Pillar 2 Dashboard: Italy

On November 7, 2025, the Decree of the Deputy Minister of Economy and Finance was issued to provide for more information on the rules for the GloBE tax return and for the payment of top-up tax due in Italy.

Resolution no. 63 of November 10, 2025 provides for the tax codes to be used for the payment of top-up tax on the F24 payment form.

On 30 October 2025, the Finance Department of the Ministry of Economy and Finance published Guidance on the submission of the GIR.

Italy issued Decree of October 16, 2025 which provides for the format of the GIR, the method of submission and exchange (updated for the January 2025 OECD Administrative Guidance) as well as the EU DAC 9 information exchange provisions.

On August 7, 2025, Italy issued its designated entity notification form for GIR filing:

Designated Entity GIR Form

Designated Entity GIR Form Instructions

On March 6, 2025 a Decree of the Italian Ministry of Finance on Notification Requirements for Global Minimum Tax purposes was published in the Official Gazette. This provides more details on the double filing relief notification under Article 51(4) of Legislative Decree December 27, 2023, no. 209.

On December 31, 2024, Ministerial Decree of December 27, 2024 was published in the Official Gazette. This implements the OECD Administrative Guidance on the treatment of deferred taxation generated in the period prior to the implementation of the GloBE rules.

On December 30, 2024, Ministerial Decree of December 20, 2024 was published in the Official Gazette. This addresses miscellaneous aspects of the GloBE Rules/Administrative Guidance (including the Forex Hedge election, debt release election and sovereign wealth funds).

On October 15, 2024, Italy issued Decree 11, of October 2024 on the calculation of the Substance-based Income Exclusion under Pillar 2.

This includes all of the OECD Administrative Guidance on the SBIE.

On July 3, 2024, the Italian Ministry of Economy & Finance issued a Decree which contains the procedures for the implementation of the Qualified Domestic Minimum Top-up Tax (QDMTT).

On May 21, 2024, Italy’s Ministry of Economy & Finance issued a Decree for the detailed application of the Transitional CbCR and UTPR Safe Harbours.

On December 28, 2023, the Italian Official Gazette published Legislative Decree No. 209 of December 27, 2023 which implements the EU Minimum Tax Directive.

On September 11, 2023, the Italian Ministry of Finance issued a draft law for the implementation of the EU Global Minimum Tax Directive (the ‘EU Directive’).

General

As expected, the Pillar Two Decree closely follows the EU Directive. There are very few options given to member states in the EU Directive in terms of flexibility over national implementation.

Article 9(3) of the Pillar Two Decree provides that it is to be interpreted and applied taking into account the Commentary on the OECD rules and the OECD Administrative Guidance. It also provides that relevant aspects of the Commentary and OECD Administrative Guidance for Italy are to be specified in a decree of the Minister of Economy and Finance. Similarly specific interpretative directives are also to be provided.

Whilst there are significant aspects of the OECD Administrative Guidance that are not included in the Pillar Two Decree, the additional Ministerial Decrees issued implement many aspects of the OECD Administrative Guidance. Further decrees are expected.

Administrative Guidance

The only aspects of the First Set of OECD Administrative Guidance included in the  Pillar Two Decree are:

-Rebasing monetary thresholds in the GloBE Rules (Article 1.1)

-The deemed consolidation rules (Article 1.2)

-Provisions for accrued pension expenses (Article 2.5)

-Inclusion of deemed distributions for covered tax purposes (Article 2.6)

-Excess negative tax carry-forward guidance (Article 2.7)

-The extension of the taxable distribution method election to insurance investment entities (Article 3.1)

-The exclusion of Insurance Investment Entities from the definition of Intermediate Parent Entity and Partially-Owned Parent Entity (Article 3.2)

-Provisions on restricted tier one capital for insurance companies (Article 3.3)

Provisions of the Second Set of OECD Administrative Guidance that are included in the  Pillar Two Decree are:

-Currency Conversion Rules

-Tax Credits Guidance (MTTCs)

-QDMTT Safe Harbour

-UTPR Safe Harbour

The Ministerial Decree of December 20, 2024 included the following:

-Blended controlled foreign company regimes;

-The debt release election;

-The portfolio shareholding election;

-The forex hedge election;

-Substitute loss carry-forwards;

-Meaning of “ancillary” for Non-Profit Organisations;

-Excluding sovereign wealth funds from the definition of Ultimate Parent Entity;

-The extension of the tax transparency election to mutual insurance companies.

