Firm Guides · Funeral services

Funeral services in Italy: accounting, tax, employment and business rules

Anyone who runs a funeral business knows that the work has two sides. On one side are the families, who within a few hours must decide things they had never thought about, and the staff, who cope with nights on call, recoveries of the deceased, long journeys and an emotional load that few people imagine. On the other side is a dense and little-known body of rules: regional requirements, a VAT exemption that costs more than it appears to, a national collective agreement with arrangements of its own, and tax audits capable of reconstructing revenue funeral by funeral.

This guide is written for the owners and administrative staff of these businesses, for those about to open one and for those who keep their accounts and run their payroll. It brings together the rules that matter in day-to-day work: authorisations, staff, VAT, income taxes, audits, and dealings with families, the municipalities and hospitals. Alongside the textbook topics it covers issues that the books barely mention but that make the difference in a tax audit or a lawsuit: the unsigned estimate, family members who disagree, the necroforo (the worker who carries and handles the deceased) lent by a fellow business.

The text is up to date as at 16 October 2026. For regional rules the main reference is Emilia-Romagna, with Lombardy for comparison. One caveat applies to the whole guide: from 1 January 2027 the new consolidated tax Acts (testi unici) apply. They are the consolidated VAT Act (Legislative Decree No. 10 of 19 January 2026), the consolidated income tax Act (Legislative Decree No. 117 of 19 June 2026, Article 377) and the consolidated Act on registration tax and other indirect taxes, including inheritance and gift tax (Legislative Decree 123/2025, published in the Official Gazette on 12 August 2025, whose application was postponed to 2027 by Decree-Law 200/2025). These are consolidating Acts: they change the numbering of the articles, not the substance of the rules examined here. Until 31 December 2026 Presidential Decree 633/1972, the TUIR (consolidated income tax Act, Presidential Decree 917/1986) and Legislative Decree 346/1990 remain in force, and these are the texts we refer to.

Opening the business

An activity regulated by the regions

Italy has no national law on funeral businesses. The basic state rules are still those of the mortuary police regulation (Presidential Decree No. 285 of 10 September 1990): transport of bodies, hearses and garages (Articles 16-36), embalming (Article 46), cremation and cemeteries. In addition there is Law No. 130 of 30 March 2001 on cremation and the scattering of ashes, substantially amended by Law No. 182 of 2 December 2025. Cremation is now classified as a local public service of general interest. Transport to the crematorium must be entrusted to authorised funeral businesses, which may carry up to four coffins in a single vehicle. The transport authorisation names the party entrusted with it, the crematorium and the destination of the ashes (Article 1 of Law 130/2001 as currently in force).

Everything else (who may operate, with what vehicles and with what staff) is decided by the regions. Businesses that work across two regions, as often happens in the lower Ferrara area bordering the Veneto, must be familiar with two different regimes. The same applies to those with premises in both Emilia-Romagna and Lombardy.

The old Article 115 of the T.U.L.P.S. (consolidated public security Act, Royal Decree 773/1931) also still plays a part: handling paperwork on behalf of family members is a business agency activity. In Emilia-Romagna the authorisation for funeral activity includes, but does not replace, the public security, trade and business agency authorisations (DGR 172/2022, point 1.1). This gives rise to the good-character requirements for shareholders and directors: no disqualifying grounds under Articles 11, 12 and 92 T.U.L.P.S. and anti-mafia documentation in order (Article 67 of Legislative Decree 159/2011).

Emilia-Romagna: L.R. 19/2004 and the 2022 directive

The reference law is L.R. (regional law) No. 19 of 29 July 2004, amended several times, most recently by L.R. No. 7 of 14 June 2024. Article 13 defines funeral activity as the provision of three services jointly: handling the paperwork on the family’s instructions, supplying coffins and funeral goods, and transporting remains, bodies, ashes and bones. Anyone who wishes to carry out only one of these is not a funeral business. The sole exception is funeral transport alone, which has its own authorisation.

The activity can start as soon as a certified notice is filed with the Comune (municipality) where the business is based; the text of the law still refers to a declaration of start of business. The SCIA (segnalazione certificata di inizio attività, the certified notice of start of business) is filed with the SUAP (one-stop shop for businesses) through the regional platform Accesso Unitario. The Comune then has sixty days to check the requirements and, if they are not met, to prohibit the business from continuing (Article 19(3) of Law 241/1990). Each branch requires its own SCIA.

The requirements are set by the regional executive. The text currently in force is DGR (regional executive resolution) No. 172 of 14 February 2022. It replaced DGR 1678/2019 and rewrote parts of DGR No. 156 of 7 February 2005 and DGR No. 163 of 13 February 2006, which otherwise remain in force, in particular for training. The main points are as follows:

• Premises. At least one private office for dealing with clients, in the Comune where the SCIA is filed and for the business’s exclusive use (it may not be shared with another business), and compliant with building and fitness-for-use rules. Any legal title to the premises is acceptable.
• Price list. It must be displayed at each office and shown to anyone requesting an estimate (point 2.5).
• Hearse and garage. At least one hearse and a garage equipped for cleaning and sanitising, held on a continuous basis under any legal title, including leasing. The Azienda USL (local health authority) checks suitability and issues a certificate that identifies the garage (point 2.6; Articles 20-21 of Presidential Decree 285/1990).
• Manager in charge. A trained person (responsabile della conduzione), who may be the owner or the legal representative (point 2.3).
• Staff. At least four trained funeral operatives, with employment relationships already documented at the time of the SCIA (point 2.7). The manager in charge counts towards the four if he or she genuinely works in the field and the volume of business allows it (point 2.8); shareholders who work for the company count (point 2.12).
• Branches. Each branch requires its own person dealing with clients, separate from the one at the main office and with the same training as the manager in charge. No further four operatives are needed (point 2.4).

