Second IRES advance payment: the forecast method only holds up on a well-built pre-closing estimate
10 November 2026, 08:09
On 30 November many Italian limited companies face one of the heaviest payments of the year-end: the second instalment of the 2026 advance payments of IRES, the corporate income tax, and IRAP, the regional tax on productive activities. It is one of the 174 tax deadlines falling in November.
For a company earning less this year than in 2025, the question is a precise one: does it still have to pay the instalment calculated on last year, or can it pay according to what it will actually earn in 2026?
The advance is calculated on the closed year or on the current one
The advance payment anticipates a tax that is known exactly only the following year, when the tax return is filed. Under the historical method the total advance equals the previous year's tax, the one declared for 2025, and it is split into two instalments: 40 per cent in June and 60 in November. Businesses subject to the synthetic tax reliability indices, the ISA, that declare revenue of up to €5,164,569 pay two equal halves instead (Article 58 of Decree-Law 124 of 2019); companies with higher turnover fall outside it and pay the larger instalment in November.
Under the forecast method, by contrast, the advance is calculated on the tax the company estimates it will owe for 2026, and the second instalment is the difference between that estimate and what has already been paid in June. The choice is made tax by tax: a company can use the estimate for IRES and stay with the historical calculation for IRAP.
In the end the tax for the year is the same under both methods; what changes is only when the money goes out. If the year goes worse, under the historical method the company pays more in November than it will owe and recovers the excess only in 2027, as a credit to be used to pay other taxes within the limits on offsetting; under the forecast method that sum never goes out at all. The whole risk lies in the estimate. The advance due is the lower of the historical amount and the tax that the return will show for 2026: if the estimate was too low and the advances paid fall short of both, a penalty of 25 per cent applies to the amount missing to reach the lower of the two, under Article 13 of Legislative Decree 471 of 1997, plus interest. The penalty falls to a fraction through voluntary correction ("ravvedimento operoso"), that is, by paying the difference on the company's own initiative before the Italian Revenue Agency disputes it.
The historical base sometimes has to be recalculated too
The calculation based on last year hides a trap. Some rules require the advance to be determined on a 2025 tax recalculated as if certain benefits had not existed. The most recent case is the reduced "IRES premiale" introduced by Law 207 of 2024, paragraphs 436 to 444 of Article 1: a company that in 2025 set aside its profits, invested and increased its headcount paid tax at 20 per cent instead of 24; the 2026 advance, however, is calculated on the tax recalculated at 24. The company needs to know this so as not to plan for a lower outflow in November than the one that will arrive.
The pre-closing estimate has to reach taxable income
The forecast method rests on the pre-closing estimate, that is, the profit and loss account for the months already closed, usually up to September or October, completed with an estimate of those remaining until December. Many companies record closing inventory, depreciation and the provision for receivables that will not be collected only at year-end: if the pre-closing estimate does not estimate these items too, the profit it produces can be far from the one in the financial statements.
The typical mistake, then, is to stop at the result before taxes. IRES is calculated on taxable income, which differs from the profit in the financial statements because tax law allows some costs only in part or not at all: company cars not assigned to employees are deductible at 20 per cent (Article 164 of the Consolidated Income Tax Act), and fines are not deductible at all. To decide the advance, therefore, the estimate has to go all the way down to taxable income.
In companies that have controlling in place, the pre-closing estimate is prepared by the accounts department with data from the management software, and the external accountant turns it into taxable income starting from the previous year's tax adjustments, updated. The comparison between the November instalment calculated with the historical method and the one that results from the pre-closing estimate should be made by the middle of the month, to leave time to decide and to adjust the year-end cash forecast.
When the difference between the two amounts is small, or when the pre-closing estimate does not yet include year-end inventory and the tax adjustments, the historical method remains the prudent choice. The forecast method pays off when the fall in profit is clear-cut and the accounts for the closed months are reliable.
This article was prompted by a news item published in ItaliaOggi on 10 November 2026.