The October 11, 2024 Decree on the Substance-based Income Exclusion (SBIE) includes all of the OECD Administrative Guidance on the SBIE. This includes:

-Foreign rules for employees and tangible assets (including the deemed 50% requirement where employees perform work outside the employer’s jurisdiction for the SBIE)

-Excluding adjustments under the stock-based income exclusion election for calculating the SBIE

-Rules for impairment losses

-Rules for operating leases

It also confirms that the SBIE is based on amounts in the consolidated  financial  statements  of  the parent  company  or,  in  the  case  of  the QDMTT  on  the  basis  of  local  accounting standards where applicable. The Explanatory Notes also reiterate that the June 2024 Administrative Guidance provides that in the case of divergences between GloBE and  accounting carrying values, the adjustments to the accounting values required for GloBE  purposes, to determine the relevant income or loss and/or relevant taxes are not to be  considered in the calculation of the SBIE.

The Ministerial Decree of December 27, 2024 includes the amendments to the deferred tax transitional provisions in Articles 4.1-4.3 of the February 2023 OECD Administrative Guidance as well as a provision from the June 2024 OECD Administrative Guidance to exclude deferred tax assets or liabilities arising under a Blended CFC regime from the transition rules.

Safe Harbour and Penalty Relief Guidance

The Pillar Two Decree references the OECD Safe Harbours and provides that Safe Harbours will be provided as agreed at the EU and OECD level. A decree of the Minister of Economy and Finance, was to be issued within 90 days from the date of entry into force of the Pillar Two Decree, providing for further details.

The QDMTT and Transitional UTPR Safe Harbours are also included but further decrees were also to be issued for the granular detail.

The Italian Ministry of Economy and Finance issued a decree on May 20, 2024 providing further details on the application of the Transitional Safe Harbours.

The decree only addresses the Transitional Safe Harbours. As such it provides for the Transitional CbCR Safe Harbour and the Transitional UTPR Safe Harbour.  The QDMTT and Simplified Calculations Safe Harbours are not included.

Most of the decree addresses the Transitional CbCR Safe Harbour. It includes most of the additional rules from the December 2023 OECD Administrative Guidance, including:

-Purchase Accounting Adjustments (consistent reporting condition, goodwill impairment adjustment)

-Same Financial Statements/Local Financial Statements for Statutory Reporting

-Using different accounting standards

-Adjustments to Qualified Financial Statements/Dividend Mismatches

-MNEs not required to file CbC Reports

-Qualified Financial Statements for PEs

-Treatment of taxes on income of PEs, CFCs, and Hybrid Entities

-Treatment of hybrid arbitrage arrangements

Transitional penalty relief is also included in Article 51(9) of the Pillar Two Decree and reduces the penalties by 50% for the first 3 years.

Article 15 of the decree provides for the Transitional UTPR Safe Harbour.

The Decree of July 1, 2024 on QDMTT implementation does provide that whether a QDMTT qualifies for the QDMTT safe harbour (ie it meets the Accounting Standard, the Consistency Standard and the Administration Standard) will be determined solely by the OECD peer review process.

Elections in the OECD Model Rules

The  Pillar Two Decree includes all of the key elections as provided in the EU Minimum Tax Directive, including the:

-Excluded Entity Election (Article 11(3))

-Election to use the Realization Method (Article 23(7))

-Stock-Based Compensation Election (Article 23(3))

-Election to Spread Capital Gains (Article 23(9))

-Consolidation Election (Article 23(15))

-GloBE Loss Election (Article 30)

-Tax Transparency Election (Article 49)

-Taxable distribution Election (Article 50)

-Unclaimed Accrual Election (Article 29(1))

-Distribution Tax Regime Election (Article 47)

-Substance-Based Income Exclusion Election (Article 35(2))

-Prior Year Adjustment Election (Article 32)

-De minimis Election (Article 37)

-Safe Harbour Election (Article 39(3))

-Deemed Disposal Election (Article 42(5))

Elections in the Administrative Guidance

Elections from the OECD Administrative Guidance included in the Pillar Two Decree are the:

-Excess Negative Tax Carry-Forward Election (Article 28(6));

-QDMTT Safe Harbour Election (Article 18(7));

-UTPR Safe Harbour Election (Article 21(9)).

The following are included in the Ministerial Decree of December 20, 2024:

-Foreign Exchange Hedge Election (Article 4 of the Decree);

-Portfolio Shareholding Election (Article 6 of the Decree);

-Debt Release Election (Article 5 of the Decree).