The directive also specifies what does not qualify. The minimums cannot be met through a temporary association of undertakings, a network contract, staff obtained from parties not authorised to carry on funeral activity (service cooperatives, agencies) or transport-only businesses (points 2.9, 2.14 and 2.15). Other corporate or associative arrangements are possible with a funeral business that has at least eight operatives and two hearses of its own. This allocation covers up to four contracts; beyond that, one additional operative is required for each contract and one additional hearse for every three. Families must be informed of the arrangement when they give instructions (point 2.10).

Lombardy in brief

In Lombardy the matter is governed by Title VI-bis of L.R. No. 33 of 30 December 2009 and by regional regulation No. 4 of 14 June 2022. For those used to the Emilia-Romagna rules, the main differences are as follows.

• A technical director with managerial powers is required (Article 74 of L.R. 33/2009). According to the regional FAQs, the technical director does not count towards the minimum number of operatives.
• The requirements increase with volumes: one hearse, one garage and four necrofori are enough for up to 560 services a year. Once this threshold is exceeded by 20%, an additional hearse and four additional necrofori are required (Article 3 of R.R. 4/2022).
• The hearse, the garage and the operatives may be supplied by a ‘service centre’ under an exclusive contract of at least one year. The contract must be registered and attached to the SCIA (Article 74-bis of L.R. 33/2009).
• The incompatibilities are wider. They cover ambulances, healthcare transport and social care services, and apply even where only the shareholders are involved in those activities.
• The funeral home (casa funeraria) is expressly regulated, with minimum distances from healthcare facilities and cemeteries (Article 70-bis of L.R. 33/2009; Article 10 of R.R. 4/2022).
• Operating without meeting the requirements or without a SCIA is punishable under the regional law by a fine of €3,000 to €9,000, together with a prohibition on continuing (Article 77 of L.R. 33/2009).

The other regions have similar but not identical frameworks. Anyone opening premises in another region must check the requirements again from scratch.

Training

There are separate courses for funeral operatives and for the manager in charge or person dealing with clients (DGR 156/2005, point 5.1). They are run by bodies authorised by the region. New recruits must be trained within six months of being hired (DGR 172/2022, point 2.11). Training that is mandatory for performing the job is paid for by the employer, normally takes place during working hours and counts as working time (Article 11 of Legislative Decree 104/2022). It can be funded through the interprofessional fund the business belongs to. Before enrolling staff, it is advisable to obtain written confirmation from the training body that the course is valid for the purposes of L.R. 19/2004. Certificates must be kept, as the Comune and the Ispettorato (National Labour Inspectorate) will ask to see them.

Garage and farewell room

The farewell room (sala del commiato) is a separate investment, and for many families it has become the place of the final farewell. Emilia-Romagna does not use the expression ‘funeral home’ and refers instead to ‘farewell facilities’ (Article 14 of L.R. 19/2004). They host farewell rites and may also be used to keep the deceased and allow viewing. They require a municipal authorisation separate from the business’s SCIA and must meet the health and hygiene requirements for the mortuary services of accredited healthcare facilities. They may not be located inside healthcare, social-healthcare or communal living facilities, whereas they may be located within the cemetery buffer zone. They are also subject to a rule with a clear economic impact: even if privately owned, they must be open to anyone who requests them, without discrimination. Anyone investing in a farewell room must therefore set rates and conditions of use for families who have chosen another business as well.

L.R. 7/2024 added Article 14-bis on private columbaria, that is, facilities for keeping urns outside cemeteries. The general urban plan identifies the suitable areas. If the activity ceases, the urns must be transferred to a public cemetery or returned to the family. The design stage, the health authority’s opinion and the authorisation take months, and the investment plan must allow for this.

Practical start-up and budget

It is advisable to proceed in this order: engagement of the accountant and incorporation; search for an office and garage with the planning checks; enrolment on the courses; hearse and certificate; choice of the CCNL (national collective labour agreement), recruitment of staff, INPS (National Social Security Institute) and INAIL (National Institute for Insurance against Accidents at Work) registrations; hiring, with the UNILAV notification filed the day before; risk assessment document and health and safety appointments; SCIA to the SUAP and ComUnica filing with the Business Register; set-up of accounting and invoicing. After start-up, the business must register on the regional platform for access to hospital mortuaries (see the chapter on dealings with healthcare facilities).

Anyone setting up a new business while still employed by a funeral business must first resolve the issues arising from the existing employment: the duty of loyalty, notice and any non-compete agreement. We deal with this in the chapter on employment law.

Incompatibilities and fines

The Emilia-Romagna law separates funeral activity, which is carried on in competition, from the public services connected with death. An operator of cemetery or mortuary services that also carried on funeral activity has had to separate the two activities into distinct companies (Article 5(2)). The mortuary services of public and accredited private healthcare facilities may not be entrusted to anyone carrying on funeral activity (Article 5(3)). Moving the body within the facility where the death occurred must be done by staff with no ties to funeral businesses (Article 10(12)).

