025, a tax deduction of €950 is available for each dependent child aged 21 to 30.

Wage Tax Relief:
A bonus has been introduced to reduce the tax wedge for employees earning up to €40,000 annually.

Fringe Benefits:
The non-taxable threshold for fringe benefits, as established in 2024, has been extended to 2025.

Housing Expense Allowance:
Employees on permanent contracts earning up to €35,000 per year who relocate their residence by more than 100 km for work are exempt from taxes on up to €5,000 annually for rent and maintenance costs during their first two years of employment.

Productivity Bonuses:
The reduction of the substitute tax on productivity bonuses from 10% to 5% for private-sector employees has been extended to the years 2025, 2026, and 2027.

Cross-Border Workers:
In line with the Italy-Switzerland agreement, individuals working remotely from their residence for up to 25% of their total working time maintain their cross-border worker status.

Flat-Rate Tax Regime:
The income threshold for accessing the flat-rate tax regime for employees is raised from €30,000 to €35,000, effective from 2025.

Web Tax:
The minimum revenue threshold for digital services tax remains at €750 million globally, with the removal of the prior €5.5 million minimum for domestic revenues in Italy.

Crypto Activities:
From January 1, 2026, the tax rate on capital gains and other income from crypto activities will increase from 26% to 33%, with the elimination of the previous €2,000 exemption threshold.

Stock Option Plans:
Costs associated with stock option plans can now only be recognized in financial statements upon the actual allocation to plan beneficiaries.

 

VAT and Other Taxes

Reverse Charge:
The reverse charge mechanism is extended to service providers in the transport, freight handling, and logistics sectors.

VAT on Waste Disposal:
The VAT rate for waste disposal services involving landfilling or incineration without efficient energy recovery is increased to 22%.

Excise Duty Products:
The mandatory use of the e-DAS (simplified accompanying document) for the transport of excise-duty products is extended to all commercial warehouse operators handling energy products.

Mandatory Certified Email (PEC) for Company Directors:
All directors of corporate entities are required to have a certified email (PEC) address.

 

Incentives

Revaluation of Shareholdings and Land:
The tax regime for the revaluation of shareholdings (both listed and unlisted) and land (agricultural and building) is stabilized. The substitute tax rate increases from 16% to 18%.

Reduced IRES Rate:
A temporary reduction in the IRES rate from 24% to 20% applies for the 2025 tax year, subject to conditions including:

  • Allocation of at least 80% of profits to a reserve;
  • At least 30% of the allocated profits, and no less than 24% of 2023 profits, invested in new Transition 4.0 or 5.0 assets for production facilities in Italy by the tax filing deadline for the 2025 tax period;
  • No reduction in annual full-time equivalent (FTE) workforce compared to the previous three-year average;
  • New permanent hires representing at least a 1% increase in headcount.

Facilitated Asset Transfers to Shareholders:
Commercial companies transferring or assigning non-instrumental assets to shareholders by September 30, 2025, are subject to an 8% substitute tax (10.5% for non-operational companies) on the difference between the normal value and the tax-recognized cost of the assets.

 

Additional Measures

Transition 5.0:
Expansion of eligible beneficiaries and increased deductible investment percentages.

Transition 4.0:
Revised timelines for the recognition of the Transition 4.0 tax credit.

SME Listing Tax Credit:
Renewed for expenses incurred for listing SMEs, with a tax credit equal to 50% of expenses up to a maximum of €500,000, valid through 2027.

ZES Investments:
The tax credit for investments in Special Economic Zones (ZES) is extended to 2025 for investments made between January 1 and November 15, 2025, with a spending limit of €2.2 billion.

New Sabatini Measure:
The “New Sabatini” incentive program is extended for the years 2025 through 2029.

 

STAY UP TO DATE WITH THE LATEST TAX NEWS. CLICK HERE TO FIND OUT MORE!

LDP provides Tax, Law and payroll  scalable and customised services and solutions. LDP Professional have also matured a significant expertise in  M&A, Corporate Finance, Transfer Price, Global Mobility Consultancy and Process Automation. 

Sign up to our newsletter

Subscribe to our Newsletter

Subscribe Form