Italy approves fiscal federalism decree despite regional opposition

The Italian Government has approved a legislative decree regarding fiscal federalism, despite failing to reach a unanimous agreement with regional authorities. During a session of the Unified Conference on July 28, 2026, several regions—including Campania, Emilia-Romagna, Puglia, Toscana, and Sardegna—expressed opposition to the proposed scheme for regional and local taxes.

Additionally, the National Association of Italian Municipalities (ANCI) and the Union of Italian Provinces (UPI) raised concerns regarding public transport issues and the lack of effective participation for provinces in Irpef revenue sharing.

Despite this lack of consensus, the Council of Ministers moved forward with the decree on August 4 to meet the legislative delegation deadline of August 29. The reform is built on the principle of financial invariance, meaning no new burdens will be introduced to public finances. Key provisions include a shared participation in Irpef totaling 5.828 billion euros for Regions and 1.802 billion euros for Provinces in the coming year, with provisions for future increases. The decree also aims to rationalize the sanctioning regime for regional and local taxes, offering potential reductions and incentives for prompt payments.