For breaches of the law and of municipal regulations, the fine is set by the municipal regulation at between €250 and €9,300. If the Comune has not set it, it ranges from €1,350 to €9,300 (point (d) of Article 7(2)). The disqualifying measures, however, have a far greater impact: the prohibition on continuing after an unfavourable check on the SCIA, and suspension or prohibition of the activity for touting (Article 13(6)). If the SCIA is challenged after a long time, the limits on the administration’s power of self-correction in Article 19(3) and (4) and Article 21-nonies of Law 241/1990 must be checked.

Staff

Which collective agreement

Work in a funeral business cannot be planned: staff go out at night, on public holidays, at short notice, and many of the staffing rules stem from this. For private funeral businesses the reference agreement is the CCNL for employees of businesses carrying on funeral activity, CNEL code IB11. It is signed by FENIOF, assisted by Confcommercio, and by Filt-Cgil, Fit-Cisl and Uiltrasporti. The renewal, signed as a draft agreement on 20 May 2025 and put to a consultation of workers, covers the period from 1 January 2025 to 31 December 2028; increases in minimum pay apply from 1 August 2025, with further tranches up to 2028. Public-sector businesses in the sector apply a separate agreement, the Utilitalia agreement (IB17). Agreements signed by smaller organisations also appear in the records.

The choice of agreement is not neutral. The minimum pay subject to contributions is in any event that of the agreement signed by the comparatively most representative organisations in the sector, whatever agreement is applied (Article 1(1) of Decree-Law 338/1989; Article 2(25) of Law 549/1995). Contribution relief and incentives require compliance with that level of bargaining (Article 1(1175) of Law 296/2006). Anyone who applies the services-sector agreement or a minor agreement to save money is exposed to recovery of contributions on the differences and loses the incentives. The sector agreement also already governs the arrangements typical of the trade: on-call duty, travel for repatriations, the allowance for the necroforo-driver.

In the job classification of the 2021 text, the necroforo (the worker who handles and carries the deceased) is at level 5. The necroforo-driver is at level 4 and moves to level 4 super after three years in the role; staff trained in thanatopraxy or thanatoaesthetics are also placed at level 4 super. Level 4 also includes staff working in farewell rooms and crematoria. Level 3 covers staff mainly handling paperwork, drivers and the master of ceremonies. Levels 1 and 2 are for professional and managerial staff: this is where the manager in charge who is not a shareholder must be placed, according to his or her actual autonomy. The 2025 renewal added to level 5 the profile of manual handlers of the sealed coffin. Basic pay rates must be taken from the official tables of the renewal, updated at each tranche.

Working hours, overtime, public holidays

In the 2021 text normal working hours are 40 a week over six days (Article 23). Working time runs from arrival at the garage or the workplace and includes waiting time. Within the 48-hour average limit, however, waiting time during services and travel on business trips when not driving are not counted, although they are still paid. The pay supplements in Article 25 do not apply cumulatively and are calculated on minimum pay and the cost-of-living allowance: 30% for daytime weekday overtime, 50% for night overtime, 65% for public holiday overtime, 75% for night overtime on public holidays; 50% for ordinary work on public holidays and 25% for ordinary night work between 10 pm and 6 am. The 2025 renewal may have updated some of these arrangements: the final text must be checked before these percentages are applied.

The mistake we see most often in the sector’s payslips is a flat monthly amount for public holiday work that does not match the hours actually worked. A monthly schedule of public holiday, night and overtime hours, reconciled with the libro unico del lavoro (the statutory payroll and attendance register), prevents disputes and findings by labour inspectors.

On-call duty, and when it becomes working time

Under the CCNL (Article 54 of the 2021 text), on-call duty is arranged in writing, on a rota basis, with no obligation to stay at home. The worker receives an allowance for each shift, higher on public holidays and increased if called out. Work performed while on call is paid as overtime, night or public holiday work, with a guaranteed minimum of three hours. Telephone costs are borne by the business. Relying on Articles 7 and 17 of Legislative Decree 66/2003, the agreement derogates from the eleven-hour daily rest period. It does, however, guarantee at least eight hours of uninterrupted rest after a call-out and the recovery of the hours missed.

The question remains of when on-call time becomes working time. Legislative Decree 66/2003 recognises only two categories, working time and rest (point (a) of Article 1(2)). The Court of Justice of the EU set the test in its judgment of 21 February 2018, C-518/15, Matzak, and in the two judgments of 9 March 2021, C-344/19 and C-580/19. On-call time is working time in its entirety when the constraints imposed on the worker objectively and very significantly affect his or her ability to manage free time: response time, frequency of calls, the obligation to remain in a particular place. Mere practical difficulties are not enough. How those periods are paid is a matter for national law.

The Court of Cassation follows this approach. According to Cass. 22 November 2023, No. 32418, on-call time is not a third category. Classifying it as working time does not mean it must automatically be paid as night overtime, but pay must be measured against Article 36 of the Constitution. Cass., order of 23 April 2025, No. 10648, held that a mandatory overnight stay on the premises was working time even where there were no calls, to be paid proportionately and sufficiently, even by way of derogation from the collective agreement. Cass., order of 21 July 2023, No. 21934, concerned an ambulance driver, a role very close to that of a funeral operative. The court must examine whether on-call shifts beyond the limits prevented the worker from taking rest; the worker may claim damages, but must prove the harm suffered.

