Italy’s Global Minimum Tax (Pillar Two): What Multinational Groups Need to Know

For a multinational group with operations in Italy, the global minimum tax has moved from a policy-team talking point to a live compliance obligation. Italy was among the first EU states to bring the OECD’s Pillar Two rules into national law, and a December 2025 corrective decree has already fine-tuned how they work. The principle is easy to state and hard to apply: every large group should pay an effective tax rate of at least 15% in each country where it operates, and where it pays less, a top-up is collected to make up the difference. For groups with Italian subsidiaries, branches, or holding entities, the question is no longer whether Pillar Two applies, but who calculates the top-up, where it is paid, and what has to be filed.

This guide sets out, at a high level, how the global minimum tax works in Italy, who it reaches, the reliefs that soften it, and the compliance obligations that now carry real penalties.

What the Global Minimum Tax Is, and Who It Reaches

The global minimum tax sets a floor. Wherever a large group operates, its profits in that country should bear an effective rate of at least 15%; if they bear less, the shortfall is topped up. The aim is to take the pressure out of shifting profit to low-tax jurisdictions, because the saving is recovered as a top-up somewhere in the group.

The rules apply to multinational and domestic groups above the €750 million consolidated-revenue threshold. Below that size, a group is outside the regime entirely. Above it, every entity in the group has to be placed in a country, and that is where the first difficulty appears.

A threshold question trips groups up before any rate is calculated: where is each entity located? Italy’s rules, as refined by the 2025 corrective decree, fix an entity’s location by where it is resident for income-tax purposes, judged on its place of management, its place of incorporation, or analogous criteria. If those tests leave an entity located nowhere, it is treated as located where it was constituted. For groups with holding companies, dual-resident entities, or stateless structures, getting location right is the first and most consequential step, because it decides which country’s effective rate each entity falls into.

How Italy Collects the Top-Up: the National Minimum Tax

Where the effective rate on a group’s Italian entities falls below the minimum, Italy charges a national minimum tax equal to the top-up for those entities. The practical effect matters: the additional tax is collected in Italy, rather than being swept up by a parent entity’s jurisdiction abroad. For a foreign-headquartered group, that means a genuine Italian liability, calculated on the combined position of its Italian entities, not something settled entirely at headquarters.

The 2025 corrective also tightened how the relevant income and the top-up itself are calculated, and narrowed certain options that let a group treat a country’s top-up as zero. Positions that some groups expected to rely on have been closed off, which is why a calculation built on last year’s assumptions should not be carried forward untested.

The Reliefs That Soften the Charge

Two mechanisms stop the minimum tax from biting in cases where it was never meant to.

The first is the substance-based carve-out. The charge is reduced by an amount tied to real economic activity in the country, broadly a portion of payroll costs and tangible assets. The corrective decree clarified what counts as eligible payroll: employee compensation including salaries and wages, direct personal-benefit costs such as health insurance and pension contributions, payroll and employment taxes, and employer social-security contributions. The effect is intuitive: a group with genuine people and assets in Italy carries a smaller top-up than a purely financial structure with the same profit.

The second is the de minimis exclusion. The top-up for a country is treated as zero in a given year where the group’s average relevant revenues there are below €10 million and its average relevant income is a loss or below €1 million. Many groups with only a small Italian footprint will fall inside this exclusion, but it has to be tested year by year, not assumed once and forgotten.

A New Filing, With Real Penalties

The substance of the regime sits in an annual information return, and the 2025 corrective set out the penalty regime that now backs it. The numbers are not nominal:

For a finance team, the takeaway is that this filing is not a formality bolted onto the year-end. The underlying data has to be right and on time, and it draws on figures, entity by entity, that the group may never previously have had to assemble in one place.

Why This Is Easy to Get Wrong

The hard part is rarely the headline 15%. It is the inputs. Where each entity is located, which financial statements feed the calculation, how deferred taxes are treated during the transitional years, and which simplified or safe-harbour options genuinely apply, all sit upstream of the rate and all move the answer. The 2025 corrective changed several of these mid-stream, including the transitional treatment of deferred tax assets and the definition of simplified covered taxes, so a position taken even a year ago may no longer hold.

For a group spanning several countries, each assumption interacts with the others. An entity placed in the wrong jurisdiction, or a carve-out miscalculated in one country, can move the top-up in another. This is detailed, cross-border work where the cost of a wrong assumption surfaces late, in an assessment, rather than early, in the model.

When to Get Expert Help

The global minimum tax is an area where an early, coordinated read pays for itself. The rules are stable in principle but technical in application, they have already been amended once, and the compliance obligation now carries penalties that make guesswork expensive.

This is where a local partner earns its place. HRIT’s accounting and tax compliance team works with the group’s advisers to fix the Italian entities’ position, calculate any national minimum tax due, and keep the annual filing accurate and on time. For the wider picture of how Italy taxes foreign-owned companies, our guide to corporate tax in Italy sets out the IRES and IRAP framework that sits alongside these rules.

The Bottom Line

Italy’s global minimum tax is no longer a future concern for the groups it covers; it is an annual calculation and an annual filing, both with money attached. The groups that handle it well are the ones that settle the hard questions early: where each entity is located, what the Italian carve-out really is, and whether the de minimis exclusion applies this year. Get those right, before the return is due rather than after an assessment, and the 15% floor becomes a manageable compliance task rather than an unwelcome surprise.

To review how the global minimum tax applies to your group’s Italian entities, get in touch with our team.

External references: Agenzia delle Entrate, global minimum tax | MEF, Dipartimento delle Finanze