Regional tax on production activities (IRAP, Imposta Regionale sulle Attività Produttive)
The regional tax on production activities (IRAP) is a local tax collected by the Region where the production activities liable for tax are conducted.
If taxpayers perform their activities in establishments and offices situated on the territory of several regions, the distribution of the taxable income, and, therefore, of IRAP is made in proportion to the cost of the employees working in the various regional establishments and offices.
Persons subject to IRAP
IRAP is due to those regularly engaged in an independently run activity in the production of goods or services in the Region.
In particular, the following persons are subject to IRAP:
- entities subject to IRES: resident commercial companies and institutions, and non-resident companies and institutions of any type with or without legal status;
- joint-name partnerships, limited partnerships and those equivalent to simple partnerships practicing arts and professions and professional associations;
- agricultural producers receiving agricultural income (individuals or groups), except for those exempt from VAT;
- public and private non-commercial institutions and public administrations;
- individuals receiving company income; and individuals receiving income from self-employed work.
IRAP does not apply to mutual investment funds, pension funds, European economic interest groups (EEIG) and door-to-door salesmen.
For persons not resident in Italy, IRAP only applies when the activities are conducted over a period of at least three months through a permanent establishment.