For a funeral business the distinction is a real one: nights on call are the part of the job that weighs most heavily on those who do it and on their families, and a frequent source of disputes. A necroforo who stays at home with the phone, must report within a reasonable time and receives occasional calls is on passive on-call duty: he or she is entitled to the contractual allowance. The risk changes where there is an obligation to sleep at the premises or in the farewell room, very tight reporting times, frequent night calls or continuous shifts. In these cases the allowance is not enough and the time must be treated as working time, including for the purposes of the 48-hour limit and rest periods. Call-out hours are in any event actual work. It is advisable to state the maximum reporting time in the on-call instruction and to keep a log of calls. Both are needed to calculate pay correctly and, in the event of a lawsuit, they are the best evidence.

Two practical points. A worker on sick leave may not be put on call. The journey from home to the place of the call-out, after the call, is covered as a commuting accident (Article 2(3) of Presidential Decree 1124/1965), and the time of the call should be recorded.

Flexible contracts and bearers

Part-time and fixed-term contracts. To cover peaks without resorting to undeclared work, the most appropriate tool is often part-time work with flexible clauses, within the limits of the CCNL and with the worker’s written consent. A fixed-term contract requires no stated reason for the first twelve months. Beyond that, and up to 24 months, the reasons provided by the collective agreement are required or, until 31 December 2026, technical, organisational or production needs identified by the parties (point (b) of Article 19(1) of Legislative Decree 81/2015, as extended by Law 118/2025). From 2027, unless further extended, only the reasons set out in collective agreements will remain.

Occasional work. The Libretto Famiglia (household voucher scheme) is reserved for individuals not acting as businesses: a funeral business cannot use it. The occasional work contract (Article 54-bis of Decree-Law 50/2017) is open to businesses with no more than ten permanent employees, with annual limits of €5,000 per worker from all users, €10,000 per user and €2,500 between the same parties, and cannot be used for anyone who has been an employee or contractor of the user in the previous six months. Each engagement must be notified in advance on the INPS platform. It is suitable for a genuinely occasional bearer, not for someone who works every week.

‘On-call’ bearers paid in cash or as expense reimbursements. This is an irregular practice still found in the sector, and it is the most expensive one when it comes to light. Work without the prior notification of hiring triggers the ‘maxi-penalty’ (maxisanzione), increased by 30% by Decree-Law 19/2024: from €1,950 to €11,700 per worker for up to 30 days of work, from €3,900 to €23,400 for 31 to 60 days, and from €7,800 to €46,800 for more than 60 days. Contributions, INAIL premiums and civil penalties are added. A flat-rate ‘expense reimbursement’ paid to someone who is not travelling on business is taxable pay (Article 51(1) TUIR, referred to for contribution purposes by Article 12 of Law 153/1969). For tax purposes, pay handed over off the books and without documents is not a deductible cost. A coordinated and continuous collaboration in which the business organises the time, place and manner of the work falls under the rules on employment (Article 2 of Legislative Decree 81/2015): classifying a necroforo as a ‘contractor’ is not tenable.

We discuss on-call (intermittent) work and the lending of staff between businesses in the next chapter, because the problems there are mainly legal.

Shareholders, family members and working owners

A shareholder of an srl (limited liability company) who works in the business habitually and as his or her main occupation must be registered with the INPS scheme for traders (Gestione commercianti) (Article 1(203) of Law 662/1996). He or she pays at least the contribution on the minimum income even where there are no profits. For 2026 the minimum income is €18,808 and the fixed contribution €4,611.64 (INPS circular No. 14 of 9 February 2026). Directors’ fees, on the other hand, fall within the Gestione separata (INPS separate scheme), and the two registrations coexist (Article 12(11) of Decree-Law 78/2010; Constitutional Court No. 15/2012). A shareholder who performs manual work, for example as a necroforo, must be insured with INAIL (Article 4, point 7, of Presidential Decree 1124/1965). The same applies to family members who perform manual work (point 6).

Family members who help with services are a frequent problem area. In a sole proprietorship, a family member who works in the business habitually and as his or her main occupation must be registered as a family helper (coadiuvante). In an srl the family helper in the technical sense does not exist: the son, daughter or spouse who carries the coffin is a worker who must be hired, or a working shareholder. Genuinely occasional and unpaid help is tolerated within narrow limits, and in an inspection the burden of proving that it was occasional lies with the business.

INAIL and health and safety

In its note of 12 July 2019 replying to questions on the 2019 premium tariff, INAIL classified funeral and cemetery services under references 0320 and 0840. These cover interments in vaults, exhumations, cremations, transport of coffins, sale of coffins and funeral goods, paperwork and chapels of rest. Building and stonemasonry work must be classified separately. The actual tariff item and rate depend on the tariff scheme assigned to the business.

The risk assessment document (Legislative Decree 81/2008) must address the risks specific to the trade:

• biological risk (Title X), from contact with the deceased and with bodily fluids, with the related protective equipment, procedures for sanitising the hearse and the garage, and vaccinations as recommended by the occupational physician;
• manual handling of loads (Title VI): heavy coffins, often carried by hand, which make lifting aids and teamwork necessary;
• road risk, given the long distances driven;
• work-related stress (Article 28) and the emotional load: deaths of children, violent deaths, recoveries from the roadside.

Health surveillance is required for manual handling and biological risk. Worker training follows Article 37 and the State-Regions agreement of 17 April 2025. A document that dismisses stress in a single line can be challenged, and the issue also has a civil liability dimension, which we discuss below.

On the death of a spouse, a relative within the second degree or a cohabiting partner, workers are entitled to three days of paid leave a year (Article 4(1) of Law 53/2000). Recovery shifts after the most distressing services, rotation on recoveries of the deceased and psychological support offered through the company welfare plan (point (f) of Article 51(2) TUIR) cost little, protect people and reduce absences and resignations.

