Paying tax not on income actually earned, but on income agreed in advance with the tax authorities. Put like that, it may sound unusual, but this is precisely the logic of the Concordato Preventivo Biennale, or CPB, Italy's two-year advance tax agreement: the Italian Revenue Agency proposes taxable income for the relevant two-year period and, if the taxpayer accepts, that amount becomes the reference for calculating tax, even if actual income differs. The mechanism can be highly advantageous for those expecting strong profit growth, but can have the opposite effect if business slows. The CPB should therefore not simply be seen as a new tax incentive: above all, it is a choice based on expectations about the business's future.

For 2026-2027, there are also several changes compared with the scheme's initial application. The agreement is principally governed by Legislative Decree No. 13 of 12 February 2024, subsequently amended several times. Since 2025, taxpayers under the flat-rate regime (regime forfetario) have also been excluded: today, the CPB essentially concerns taxpayers subject to the ISA, Italy's synthetic tax reliability indicators (Indici sintetici di affidabilità fiscale).

What the two-year advance tax agreement is

The principle is fairly simple. Imagine a business declared a given income in 2025. Using data in its tax return, the ISA and information in its databases, the Italian Revenue Agency prepares a proposal indicating the income the taxpayer should use for tax purposes for 2026 and 2027. The taxpayer may accept or decline. If they decline, they simply remain taxed under normal rules. If they accept, they commit to declaring the agreed income for the two years covered, under the CPB rules. The methodology for proposals relating to 2026-2027 was approved by a decree of the Ministry of Economy and Finance dated 11 May 2026.

The fundamental point is that actual income and agreed taxable income can diverge. If the business performs better than anticipated by the agreement, higher actual income does not normally produce an automatic corresponding increase in the agreed tax base. If business performs worse, however, earning less is not enough to automatically reduce the income on which taxes are calculated. This is where the arrangement's advantage and risk arise simultaneously.

A simple example

Suppose a professional receives a proposed agreed income of 70,000 euros for 2026. If they accept the CPB and actual income reaches 100,000 euros during 2026, this does not necessarily mean the additional 30,000 euros is taxed under ordinary rules as though the agreement did not exist. The taxpayer has agreed an income base in advance with the tax authorities under the CPB rules. If actual income instead falls to 50,000 euros, the situation reverses: simply earning less does not normally allow agreed income to be replaced with actual income.

This explains why one of the most important questions before opting in is not merely “How much do I save today?” but “How much do I realistically expect my business to earn in 2026 and 2027?”

It does not mean paying taxes in advance

The name can cause confusion. “Advance” does not mean paying all the next two years’ taxes immediately today. What is mainly determined in advance is the level of taxable income. Tax payments continue under the normal system of final balances and advance instalments and the specific CPB provisions. The taxpayer also remains subject to accounting, filing and other statutory tax obligations. The agreement therefore does not turn a business into an entity “exempt” from checks or bookkeeping.

Who can opt in during 2026

One point to clarify is that the CPB is not indiscriminately open to every VAT-registered taxpayer. Following legislative changes in 2025, taxpayers under the flat-rate regime (regime forfetario) are excluded from the Concordato Preventivo Biennale. The scheme therefore concerns taxpayers carrying on business, artistic or professional activities to whom the ISA apply and who meet the other statutory conditions. The ISA are synthetic tax reliability indicators, used by the tax administration to assess taxpayers’ reliability through a range of economic and accounting data. However, being subject to ISA does not automatically make someone eligible. The rules contain eligibility requirements and various exclusions. Matters to verify include, for example, compliance with tax return obligations and the existence of certain tax or social security debts.

In particular, definitively assessed tax or social security debts totalling 5,000 euros or more are relevant, except in situations expressly covered by the rules, such as suspended debts or debts being regularly paid in instalments within the specified limits. By the acceptance deadline, the relevant remaining debt may be brought below 5,000 euros, including interest and penalties. The actual assessment must nevertheless be made for each taxpayer, because lawmakers have repeatedly amended exclusions, termination conditions and grounds for forfeiture.

How the proposal is calculated

The proposal is not generated simply by applying a fixed percentage to the previous year's income. The Agency uses a methodology considering taxpayer-declared data, information in the tax administration's databases and ISA-related factors. For 2026-2027, the Ministry of Economy and Finance approved a specific methodology in May 2026. Lawmakers have also introduced limits on the proposed increase over previous reference income, linked to the taxpayer's tax reliability level. For 2026, thresholds become progressively higher as the ISA score decreases. Among the changes introduced in 2026, the maximum increase was also set at 30% for taxpayers with a tax reliability score of at least 6 but below 8 and 35% for those with a score of at least 1 but below 6.

