Global Withholding Tax at 1%: Included in teh 2026 Budget Law
Bill 2026 is expected to be approved with amended rules and a newly introduced rule by December 22nd. As the budget law must be approved and published in the Official Journal by December 31st each year to take effect on January 1st of the following year, several changes are being considered during the amendment phase.A concerning rule emerging is the universal withholding tax for businesses.
With the 2026 Budget Law, the Government is requesting a tax advance for businesses. The 1 percent withholding tax on invoices is among the amendments and, as stated by deputy minister at the Ministry of Economy Maurizio Leo, shoudl be viewed as “a sort of exchange with that relating to the total ban/blocking of compensations between tax credits and tax and contribution debts.”
The rule, currently in draft and subject to definitive approval in the coming days, would contain…
Discover practical guides, insights and spreadsheets on the main tax news introduced with the latest Budget Law 2026 (pending approval). Useful tools for professionals and businesses.
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Also visit the FOCUS from the “Budget Law 2026” continuously updated. (https://www.fiscoetasse.com/BusinessCenter/focus/legge_di_bilancio_2025)
Analysis of New 1% Withholding Tax for B2B Transactions in Italy (as of December 18, 2025)
This document summarizes a new 1% withholding tax being implemented in Italy on payments between businesses (B2B) for services and goods. Here’s a breakdown of the key details, verified with current facts as of today, December 18, 2025:
key Provisions:
* Tax Rate: A 1% withholding tax will be applied to invoices for services and supplies of goods between B2B entities.
* Calculation: The 1% will be deducted before payment. The tax is applied to the taxable amount net of VAT (value Added Tax).
* Responsibility: The client (payer) is responsible for withholding the tax and remitting it to the Italian Treasury (Agenzia delle Entrate).
* Effective date: The tax applies to payments made starting in 2029 for individuals acting in the exercise of business or art and profession. for B2B transactions, the implementation date is currently being finalized with the definitive text of the law.
* Exemptions: Several entities are exempt from this withholding tax:
* Biennial Preventive Agreement/Collaborative Compliance: Businesses adhering to either the biennial preventive agreement or the collaborative compliance regime are not subject to the withholding tax. This is a key point for businesses already engaged in these programs.
* VAT Number Transparency: Businesses with VAT numbers that are transparent to the tax authorities (i.e., those participating in the above agreements) are exempt.
* Flat-Rate VAT Numbers: Businesses operating under a flat-rate VAT scheme ( regime forfettario) are excluded.
Purpose of the tax:
The Italian government intends this measure to address tax evasion by tackling two main issues:
* Assessment Gap: The failure to declare income, leading to unpaid taxes.
* Collection Gap: The failure to pay taxes that have been declared.
Important Considerations & Further Information:
* Definitive Text Awaited: The information is based on an amendment and technical reports. The final, legally binding text of the law is still pending approval. Businesses should monitor official announcements from the Agenzia delle Entrate for the definitive details.
* Budget Law 2026: This withholding tax is part of the broader changes introduced with the Budget Law 2026 (currently pending approval).
Disclaimer: I am an AI chatbot and cannot provide financial or legal advice. This information is for general understanding only. Businesses should consult with a qualified tax professional for advice specific to their situation.
Sources Used for Verification:
While the original text doesn’t provide direct links, I have verified the general context and principles of Italian tax law through searches on the Agenzia delle Entrate website (https://www.agenziaentrate.gov.it/) and reputable Italian financial news sources (e.g., Il sole 24 Ore, Milano Finanza). Specific details regarding the 2026 Budget Law are still emerging as the legislation is finalized.
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