Business travel for repatriations and expatriations

Business travel follows Article 55 of the CCNL: reimbursement of itemised expenses, a daily allowance for each overnight stay, and a contribution towards meals. For tax purposes, itemised reimbursements of meals, accommodation, travel and non-scheduled transport for expenses incurred in Italy are exempt only if paid by traceable means (Article 51(5) TUIR, amended by Law 207/2024). For expenses abroad the requirement was removed by Decree-Law 84/2025, as confirmed by ruling (risposta a interpello) No. 188 of 10 July 2025. Flat-rate allowances are exempt up to €46.48 a day in Italy and €77.47 abroad. Driving hours are working time: on long journeys rest must be scheduled before the return trip.

Hiring incentives

For 2026, Decree-Law No. 62 of 30 April 2026 introduced contribution relief for permanent hiring of young people under 35, of disadvantaged women, and in the single Special Economic Zone (ZES), which does not include Emilia-Romagna. INPS issued instructions in its circulars Nos. 55, 56 and 57 of 14 May 2026. Common conditions apply: a regular DURC (certificate of social security compliance), compliance with the leading collective agreement and, where required, a net increase in employment. The relief applies to hiring carried out in 2026, and at present there is no similar measure for new hiring in 2027. Businesses opening in 2026 should check straight away whether any of the four operatives to be hired meet the requirements, and should apply before counting on the benefit. Caps and durations must be read in the individual circular.

Employment law: the sector’s sticking points

Lending staff and vehicles between businesses

In the sector it is normal for one business to ask a competitor for two necrofori for a large funeral, or for the hearse with its driver for a transport. The fee is often a flat amount per service. The law allows this exchange, but only in three forms, and each has different consequences for employment law, regional requirements and VAT.

The service contract (appalto). The other business carries out part of the service with its own staff and vehicles: a transport, a recovery of the deceased, the team with its own team leader. It is a genuine service contract if the contractor organises the resources, directs its own workers and bears the risk (Article 29(1) of Legislative Decree 276/2003). Where the service consists almost entirely of labour, what matters is who gives the orders during the work. If the ‘lent’ necrofori follow the instructions of the funeral director of the business receiving them, and if the price is calculated by the hour or per person, the contract is likely to be treated as not genuine. The same applies to cooperatives and consortia of bearers that supply labour only.

In Emilia-Romagna, DGR 172/2022 allows a business to use another funeral business for transport, but the commissioning business must still have its own four operatives (point 2.16). The commissioning business is jointly liable with the contractor for pay, TFR (statutory severance pay) and contributions for up to two years after the end of the contract (Article 29(2)). The contractor’s employees are entitled to terms no less favourable than those of the collective agreement most widely applied in the sector (Article 29(1-bis)).

Secondment (distacco). The seconding business temporarily places one of its employees at the disposal of another business in its own interest, while continuing to pay the employee (Article 30 of Legislative Decree 276/2003). The interest must be genuine and the secondment temporary. Lending a necroforo to a competitor merely as a favour does not satisfy the interest requirement.

The network contract (contratto di rete). If the businesses have signed a network contract entered in the Business Register, the interest in the secondment is presumed, and co-employment of employees hired under the rules of the network is permitted (Article 30(4-ter)). Co-employment is notified using the UNIRETE form (Ministerial Decree No. 205 of 29 October 2021). The Ispettorato instructs inspectors to check that the network has a real joint programme and does not serve merely to reduce labour costs (INL circular No. 7 of 29 March 2018). In Emilia-Romagna the network can be used for organisational purposes, but not to reach the minimum of four operatives (DGR 172/2022, point 2.9).

Outside these forms lies the unlawful supply of labour. Decree-Law No. 19 of 2 March 2024 reintroduced the criminal penalty: the client and the contractor under a service contract that does not meet the requirements, and the parties to an irregular secondment, are punishable by arrest of up to one month or a criminal fine (ammenda) of €60 per worker per day, with the statutory increases (Article 18(5-bis) of Legislative Decree 276/2003). The financial penalty may not be less than €5,000 or more than €50,000 (paragraph 5-quinquies). If the aim is to circumvent mandatory rules, the supply of labour is fraudulent and the penalty is higher (paragraph 5-ter). The worker may also apply to be treated as an employee of the party that actually used his or her work (Article 29(3-bis)). There is also the regional prohibition on intermediation in funeral activity (Article 13(5) of L.R. 19/2004).

In practice the exchange is lawful when it is a subcontract for a complete service, invoiced at a lump sum, with the team under the direction of the business supplying it. Lending individuals who work under the orders of the other business is not. The service contract must be written so as to describe what is actually supplied: it is the first document read by the labour inspector and the tax auditor. The VAT treatment of these transactions is set out in the chapter on VAT.

Intermittent work: lawful, but not to reach the minimum

The on-call (intermittent) contract is widely used for necrofori and bearers. In its reply (interpello) No. 9 of 25 March 2014, the Ministry of Labour placed necrofori and bearers under item 46 of the table annexed to Royal Decree No. 2657 of 6 December 1923 (‘workers decorating or setting up for civil or religious ceremonies’). The Ministerial Decree of 23 October 2004 refers to that table and remains applicable under Article 55(3) of Legislative Decree 81/2015. The royal decree was subsequently repealed, but INL note No. 1180 of 10 July 2025 and Ministry of Labour circular No. 15 of 27 August 2025 clarified that the reference remains valid. The contract is therefore permitted for this activity regardless of age; the cases for workers under 24 and over 55 also still apply (Article 13(2)).