The principle is intuitive: the more reliable a taxpayer is considered, the less upward adjustment of the reference income should be needed.

The advantage of the substitute tax

One feature making the CPB particularly interesting is the option, where the conditions are met, to apply a substitute tax to the portion of agreed income exceeding reference income. In simple terms, the system prevents the entire increase required by the agreement from necessarily being subject to ordinary IRPEF (personal income tax) or IRES (corporate income tax) rates in the same way as an ordinary income increase. The substitute tax rules originate in Article 20-bis of Legislative Decree No. 13/2024 and provide differentiated rates based on taxpayer reliability. The Italian Revenue Agency has also introduced a specific payment code for the substitute tax payable by ISA taxpayers opting into the CPB.

This matters because it completely changes how the benefits of acceptance must be assessed: simply comparing declared income with the amount proposed by the tax authorities is insufficient. We need to reconstruct the entire tax burden under both scenarios, including ordinary tax, any substitute tax, IRAP (regional tax on productive activities) where due, social security contributions and advance payments.

A further distinction concerns taxpayers who renew the agreement. Legislative Decree No. 148/2026 grants them additional benefits, including higher thresholds for using tax credits without a compliance certification (visto di conformità) and shorter tax assessment time limits. Interest-free tax instalments are also provided for the 2026-2027 renewal. These measures should be checked in the calculation rather than automatically attributed to first-time participants.

When the agreement can become highly advantageous

Consider a business receiving an agreed-income proposal of 100,000 euros, but realistically expecting income of 140,000 or 150,000 euros because of new customers, higher margins or business growth. Acceptance may provide a substantial advantage because some of the actual economic increase may not translate into a corresponding increase in the ordinary tax base. The CPB therefore tends to be more financially attractive for businesses and professionals expecting:

The crucial word, however, is expecting. Nobody knows with certainty how much income will be generated over the two-year period.

The opposite risk: paying tax on income that never materialises

Take the same example but imagine a completely different scenario. Agreed income is 100,000 euros, but during the year the business loses an important customer and actual income falls to 65,000 euros. The CPB can then become financially disadvantageous. It is therefore wrong to present it as a system for “paying less tax”. The Concordato Preventivo Biennale is better understood as an economic bet on future income stability or growth, within very precise tax rules. Particular exceptional circumstances allow the agreement's effects to cease, but these must not be confused with normal business fluctuations.

A simple fall in turnover or profit relative to expectations does not automatically create the right to leave the agreement.

Turnover still matters

Another common mistake is assuming that, once income is agreed, turnover no longer matters. It does. The taxpayer must continue issuing invoices, recording revenue, correctly calculating VAT, complying with tax obligations and retaining legally required documentation. The CPB mainly concerns determining income relevant for the taxes covered by the scheme; it does not remove normal VAT rules and clearly does not permit taxpayers to omit transactions from their declarations. The distinction between revenue and income therefore remains essential. A business may have turnover of 500,000 euros and income of 100,000 euros, because tax-relevant expenses must be deducted from turnover under applicable rules.

The agreement addresses taxable income; it does not make turnover irrelevant.

What about social security contributions?

This also deserves attention. Article 19 provides that the agreed base is relevant for compulsory social security contributions too, with the option to contribute on actual income when it is higher. The specific effects must nevertheless be checked for the taxpayer's pension scheme, especially where autonomous professional pension funds are involved. For professionals and sole traders in particular, comparing IRPEF alone may therefore be incomplete. A proper calculation should include at least: income taxes + any CPB substitute tax + IRAP where applicable + social security contributions. Only after reconstructing all these components can acceptance be properly compared with ordinary taxation.

An agreement does not mean immunity from checks

Accepting the Agency's proposal does not provide a “tax shield” for the two years. Filing obligations remain. Specific benefits and restrictions on assessments exist, but they do not eliminate checks on data accuracy and the agreement's conditions. The legislation also provides specific grounds for forfeiture (decadenza). Serious filing irregularities, unpaid amounts and significant differences between declared and subsequently assessed figures may, for example, matter. The rules, also updated by Legislative Decree No. 148/2026, include findings of undeclared business activity or fictitious or non-deductible liabilities above the specified thresholds relative to declared revenue or professional fees. The updated rules must therefore be applied, distinguishing error corrections from situations causing forfeiture of the agreement.

