Italy’s 2026–2027 Biennial Tax Agreement: What’s New and When It Makes Sense

Who can participate and what is agreed?

The scheme is aimed at businesses and self-employed professionals subject to Italy’s ISA tax reliability indicators for 2025, including eligible limited liability companies, partnerships and sole proprietors. Flat-rate taxpayers are excluded from the 2026–2027 agreement.

Accepting the proposal determines business or professional taxable income and, where applicable, the IRAP net production value for the two tax years. Actual income above or below the agreed amount generally does not alter the agreed tax base, subject to adjustments and statutory exceptions. VAT remains subject to the ordinary rules.

New for 2026: income proposal limits linked to ISA scores

The maximum increase above adjusted 2025 income depends on the taxpayer’s ISA score: 10% for a score of 10; 15% for scores from 9 to below 10; 25% for scores from 8 to below 9; 30% for scores from 6 to below 8; and 35% for scores below 6. Comparable limits apply to the IRAP net production value.

These caps do not apply if the resulting proposal would be below the relevant sector reference figures. A gradual adjustment methodology also applies to the 2026 proposal. The limits are therefore part of an individual calculation, not a guarantee that the proposed income will always rise by no more than a fixed percentage.

Eligibility, data errors and disqualification

Before accepting, a taxpayer must review ISA applicability, previous tax returns, tax and social security debts, exclusions and any relevant changes in business structure. Acceptance without the statutory requirements or despite an exclusion has no effect from the outset.

For certain errors or omissions in data used to determine the proposal, disqualification is no longer automatic: a tax assessment must show that the corrected income or net production value is at least 30% higher than the agreed amount. Some irregularities may be corrected through amended returns and voluntary disclosure, with recalculation, subject to exclusions and specific conditions.

Renewing taxpayers may also benefit from certain exceptions regarding the admission of new shareholders or partners, which are particularly relevant to business reorganisations.

Enhanced incentives for renewing taxpayers

Taxpayers who participated in the 2024–2025 CPB and renew for 2026–2027 may qualify for additional benefits, provided statutory conditions are met. These should not be confused with ordinary benefits available to all participants.

• Exemption from the compliance certification requirement for annual VAT credit offsets up to €100,000.
• Exemption for qualifying direct-tax and IRAP credit offsets up to €70,000 annually.
• Simplified VAT refunds up to €100,000 and a two-year reduction in certain tax assessment periods.
• Interest-free instalments for qualifying balances and advance tax payments relating to agreed years.
• Relief from special increases to advance payments calculated using the historic method, where applicable.

Substitute tax and special settlement of earlier tax years

Taxpayers can opt for substitute taxation on the positive difference between agreed income and adjusted 2025 income: 10% for ISA scores of at least 8; 12% for scores from 6 to below 8; and 15% for scores below 6. These rates apply to additional income up to €85,000; specific rates of 43% for personal income taxpayers and 24% for corporate income taxpayers apply to the excess.

Qualifying taxpayers who renew after participating in 2024–2025 may also elect a special settlement mechanism for 2020–2023. Payments are scheduled between 1 January and 15 March 2027, with an instalment option subject to the rules. This decision requires a separate review of the taxpayer’s position.

When might participation be worthwhile? Two scenarios

Consider a limited liability company offered agreed taxable income of €100,000 for 2027. If actual income reaches €140,000, the CPB generally continues to use the €100,000 agreed base, potentially providing savings relative to ordinary taxation.

If actual income instead falls to €70,000, the agreed €100,000 generally remains the taxable base in the absence of a statutory termination event. The outcome may therefore be worse than ordinary taxation. These illustrations exclude substitute taxes, IRAP, social security contributions and any applicable adjustments.

When should businesses be cautious?

The assessment should consider customer concentration, revenue volatility, planned recruitment, capital investment, exceptional expenses and possible corporate reorganisations. A simple fall in profitability does not automatically terminate the agreement.

Termination and forfeiture follow different statutory rules. Qualifying exceptional events may terminate the CPB following a sufficiently significant income decline; serious compliance failures can instead cause loss of the agreement’s effects.

Practical checklist before 2 November

Prepare at least three profitability forecasts: downside, central and growth scenarios. Assess not only the tax charge but also the cash flow needed for balances and advance payments.

• ISA eligibility, previous returns and relevant tax or social security debts.
• Accuracy of the proposal and adjusted 2025 income figures.
• Actual 2026 accounts and realistic 2027 revenue and margin forecasts.
• Ordinary taxation versus substitute tax, IRAP and contributions.
• Investments, recruitment and anticipated corporate transactions.
• Additional incentives genuinely available, particularly on renewal.
• Financial sustainability and termination or forfeiture risks.

How to accept or revoke an agreement

For calendar-year taxpayers, the deadline is Monday 2 November 2026. Acceptance may accompany the REDDITI 2026 return or be submitted separately using the CPB model and the income tax return front page, as instructed by the Italian Revenue Agency. Separate submission does not replace the income tax return obligation. Previous acceptance can be revoked by the same deadline.

Taxpayers whose tax years do not coincide with the calendar year have different statutory deadlines. The current official filing instructions should be checked before submission.