In terms of the QDMTT, the currency conversion provisions in the Second Set of Administrative Guidance are included. As such the 5 year currency conversion election for QDMTT purposes also applies.

Differences to Model Rules

As expected, the Pillar Two Decree closely follows the EU Directive. There are very few options given to member states in the EU Directive in terms of flexibility over national implementation.

The main options relate to the design of the QDMTT.

The key differences are with the OECD model rules. ie:

-The Pillar Two Decree extends the GloBE rules to include large scale, purely domestic groups,

-Italy applies the IIR to not only foreign subsidiaries but also to all domestic constituent entities. This is permitted but not mandatory under the GloBE Model Rules.

The OECD Model Rules allow flexibility as to how to apply the UTPR. Italy’s approach is to apply a UTPR top-up tax rather than a denial of deduction.

As such the carry forward provisions in Article 2.4.2 of the Model Rules for UTPR amounts not sufficient to provide for the additional cash tax expense are not relevant and these rules are not included in the  Pillar Two Decree.

Qualifying Domestic Minimum Top-Up Tax

Article 18 of the Pillar Two Decree provides for a QDMTT (or at least a domestic minimum tax that is likely to be classed as a QDMTT) for accounting periods beginning on or after December 31, 2023. The Decree of July 1, 2024 on QDMTT Implementation expands on a number of areas to ensure that the domestic minimum tax qualifies as a QDMTT and also for the QDMTT Safe Harbour).

Article 18(1)(a) of the Pillar Two Decree provides that the method of calculation is to take the general top-up tax calculation (or additional top-up tax from a prior year). However, this is then effectively recalculated taking account of some adjustments that are provided in the OECD Administrative Guidance.

Article 2 of the July 2024 Implementing Decree confirms that the QDMTT applies to Stateless Entities.

Under the OECD Administrative Guidance, a domestic minimum tax does not need to apply to Stateless Constituent Entities to be a QDMTT. However, jurisdictions can impose a QDMTT on these entities when they are created under the domestic law of the jurisdiction.

It also confirms that Excluded Entities are only considered for QDMTT purposes for the purposes of determining whether the 750 million euro turnover threshold has been met. They are excluded from the actual QDMTT calculations and are not reported in the GloBE Information Return aside from the group structure aspects. MNE groups can however make an excluded entity election to include them.

CFC taxes are not pushed down when considering the QDMTT ETR. Article 11(1)(b) prohibits the pushdown of taxes for PEs, CFC’s, Hybrid entities, and also for taxes on distributions.

This ties in with the Second Set of OECD Administrative Guidance. Note that domestic withholding tax on dividends distributed from an Italian entity to a foreign entity should still be allocated to the Italian entity under the OECD Guidance for the drafting of QDMTTs. Article 11 of the  Pillar Two Decree provides for this by stating that only recorded foreign taxes are not pushed down. The Fourth Set of OECD Administrative Guidance (issued in June 2024) also expanded the scope of the pushdown restriction to Hybrids to include reverse hybrids. This is not included in the Pillar Two Decree or Implementing Decree.

Article 4(1) of the Implementing Decree confirms that the QDMTT applies irrespective of the shareholdings in the group entities located in Italy. This reflects the OECD Administrative Guidance that provides that Top-up Tax that is subject to the QDMTT is based on the whole amount of the jurisdictional Top-up Tax calculated, irrespective of the ownership interests held in the Constituent Entities located in the QDMTT jurisdiction by any Parent Entity of the MNE Group. The special rules for minority owned entities and investment entities equally apply, however, for the QDMTT calculation.

Article 18(3) of the Pillar Two Decree includes the Local Accounting Standard rule as provided in the July 2023 OECD Administrative Guidance. This provides that instead of using the UPEs accounting standard, MNEs calculate GloBE income for QDMTT purposes using Accounting Standards applied under Italian Tax or Corporate Law, where that accounting standard is required to be used under domestic law (or they are subject to an external audit).

For this to apply all the constituent entities of the MNE or domestic group located in Greece must prepare financial statements based on Greek GAAP or IFRS, and their financial year must be the same as the consolidated financial statements.

If these conditions are not met, the domestic minimum tax is calculated:

-using the financial accounting standard of the ultimate parent entity, and,

-if that is not practicable, on the basis of an accepted or approved accounting standard, if:

o          the constituent entity’s financial statements are prepared in accordance with that standard,

o          the information contained in the financial statements is reliable; and

o          permanent differences of more than EUR 1 million are conformed with the UPEs accounting standard.