The consequences can be particularly severe because, in certain cases, forfeiture affects the agreement for both tax periods. The CPB cannot therefore be viewed as a tool that makes accurate accounting less important. If anything, the opposite applies: joining a regime with specific conditions and consequences makes proper monitoring of compliance even more important.

How long is there to opt in during 2026?

For 2026-2027, lawmakers have provided specific rules. The statutory deadline was postponed to 31 October 2026 for taxpayers whose tax year coincides with the calendar year. Because 31 October falls on a Saturday in 2026, the general rules on tax obligations move the operational deadline to the next working day, Monday 2 November 2026. This means that, at the time of writing, the choice remains open. This is precisely when interested businesses and professionals should run financial scenarios, avoiding a decision based simply on the amount proposed by the Agency.

A proper calculation requires at least three scenarios

Personally, I would never assess an agreement solely by looking at the Agency's proposal. I would build at least three scenarios for 2026 and 2027.

For each, I would compare the total tax burden with and without the CPB. This is a simple sensitivity analysis, but it reveals something fundamental: how much must actual income grow before the agreement becomes financially worthwhile? That is probably one of the most important figures to know before opting in.

An example of potential benefits

Suppose, greatly simplifying, that agreed income is 80,000 euros. If, without the CPB, the taxpayer expects to earn:

Expected actual incomeIndicative assessment
65,000 eurosthe agreement could be disadvantageous.
80,000 eurosthe benefit will mainly depend on the tax structure and any substitute tax.
100,000 eurosthe CPB could start producing a significant advantage.
130,000 eurosthe potential benefit could become much more substantial.

But the correct reasoning is not:

“The more I earn, the more worthwhile the agreement becomes.”

Contributions, extraordinary items, tax losses, company structure, possible termination conditions, applicable rates and, above all, the reliability of the growth forecast must also be considered.

Why do the tax authorities offer this system?

At first glance, it may seem strange that the state agrees to fix income in advance and potentially forgo tax on some future growth. The scheme's logic is different. Lawmakers seek more predictable tax revenue and greater tax compliance, meaning a relationship in which the taxpayer accepts a given tax base in advance and the administration can focus more of its analysis and enforcement on positions considered riskier. The agreement forms part of the wider reform of tax assessment and tools encouraging voluntary compliance. There is therefore an implicit exchange.

The taxpayer gains greater predictability of the tax base and may benefit from growth beyond certain levels; the state gains greater tax certainty and a more structured relationship with the taxpayer.

The CPB and tax planning are not the same thing

The Concordato Preventivo Biennale can be a tax planning tool, but it does not replace business planning. Before asking how much tax might be saved, we should understand: what turnover the business can realistically achieve, what its margins will be, which costs will rise, what investments are planned and how stable its customer base is. A trader expecting turnover growth of 20% might simultaneously face higher staff costs, rents and raw material prices, leaving income almost unchanged. Conversely, a professional might increase fees by 15% without a corresponding rise in costs, allowing income to grow much faster.

The CPB focuses on income, not simply turnover growth.

So is it worth opting in?

There is no universal answer. The agreement tends to become more attractive when proposed income appears reasonable relative to the current position and concrete factors support growth beyond that built into the proposal. It becomes riskier when activity is highly cyclical, depends on a few customers, has unstable margins or faces a significant probability of declining results. This is therefore a case where running a calculation before deciding is probably far more valuable than simply reading the figure proposed by the Italian Revenue Agency.

The most important point to remember

The Concordato Preventivo Biennale does not guarantee tax savings. Within the statutory rules, it guarantees greater predictability of the tax base. If actual income grows much more than agreed income, that predictability can become a substantial financial advantage. If income falls instead, the same rigidity can become a cost. In other words, the taxpayer retains the risk of declining results while potentially benefiting from growth beyond agreed income, within the limits and adjustments provided by the rules. This is probably the most accurate interpretation: not an automatic tax discount, but an agreement whose economic value depends on what actually happens to the business during the relevant two-year period.

Article updated as of 1 October 2026. Examples are simplified and do not calculate tax due. This content is informational and does not replace an assessment of an individual taxpayer's tax and social security position.