A tax system that stifles businesses
Italy’s small and medium-sized enterprises (SMEs) face one of the highest tax burdens in Europe, with a total tax rate reaching up to 60% of profits. According to Unimpresa’s research center, in 2023, the effective tax burden on SMEs was 59.1%, significantly hampering growth and competitiveness.
This heavy taxation comes from three main components:
- IRES at 24%
- IRAP at 3.9% (reduced for some categories)
- A labor tax wedge exceeding 30% of labor costs
This makes Italy the most tax-heavy country for small businesses, compared to Germany (48%), France (50%), and Spain (45%).
The proposed tax amnesty for overdue payments
To address this excessive tax burden, Deputy Prime Minister Matteo Salvini has proposed a new tax amnesty for overdue payments, a move strongly supported by Unimpresa. The idea is to allow businesses to settle their debts in 120 installments without interest or penalties, providing much-needed relief.
Currently, Italy has over 12 million overdue tax bills, affecting craftsmen, shopkeepers, and small entrepreneurs. Many of them struggle not because of tax evasion, but due to a system where penalties and interest often double or triple the original debt.
Tax reforms are not enough
In 2024, the government launched a tax reform, reducing IRPEF tax brackets from four to three, benefitting sole proprietors and freelancers. However, this measure has yet to bring structural relief to SMEs, which continue to bear the weight of indirect taxes and contributions.
Some incentives, such as tax credits for investments in capital goods, provide limited support but do not address the core problem. Unimpresa calls on the government to accompany the tax amnesty with a broader tax reduction plan, fostering investment, growth, and employment.
Conclusion: the tax system must support SMEs
SMEs are the backbone of the Italian economy, yet without structural reforms, they risk collapsing under excessive taxation. The proposed tax amnesty could be a first step toward a fairer system, but long-term policies must also be implemented to ease the tax burden and enhance Italy’s competitiveness.
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