The decree wide-ranging tax reforms introduce targeted relief for third-sector entities, revised VAT treatment across multiple activities, updated the amateur sports regime, and clarification of tax rules for businesses in crisis, and postpones key VAT changes to 2036.
Italy’s Revenue Agency announced that it has published Legislative Decree No. 186 of 4 December 2025 in the Official Gazette on 15 December 2025. This decree introduces a coordinated package of fiscal measures affecting the third sector, amateur sports, VAT, business crisis procedures and digital platforms.
The decree aims to streamline existing rules, align domestic legislation with EU requirements and provide legal certainty, while deferring the most sensitive VAT reform affecting associative entities.
Third sector and VAT framework
For third-sector entities, the decree introduces a safeguard against unintended tax charges arising from reclassifying activities under the Third Sector Code. Capital gains taxation is suspended when assets are transferred from commercial to non-commercial use, provided they are allocated to statutory activities with social or public-interest purposes.
Taxation will apply only if the assets are later diverted or sold. At the same time, the long-anticipated VAT exemption regime for associative entities has been postponed until 1 January 2036, easing immediate compliance pressures. The VAT flat-rate regime is also adjusted, with the revenue threshold raised to EUR 85,000 and administrative simplifications introduced, including exemptions from receipt certification.
In addition, VAT legislation is updated to replace references to ONLUS with the broader category of third-sector entities, and to extend the reduced 5% VAT rate to services supplied by social enterprises operating in corporate form.
Amateur sports
The decree reshapes the flat-rate tax regime for amateur sports organisations. The regime remains available to amateur sports associations and companies that are not classified as third-sector entities, provided their commercial revenues do not exceed EUR 400,000.
Third-sector entities registered with RUNTS and carrying out amateur sports as an activity of general interest are explicitly excluded. Where the revenue threshold is exceeded, the benefit of the regime is lost from the month following the breach.
Business crisis and insolvency
Significant clarifications are introduced for businesses undergoing restructuring or insolvency proceedings. The decree extends the tax exemption on debt forgiveness to newer crisis-resolution instruments introduced under the Business Crisis and Insolvency Code.
Debt reductions achieved through qualifying restructuring and recovery procedures are confirmed as non-taxable, strengthening the tax neutrality of crisis management tools. However, the decree also makes clear that no refunds will be granted for taxes previously paid under alternative interpretations.
VAT simplification and alignment with EU law
Beyond the third sector, the decree delivers broader VAT simplifications. Input VAT adjustment rules are streamlined, and non-commercial entities are required to deduct VAT only in proportion to their economic activities, supported by separate accounting.
The VAT exemption for international transport services is extended to intermediaries, bringing Italian law into line with EU directives and Court of Justice case law. Definitions relating to cross-border payment services are also updated to reflect EU standards.
Reporting obligations for electronic platforms
The decree removes a redundant reporting obligation for electronic platforms, eliminating overlap with newer and more comprehensive reporting rules. This change reduces compliance costs for platform operators and administrative burdens for the tax authorities.