Article 5(1) of the Implementing Decree confirms that the local accounting standards applied under Italian tax or corporate law are accounting standard issued by the Italian Accounting Body (OIC) and the IFRS adopted by the EU under Regulation (EC) no. 1606/2002.

Article 5(3) of the Implementing Decree provides that the consideration of whether the local accounting standard applies is determined separately for entities that are subject to standalone ETR calculations (MOCE, Investment entities etc).

Article 18(4) of the Pillar Two Decree, implements provisions of the Second Set of OECD Administrative Guidance which provides some specific rules relating to the currency to be used for calculating the QDMTT.

The general rule is that where the QDMTT requires a local accounting standard and all the Constituent Entities in the jurisdiction use the euro as their functional currency, the QDMTT should require the relevant computations in the local currency.

However, if not all Constituent Entities in the jurisdiction use the euro as their functional currency, the Filing Constituent Entity may make a Five-Year Election to undertake the QDMTT computations for all Constituent Entities in the jurisdiction either:

– in the presentation currency of the Consolidated Financial Statements; or

– in euros.

Under Article 18(6) of the  Pillar Two Decree, the initial phase of international activity exemption does not apply for QDMTT purposes. The OECD Administrative Guidance does not require this to be included for a domestic minimum tax to be a QDMTT.

Articles 4(5)/(6) of the Implementing Decree confirms that the QDMTT is deemed to be zero where the Transitional CbCR Safe Harbour or the de minimis exclusion applies.

Article 7 of the Implementing Decree applies the Transitional Rules in the OECD Model Rules for QDMTT purposes. This reflects paragraphs 118.48-118.49 of the OECD Commentary to the Model Rules.

In particular it includes rules where the QDMTT applies before the GloBE rules apply to an entity in that jurisdiction. These rules are required to treat the Fiscal Year that the GloBE Rules come into effect for Constituent Entities as a new Transition Year and reset certain attributes of those Constituent Entities.

Article 10(1) of the Implementing Decree provides detailed rules to identify the group entity required to pay the QDMTT. MNE groups can elect for an Italian entity to pay the QDMTT. If there are no companies, other than investment entities and investment insurance entities located in Italy, it identifies a stateless entity established under the laws of the Italian State for the payment of the QDMTT. If there are no stateless entities and only investment entities or investment insurance entities located in Italy, the multinational or national group identifies an investment entity or an investment insurance entity investment for the payment of the QDMTT.

Article 10(2) of the Implementing Decree includes payment rules for joint ventures and provides that if a jointly controlled entity located in Italy belongs to a jointly controlled group, it is required to pay the QDMTT due for itself and for its jointly controlled subsidiaries who are taxable entities.

Filing

The relevant aspects of the submission of a GloBE Information Return (GIR) are included, as provided in the EU Directive.

The proposed approach is that every Constituent Entity located in Italy will have an obligation to file a GIR in Italy. However, this obligation can be discharged if the GIR is filed by:

-The Ultimate Parent Entity; 

-A Designated Local Entity;

-A Designated Filing Entity.

Where the GIR is being filed by either the Ultimate Parent Entity or the Designated Filing Entity, the Constituent Entity, must file a notification with the Revenue (and there must be a qualifying information exchange agreement in place).

The notification must contain:

-Details of the entity that is filing the GIR, and

-The jurisdiction in which such an entity is located.

Where the GIR is filed by the Designated Local Entity it needs to outline the Constituent Entities that it is filing on behalf of.

Both the GIR and associated notifications must be filed no later than 15 months after the end of the fiscal year (with an 18-month deadline for the Transition Year).

The Pillar Two Decree also requires submission of an additional self- assessment return (referred to as a ‘GloBE Top-Up Tax Return’) by the GIR filing deadline, under Article 53(1).

The Decree of November 7, 2025 provides for a single declaration form, consisting of two parts: (1) a general section, always mandatory, containing the data of the person submitting the declaration, information on the group, and any simplified or exclusion regimes that the group benefits; and (2) specific schedules for each of the three taxes (IIR, UTPR or QDMTT) for which the declarant is responsible (the schedules must be completed even if the tax due is zero).

On March 6, 2025 a Decree of the Italian Ministry of Finance on Notification Requirements for Global Minimum Tax purposes was published in the Official Gazette (the ‘March Ministerial Decree’).

