Italy’s tax authorities have issued operational guidance on the Two-Year Preventive Composition Procedure, detailing eligibility requirements, income calculation rules, exclusion and forfeiture conditions, taxpayer benefits, and enhanced controls for non-participants.
The Italian tax authorities issued Circular No. 8/E on 6 October 2026, which provides systematic operational guidance on the Two-Year Preventive Composition Procedure (Concordato Preventivo Biennale, CPB).
Originally introduced by Legislative Decree No. 13/2024, the CPB framework incorporates major statutory updates up to Legislative Decree No. 148 of 7 August 2026 and Decree-Law No. 38/2026.
The tax circular also details the operational rules for calculating and accepting tax proposals, outlines the general requirements and specific exclusion criteria for applicants, and explains how updates from recent legislative decrees impact tax compliance and administrative procedures.
Scope, core mechanism, and submission deadline
Italy’s Preventive Two-Year Agreement (CPB) promotes voluntary tax compliance for eligible resident business and professional taxpayers with revenues or fees up to EUR 5,164,569.
Under the scheme, taxpayers accept a two-year Tax Authority proposal for taxable income and IRAP Net Production Value based on economic models and ISA data.
VAT is excluded and remains subject to normal rules. For 2026–2027, the acceptance deadline was extended to 31 October 2026, effectively 2 November 2026, because October 31 falls on a Saturday.
Eligibility requirements & legal nullity of invalid elections
Taxpayers must be subject to ISA and have no definitive tax or INPS debts of EUR 5,000 or more as of 31 December 2025. Debts under instalment plans or formal suspension are excluded, and eligibility can be restored by reducing the debt below EUR 5,000 before acceptance. Under the Decreto Omnibus, an invalid CPB election is void from the outset rather than resulting in subsequent forfeiture.
Exclusion causes
- Prior three years (2023–2025): Failure to file required tax returns or definitive convictions/plea bargains for specified tax and financial crimes.
- Prior fiscal year (2025): Tax-exempt, excluded, or non-taxable income exceeding 40% of total business or professional income.
- First CPB year (2026): Switching to the flat-rate regime or carrying out specified extraordinary corporate operations, such as mergers, demergers, or business transfers.
- Professional entities/partnerships: Mismatched CPB elections between sole practitioners and their professional associations, STPs, or STAs, unless different ISA codes apply.
Calculation methodology, capping, and adjustments
- Gradual implementation: The 2026 proposed income increase is capped at 50% of the target increase set for 2027.
- Reliability caps: Proposed income increases are capped based on the taxpayer’s ISA score, ranging from 10% for a score of 10 to 35% for scores below 6.
- Extraordinary events: Activity suspensions of at least 30 days in 2026 can reduce proposed income by 10% to 50%, depending on the suspension period.
- Neutral tax items: Extraordinary items are excluded from the CPB baseline and adjusted separately, with the resulting taxable baseline subject to a EUR 2,000 minimum.
Legal effects, protections, and reward benefits
- Audit exemption: CPB participants are protected from ordinary analytical-presumptive tax assessments for income tax and IRAP during the agreement period.
- Standard reward scheme: Participants receive enhanced ISA benefits, including higher VAT and direct tax/IRAP offset thresholds, VAT refund exemptions, exclusion from non-operating company rules, and a 1-year reduction in the assessment period.
- Enhanced renewal rewards: Renewing CPB for a second term increases offset thresholds, provides a 2-year reduction in the assessment period, allows interest-free instalments, and offers a special tax amnesty for 2020–2023.
- Optional flat tax: Taxpayers can apply a 10%–15% substitute tax to incremental agreed income above the previous year’s income, up to EUR 85,000.
Cessation vs. forfeiture
- Cessation: Takes effect when structural changes occur during the biennium (e.g., business closure/substantive change, joining the flat-rate scheme, extraordinary restructuring) or when extraordinary events cause actual income/VPN to drop by more than 30% compared to the agreed proposal.
- Forfeiture: Triggered by serious non-compliance, tax crimes, or audit findings revealing unrecorded income/unsupported expenses exceeding 30% of declared turnover.
- Correction: Minor reporting errors no longer automatically trigger forfeiture if voluntarily corrected through an amended return and the related penalties are paid before a formal audit notice.
Advance tax payments & control activities
- First-year surcharge: CPB participants using the historical method for advance tax payments face a 10% surcharge on the increase between agreed and prior-year income, or 3% for IRAP. The surcharge does not apply upon renewal.
- Intensified controls for non-adherers: The Tax Authority and Finance Police will increase audits and tax controls on taxpayers who do not join CPB or forfeit its benefits.
