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Tax Incentives for Businesses: How the 2025 Budget Law Supports Growth and Innovation

The 2025 Budget Law introduced significant changes for Italian businesses, aiming to stimulate investment and strengthen competitiveness

author: Internal Editorial Team
29-05-2025
3 mins to read

The 2025 Budget Law: Tax Incentives for Business Growth and Innovation

The 2025 Budget Law introduced significant changes for Italian businesses, with the aim of stimulating investment and strengthening competitiveness. One of the most relevant measures concerns the reduction of the corporate income tax rate (IRES) from 24% to 20% for companies that meet specific requirements. Let’s explore how businesses can benefit from this measure and what the advantages are.

What Is the IRES Tax Incentive and How Does It Work?

For Italian companies, IRES is one of the main corporate taxes. With the new 2025 Budget Law, companies that reinvest at least 80% of their annual profits into development and innovation projects can benefit from a reduced tax rate, dropping from 24% to 20%. But what does this mean for businesses?

Reducing the Tax Burden: Companies can allocate part of their profits to investments, thereby reducing their tax burden.
Stimulating Growth and Innovation: Investing in new technologies, machinery, or market expansion.

This measure not only eases the fiscal load, but also opens up new investment opportunities, encouraging the modernization and digitalization of companies.

Who Can Benefit from the Tax Incentive?

To qualify for the IRES reduction, companies must set aside at least 80% of their annual profits and use them for investment projects such as purchasing technologies, machinery, or strengthening human capital.

For example:

A company investing in advanced software to optimize production.
A business deciding to expand its sales network, creating new jobs and increasing its competitiveness.

This incentive aims to reward forward-looking companies, supporting those who invest to grow and stay competitive.

Why Is It Important to Invest? The Long-Term Benefits

Investing today means laying the foundation for solid long-term growth. Through this tax reduction, the 2025 Budget Law encourages companies to reinvest their profits, contributing to the development of new business initiatives. But how does this impact competitiveness?

Technology and Innovation: As technology evolves, companies must adapt quickly. Investments in automation or digitalization can make a critical market difference.
Market Expansion: Using profits to enter new domestic or international markets increases growth opportunities.

Frequently Asked Questions About IRES and Tax Incentives

How can I prove that I have reinvested 80% of the profits?
Companies must provide official documentation showing how profits were used in productive investments. This may include purchase contracts or detailed investment plans.

What happens if I don’t reinvest 80% of the profits?
In this case, the company will not benefit from the reduced IRES rate, which will remain at 24%.

Can profits be used for any type of investment?
No. Investments must be aimed at improving productive capacity or innovating the company’s operations.

An Opportunity Not to Be Missed

The 2025 Budget Law offers companies a significant tax advantage, reducing IRES for those who reinvest their profits in productive and development-related activities. If you’re an entrepreneur, now is the perfect time to assess which investments could enhance your business while also lowering your income tax burden.

Take advantage of this tax opportunity to strengthen your market position and prepare for a successful future.

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