The IRAP, an acronym which stands for Regional Tax on Productive Activities, is a local tax that is applied to production activities carried out in each region. The tax must therefore be paid only by those individuals who carry out business activities and not by natural persons.
IRAP essentially concerns: companies or entities subject to IRES, i.e. joint-stock companies and commercial entities; companies subject to IRPEF, i.e. partnerships, shipping companies, de facto companies and individual businesses; self-employed workers and, finally, banks and insurance companies.
IRAP is a tax that affects the value of production achieved by companies.
By value of production we mean the difference between the revenues and the costs that characterize the characteristic management, i.e. the core business for which the company was established and works.
IRAP is one of the most hated taxes by Italian businesses. The reason? It is a tax which in its tax base includes (partially) the cost of labor and, consequently, penalizes those companies that have a very strong "human capital" component.
In reality, today tax legislation provides for various IRAP deductions and exemptions on the labor component, an absolutely decisive factor for greater tax fairness.
The regulatory reference is the Legislative Decree 446/1997.
Here is the complete and updated guide on IRAP, with everything you need to know about calculating the tax base, taxable subjects, rates and instructions:
IRAP: when do you pay? Taxable base, calculation and rates
