The Law Decree nr. 201/2011 converted into the Law nr. 214/2011 has modified rules to deduct the Italian Regional Tax (named IRAP) from corporate incomes. Starting from the financial year 2012 the following elements become deductible from Italian Tax on corporate incomes (named IRES):

  • The part of the IRAP pertaining employees, except deductions foreseen by the law (analytical deductions);

  • The additional deduction of 10% of the IRAP paid in the year (forfeited deduction).

The same Decree has extended the above mentioned deductibility also for years preceding the 2012, allowing tax payers to obtain the refund of income taxes paid within the 48 months preceding the financial year 2012 caused by previous IRAP’s non deductibility.


Tax payers allowed to access to the refund are only the ones that had employment costs during the years under consideration, being them:

  • Limited Liability and Public Companies;

  • Unlimited Liability Companies;

  • Unlimited Professional Partnerships;

  • Banks and other Financial Institutions;

  • Insurance Companies;

  • Individual Entrepreneurs.

And, in general, all legal entities that have determined the IRAP taxable income according to analytical rules.


As said at paragraph 2 above, a prerequisite to access to the refund is the existence of employment costs.

To this extent elements to be considered to calculate this cost are:

  • Salaries and wages (in every form);

  • Bonuses and other similar elements;

  • Temporary employment and detached personnel;

  • Transfer indemnities (other than out-of-pocket);

  • Social Security and Pension contribution;

  • Occasional payments;

  • Severance Payments (including end-of-employment “TFR”).

The above mentioned have to be considered not only for employees, but also for all other agreements assimilated to employment ones (including directors).

On the contrary are not relevant all professional costs that have already been entirely deducted during the years under consideration.

Tax allowance, such as the ones foreseen by article 11, paragraph 1, letter a) of the Legislative Decree 446/1997 haven’t, obviously, to be re-considered, since this would be a duplication.


Tax payers having a financial year different from the calendar one, can ask the refund for taxes paid on incomes generated during the period 2007-2011 starting from payment made with the first advanced payment made in June 2007, up to the balance paid for 2011, therefore in June/July 2012.

Tax payers are entitled to obtain a refund also if for the above mentioned period they had a negative result (loss) for corporate income tax. In this case IRAP’s deductibility increases losses to be off-set against taxable incomes of the first relevant year.

In case losses have already been off-set in a following year for which terms to submit the tax return have already expired, the tax payer can ask to be refunded for IRES or IRPEF overpaid in that period.

On the contrary, if losses haven’t been off-set yet, the same can be used in the first available year.


First we need to make a calculation on the relevant years to determine if the cost to file and submit the refund declaration is convenient for the tax payer. Therefore we will check which of our clients can be interested in filing the refund declaration, having suffered employment costs in the year under consideration: in the event that you will not receive other information on this topic from our end, this will imply that filing a refund declaration is not worthwhile.

On the contrary we’ll send a personalised communication to client who will have convenience to file and submit a refund request, since benefit will exceed costs.

The communication will include:

1. Amounts that can asked for refund;

2. Fees to file and submit application form and declaration.

We’ll require a written confirmation for approval.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.