The Corporate Income Tax (known as IRES) is a proportional tax. It means that taxation on corporate income is applied at a fixed rate.
IRES is applied to the income of your company if your company is incorporated as a joint-stock company, a cooperative or a consortium.
The tax base is calculated on the corporate income that results from the difference between revenues and the costs borne in carrying on business activities. This difference serves as a starting point for IRES computation.
If applicable, this difference can be modified by applying tax variations [1] and IRES computation.
E.g.: let us assume that a limited liability company has revenues amounting to 200,000 euros and costs amounting to 120,000: its business income is equal to EUR 80,000.
E.g.: let us assume that a limited joint-stock company has revenues amounting to 500,000 euros and costs amounting to 300,000. Tax variations amount to -20,000 and +30,000 euros. Corporate income is thus 200,000 – 20,000 + 30,000 = 210,000 euros.
For further information on how the Corporate Income Tax works, please refer to the In-depth guide to the Corporate Income Tax.
[1] Tax variations may increase or decrease corporate income: they include amounts of different natures which, according to the tax laws, are to be added to the difference between revenues and costs in calculating taxable income.