This provides more details on the double filing relief notification under Article 51(4) of Legislative Decree December 27, 2023, no. 209 (the Global Minimum Tax Law), and as provided in Article 8.1.3 of the OECD Model Rules.

Article 2 of the March Ministerial Decree provides that for financial years beginning on or after December 31, 2023, constituent entities of in-scope MNE groups are exempt from the requirement to file a GIR if a designated local entity is appointed to file the GIR on their behalf or if they notify that a UPE or other designated entity is to file the GIR on their behalf. (providing the UPE or designated entity is located in a jurisdiction that has a qualified competent authority agreement in place for the exchange of information). Excluded entities are not required to be identified.

Under Article 4 of the March Ministerial Decree, the above notification includes the following:

• identification of the multinational or domestic group ;
• information on the entity;
• contact details;
• information on the parent company;
• information on the designated entity;
• information on the designated local entity;
• reference period of the notification.

Group Information

Article 5 of the March Ministerial Decree provides that the group information to be provided will include the name of the multinational or domestic group that is filing a single GIR as reported in the consolidated balance sheet for the relevant financial year.

If, in the financial year covered by the relevant communication, the constituent is a member of more than one multinational or domestic groups, a separate notification for each must be made.

Entity Information

Article 6 of the March Ministerial Decree provides that the entity information to be provided will include the tax code of the entity indicated in the notification form.

Contact Details

Article 7 of the March Ministerial Decree provides that the contact details to be provided will include the telephone number, postal address, email address or the designated local entities email address, as well as the type of designated notification entity.

Information on the parent company

Article 8 of the March Ministerial Decree provides that the information on the parent entity to be provided includes the identity and country of origin (using a two-digit alphabetic code based on ISO 3166 – 1 Alpha 2 standard), registered office address, tax code of the parent company and whether the GIR will be transmitted to the Italian tax administration by the country of the UPE. The type of UPE is also required to be notified.

Information about the designated company

Article 9 of the March Ministerial Decree provides that if the GIR is filed through the exchange of information provisions, the notification form requires the information for the designated entity as provided in Article 8 (above).

Information about the designated local entity

Article 10 of the March Ministerial Decree provides that the information to be provided includes the tax code and the role of the company.

Notification reference period

Article 11 of the March Ministerial Decree provides that the reference period is the start and end date of the financial year covered by the GIR to which the notification refers.

Deadline for submitting the notification form

Under Article 12 of the March Ministerial Decree the notification is required to be filed by the 15th month following the last day of the relevant financial year (increased to 18 months in the transitional year).

If there is no subsequent change to the information provided the relevant notification is considered valid in relation to subsequent financial years.

Under Article 14 of the March Ministerial Decree, the Italian Revenue Agency is to issue an Order with 180 days providing the model notification form and transmission methods.

Payment

Top-Up Tax is payable by the filing deadline.

Article 53(2) of the Pillar Two Decree provides that 90% of the top-up tax is payable within 11 months after the end of the financial year.  The remaining payment is made within 1 month of the deadline for filing the top-up tax return.

Resolution No. 63 of November 10, 2025 provides that the Revenue Agency has established specific tax codes for payment on the F24 Payment Form. The code “2730” is for IIR tax, “2731” for the UTPR and code “2732” for the QDMTT. When filling in the payment form, these codes must be entered in the “Treasury” section, indicating the tax year to which the payment refers in the “YYYY” format. In addition, to distinguish the two instalments, the “Instalment/Region/Province/Month ref.” field must be completed in the “NNRR” format, where “NN” represents the number of the instalment (01 for the first, 02 for the second) and “RR” indicates the total number of instalments (which will always be 02).

Penalties

Under Article 51(9) of the Pillar Two Decree, a late filing penalty of between 10,000 EUR and 100,000 EUR applies. This is subject to a cap of 1 million euros for all companies of the multinational or national group located in Italy. For the first three financial years, these penalties are reduced by 50 percent.

On August 7, 2025, Italy issued its designated entity notification form for GIR filing:

Designated Entity GIR Form

Designated Entity GIR Form Instructions

On November 7, 2025, the Decree of the Deputy Minister of Economy and Finance was issued to provide for more information on the rules for the GloBE tax return and for the payment of top-up tax due in Italy.

Resolution no. 63 of November 10, 2025 provides for the tax codes to be used for the payment of top-up tax on the F24 payment form.