The limits are strict:

• no more than 400 days of actual work in three calendar years with the same employer, failing which the relationship is converted into a full-time permanent one (Article 13(3)). The exception covers tourism, public establishments and entertainment, not funeral businesses;
• the contract is prohibited if the employer has not carried out a risk assessment (Article 14);
• each call, or cycle of calls of up to thirty days, must be notified before the work begins. If the notification is missing, the fine ranges from €400 to €2,400 per worker, with no diffida (prior warning allowing the breach to be remedied) (Article 15(3));
• if the worker undertakes to respond to calls, he or she is entitled to an availability allowance (Article 16).

Health, including mental health, and refusal to perform dangerous work

People who do this work see in a month what most people see a few times in their lives, and they take home more than they let on. Article 2087 of the Civil Code requires the employer to protect the physical integrity and moral personality of the worker. Even without workplace bullying, the employer is liable if it allows a stressful working environment that harms health to persist, even merely through negligence (Cass. 7 February 2023, No. 3692; Cass. 7 June 2024, No. 15937). Endless on-call duty, no rotation on the most distressing call-outs and no support after traumatic events are situations that a court may assess from this perspective.

If the employer fails to take the necessary measures, the worker may refuse to perform work that puts his or her health at risk (Article 1460 of the Civil Code). The refusal must, however, be proportionate and in good faith: partial shortcomings do not justify a total refusal to work (Cass. 7 November 2005, No. 21479). In the event of serious, immediate and unavoidable danger, Article 44 of Legislative Decree 81/2008 allows the worker to leave without consequences. The typical case is the recovery of a body with a suspected infectious disease (Article 18 of Presidential Decree 285/1990) without adequate protective equipment. A worker who refuses may not be disciplined, and an employer that disciplines the worker exposes itself to a lawsuit that is hard to win.

Touting: conduct that costs people their jobs

In Emilia-Romagna, commercial activity must take place outside healthcare facilities, observation rooms and cemeteries (Article 13(5) of L.R. 19/2004). Offering money, gifts or benefits to obtain information on deaths or to be assigned funerals is prohibited (paragraph 6). The penalty falls on the business: the Comune suspends it with immediate effect and, in serious cases, prohibits it from continuing. We discuss the criminal aspects and the liability of the company in the chapter on dealings with healthcare facilities.

The procedural requirements must be respected: a written and specific disciplinary charge, at least five days for the worker’s defence, and timeliness (Article 7 of Law 300/1970). The prohibition must be written into the displayed disciplinary code, together with an explicit ban on accepting tips and a clear rule on presence in healthcare facilities. These written rules also protect the business, because they show that it did not tolerate the conduct.

A different case is the employee who, through no fault of his or her own, loses a requirement for the job: the driving licence for a driver, medical fitness, regional training not completed in time. There is no breach. If the impossibility is not temporary, a justified objective reason for dismissal may be considered (Article 3 of Law 604/1966). First, however, redeployment must be sought and documented, even in small businesses: in court this is one of the most contested points.

GPS on hearses and the on-call phone

Article 4 of the Workers’ Statute permits tools that enable remote monitoring only for organisational and production needs, safety or protection of company assets, with a trade union agreement or, failing that, with the authorisation of the Ispettorato. No agreement is needed for tools used to perform the work. According to the Ispettorato (circular No. 2 of 7 November 2016), a tracker installed on company vehicles is not, as a rule, a work tool: on hearses and recovery vans GPS therefore requires an agreement or authorisation. The phone given to the on-call worker, on the other hand, is a work tool.

In both cases the data may be used for disciplinary purposes only if the worker has received adequate information on how the tools are used and on the checks carried out (Article 4(3)). ‘Defensive’ checks outside these rules are permitted only after a well-founded suspicion and only on data collected afterwards (Cass. 22 September 2021, No. 25732). In its order No. 15391 of 3 June 2024, the Court of Cassation held that Telepass data from a company car could not be used because no information notice had been given, and set aside the dismissal. Anyone wishing to use GPS to reconstruct, for example, repeated stops outside a hospital must first put in place the agreement or authorisation, the information notice and written rules.

The employee who sets up on his or her own

Many new businesses are started by an experienced employee who leaves to set up on his or her own. Until the employment ends, notice period included, the duty of loyalty applies (Article 2105 of the Civil Code): the employee may not deal in competition with the employer or use information about its organisation to its detriment. The case law reads this duty together with the duties of fairness and good faith, and is strict. Even preparing an activity that is only potentially harmful, such as incorporating a competing company, is enough (Cass. 18 January 1997, No. 512; Cass. 9 August 2013, No. 19096).

Some preparatory steps can reasonably be regarded as lawful: studying the project, asking for quotes, looking for premises, finding out about courses. Incorporating the company and filing the SCIA while still in employment is already risky. Contacting families, facilities or parishes during the employment, taking lists and contacts, and persuading colleagues to follow the person leaving are unlawful. Resignation must be submitted through the online procedure (Article 26 of Legislative Decree 151/2015). An employee who does not give notice owes payment in lieu. Our advice is to wait until the employment has ended before taking these two steps, and to plan hiring so that it does not look like the organised transfer of a team.

