The 2025 Budget Law (Law No. 207/2024) introduces Reward IRES, a measure designed to encourage Italian companies to invest in technological innovation, foster job growth, and promote both public and private investments in several strategic sectors.
What is Reward IRES?
Reward IRES is a tax benefit granted to corporations that choose to reinvest their 2024 profits instead of distributing them. This incentive provides a significant reduction of the corporate income tax (IRES) rate, from 24% to 20% for fiscal year 2025, provided that specific requirements are met:
- Profit allocation: At least 80% of 2024 profits must be allocated to reserves.
- Investments in 4.0 and 5.0 assets: At least 30% of the allocated profits must be reinvested in new capital goods, as defined by the Transition 4.0 and Transition 5.0 plans.
- Job creation: The company must increase its workforce by at least 1% in 2025, without resorting to the Wage Guarantee Fund (Cassa Integrazione Guadagni – CIG).
This measure encourages technological innovation and supports the transition toward advanced and sustainable production models.
Tax Credits and Investment Incentives
To boost private investments in 2025, €1.6 billion has been allocated to fund a tax credit for companies acquiring capital goods intended for production facilities in Southern Italy. In addition:
- Additional funding for Nuova Sabatini, a measure reducing the cost of financing for machinery.
- Dedicated resources for the tourism sector.
- A three-year extension of the 50% tax credit for consultancy expenses supporting SMEs in listing on EU/EEA regulated markets or multilateral trading facilities.
Detailed Requirements
According to the implementing provisions published in 2025, to access Reward IRES companies must:
- Allocate at least 80% of 2024 profits to a specific reserve.
- Invest in 4.0 and 5.0 capital goods.
- Increase their workforce in 2025, without using CIG.
Benefits of Reward IRES
- Reduced corporate tax rate: From 24% to 20%, leading to significant tax savings.
- Incentive for innovation: Investments in 4.0 and 5.0 assets foster the adoption of advanced technologies, improving competitiveness.
- Job growth: Increased employment contributes to stability and long-term business development.
Grounds for Forfeiture
- Distribution of allocated profits.
- Failure to increase employment.
- Use of CIG during the reference year.
Failure to comply with the conditions results in the loss of the benefit, application of the ordinary tax rate, and repayment of unpaid amounts plus interest and penalties.
Reward IRES represents a significant opportunity for Italian companies committed to investing in innovation and job creation. Careful planning of profit allocation, investments, and workforce strategies is essential to secure and maintain access to the incentive.