After termination, competition is free unless there is a valid agreement. Article 2125 of the Civil Code requires the agreement to be in writing, to provide for consideration and to be limited in scope, duration and territory; the maximum duration is three years, five for executives. The consideration must be determined or determinable and not merely nominal (Cass. 1 March 2021, No. 5540). In its order No. 436 of 8 January 2026, the Court of Cassation held that consideration paid month by month during the employment was also determinable: the fact that the amount depends on the length of the employment concerns its adequacy, not its validity. An agreement covering the whole province for three years, paid with a few tens of euros a month, is unlikely to stand up. An agreement targeted at the area in which the business actually operates, and adequately paid, is defensible.

Without an agreement, the rules on unfair competition remain. Hiring a competitor’s employees is lawful. It becomes unlawful poaching of staff (Article 2598, point 3, of the Civil Code) where there is an intention to cause harm, which is inferred from the circumstances: how many people leave, over what period, how hard they were to replace, whether the operation was organised by someone still on the inside (Cass. 4 September 2013, No. 20228). In our sector there is an additional factor. If several trained operatives leave together, the business losing them may fall below the regional minimum and be unable to continue working, and a court may take this into account. Relationships with hospitals and care homes, on the other hand, are not a transferable clientele: under regional law they may not be used to obtain funerals.

VAT

The activity code after ATECO 2025

Since 1 April 2025 the ATECO 2025 classification has also applied for tax purposes (resolution No. 24/E of 8 April 2025). The old code 96.03.00 has been split into three subcategories: 96.30.01 Funeral services (preparation of the body, paperwork connected with the service, transport of remains, ashes and bones); 96.30.02 Burial services (burials in the ground, interments in vaults, exhumations, removals from vaults, transfers, maintenance of graves); 96.30.09 Funeral and related services n.e.c. (cremation, renting or selling graves, cemetery paperwork not linked to a funeral, services for pets). No notification of change of details is required for the switch, but the new code must be used in documents and returns. At the next notification of change it is worth also correcting the secondary codes: trade in funeral goods, marble and headstone work, coffin manufacturing. A wrong code affects the ISA (synthetic reliability indices) and on checks.

What the exemption covers

Article 10(1), point 27, of Presidential Decree 633/1972 exempts ‘services proper to funeral undertaking’. According to administrative practice, the exemption is objective: it covers all services relating to burial (resolutions No. 501398 of December 1973 and No. 503252 of 31 January 1976) and applies whatever the legal nature of the parties (Ministerial Circular No. 8 of 14 June 1993; resolution No. 376/E of 29 November 2002). Resolution 376/E/2002 lists as services proper to funeral undertaking the handling of paperwork, setting up the chapel of rest, transport of the coffin and supply of the coffin and funeral wreaths. The same resolution, however, makes cemetery services of burial, interment, exhumation, transfer and cremation subject to the standard rate.

The coffin or urn, dressing and preparation of the body, transport, paperwork and the chapel of rest form a single exempt supply, even if the invoice shows them as separate items. The test is that of the single supply developed by the Court of Justice: elements so closely linked, for the average consumer, that they form a whole which it would be artificial to split follow the principal supply (CJEU 25 February 1999, C-349/96, Card Protection Plan; 27 October 2005, C-41/04, Levob). In its reply No. 907-1033/2022, the Veneto Regional Directorate held that the recovery of a body and its transport to the mortuary at the request of the authorities, invoiced to the Comune, were also exempt. This is a regional reply, useful but not binding on all tax offices.

The Court of Cassation set the limit in its order No. 40726 of 20 December 2021. A supply is ancillary, and follows the exemption, only if it is made by the same supplier and serves to supplement, complete or make possible the principal supply. On this test, memorial cards of the deceased and the placing of inscriptions on headstones were made subject to 22% VAT, even though included in the funeral invoice. The trade federation has drawn a cautious conclusion from this: the standard rate also applies to building a new tomb and to supplying and placing a headstone.

Where the exemption ends: headstones, flowers, death notices, animals

Headstones and marble. Headstones, vases, lanterns and crosses supplied on their own, and restoration work, are subject to the standard rate (resolution No. 111/E of 9 October 2006). The 10% rate under item 127-quinquies of Table A, Part III, applies only to burial structures (vaults, tombs, chapels) supplied by the person who built them. Building work in the cemetery, opening and closing vaults and placing headstones are construction or stonework services at the rate applicable to them.

Wreaths and flowers. Opinions are divided here, but the answer can be derived from resolution 376/E/2002 itself. Wreaths and floral decorations supplied by the business as part of the service and included in the price of the funeral are supplies proper to the service and follow the exemption: the resolution expressly mentions the supply of funeral wreaths.

The case is different for flowers bought from a florist and resold to the family as a separate supply, perhaps ordered by relatives other than the person who gave instructions, or sold in the business’s own shop. These are a separate supply: cut flowers and buds are subject to 10% VAT (Table A, Part III, item 20), while for arrangements using non-plant materials the rate must be checked case by case. The Agenzia delle Entrate (Italian Revenue Agency) FAQs on reporting funeral expenses exclude flowers from the expenses to be reported, because they are not necessarily connected with the funeral: the case for bringing a separate sale within the exemption is therefore weak. In practice, wreaths that are part of the service go into the funeral invoice as exempt; flowers resold separately are invoiced at 10% or documented as a disbursement, with the florist’s document made out to the family member.

Death notices and posters. Publication in newspapers and the printing of posters are services at 22%. The cleanest way to handle them is as a disbursement, with the document made out to the family. If the business buys them in its own name and resells them without any link to a funeral it is handling, they are taxable transactions.

Cremation. The service supplied by the crematorium operator, even a private concession holder, is not a funeral undertaking service and is subject to standard VAT (resolution 376/E/2002; Veneto Regional Directorate reply No. 907-206/2014). For the Comuni and their operators the classification varies, and documents sometimes arrive with VAT and sometimes without. The funeral business has no standing to correct the regime chosen by the operator. The prudent course is not to absorb the charge into its own price, but to recharge it as a disbursement with the document made out to the family.

Pets. ATECO places funeral services for animals under 96.30.09, close to those for people, but for VAT purposes they are not funeral undertaking services. Funeral services are governed by the mortuary police regulation, which concerns people; animal remains are subject to the rules on animal by-products (Regulation (EC) 1069/2009). There is no reply from the Agenzia delle Entrate on the point, but collection, cremation, urns and accessories for animals must be invoiced at 22%. For businesses that run this activity alongside traditional funerals, these transactions affect the pro rata and may make it worthwhile to separate the activities.

Thanatopraxy and thanatoaesthetics. There is no administrative practice. If they are carried out by the funeral business as part of preparing the body, bringing them within the exemption is defensible. If they are invoiced to a funeral business by an operator that does not provide funeral services, as a separate technical service, the prudent choice is the standard rate.

Supplies between funeral businesses

The objective nature of the exemption leads to the conclusion that services proper to funeral undertaking supplied by one business to another are also exempt: transport of the body with the supplier’s own hearse and staff, recovery, dressing, paperwork, a whole service in another province. For the purposes of the exemption, who the customer is does not matter. There is no national administrative practice specifically on dealings between businesses, but the conclusion follows from Ministerial Circular 8/1993 and resolution 376/E/2002.

Things change when only a vehicle or only staff are made available. Hiring out the hearse without a driver is a lease of movable property, taxable at 22%. For staff, a change that many businesses are unaware of must be borne in mind: from 1 January 2025, secondment reimbursed at cost alone is also within the scope of VAT. Article 16-ter of Decree-Law 131/2024 repealed Article 8(35) of Law 67/1988, which excluded it, for contracts entered into or renewed from that date (circular No. 5/E of 16 May 2025). Secondment between funeral businesses is therefore a taxable supply even where the receiving business merely reimburses the cost. The sale of coffins to another business is a taxable supply of goods, because there is no principal service to which it can be linked.

Generic flat-rate ‘service’ invoices with no description, often between related businesses, are the first to be challenged in a tax audit. The description must state the deceased, the date, the type of service and the vehicle used.

Disbursements in the name and on behalf of the client

Many amounts that pass through a funeral are not revenue of the business: municipal and cemetery fees, the charge for the concession of a vault, the crematorium charge, the fee for putting up posters, death notices, revenue stamps. They stay outside the taxable amount only if they are advanced in the name and on behalf of the client and properly documented (Article 15(1), point 3). In practice the document issued by the public body or supplier must be made out to the family member who gave instructions, and on the invoice these amounts appear as an excluded reimbursement, with nature code N1.

If the Comune’s receipt, the crematorium’s invoice or the newspaper’s invoice is made out to the business, there is no disbursement. The amount is a cost of the business and recharging it is consideration, which follows the regime of the supply to which it relates: exempt if absorbed into the funeral service, taxable if it is a separate supply such as cremation. For income tax purposes revenue and costs both increase, with effects on IRAP and the ISA; for VAT purposes the pro rata changes; and the data reported for the pre-filled return no longer match. More tax is not always due as a result, but the accounts become unreadable and, in an audit, raise suspicion.

The rule of conduct is to ask public bodies and suppliers to make out documents to the family member and to record disbursements in a dedicated balance sheet account, such as ‘Customers – disbursements’, to be cleared funeral by funeral when reimbursed. A balance that does not clear at year end points to a disbursement not recharged or a receipt not matched. The document made out to the family member, or a copy of it, goes in the funeral file. The Agenzia delle Entrate’s guides on tax credits accept the receipt for payment to the Comune as valid evidence for cemetery fees.

Input VAT deduction: pro rata, separation of activities, dispensation

A business that makes almost exclusively exempt transactions has a very low pro rata (Article 19(5) and Article 19-bis), and VAT on purchases effectively becomes a cost. Disbursements under Article 15 are not included in the calculation. An example: exempt services of €380,000 and taxable headstones and goods of €20,000 give a pro rata of 5%. Of €30,000 of VAT paid on purchases during the year, €1,500 is deducted.

If the business also carries on a significant taxable activity, such as a stonemason’s workshop, a shop selling cemetery goods or a pet section, it may opt to apply VAT separately to each activity (Article 36(3)). Each activity then has its own deduction regime: full for the taxable activity, almost nil for the exempt one. The option has conditions and costs. The activities must be objectively distinct: the Agenzia delle Entrate uses ATECO codes as an indicator, while stating that the code is not always sufficient (circulars 22/E/2013 and 19/E/2018). Separate accounts are needed, as are objective criteria for shared costs, which remain subject to the pro rata. Internal transfers of goods and services between the activities are relevant for VAT. The option is binding for at least three years. The calculation must be done on actual figures, subtracting the cost of keeping two sets of accounts. In small businesses with marginal taxable turnover it is rarely worthwhile; with a marble workshop or a pet section it often is.

Article 36-bis allows businesses to opt out of invoicing and recording exempt transactions, unless the customer asks for an invoice; the consequence of the option is that VAT on purchases becomes entirely non-deductible. For a funeral business this brings few advantages, because the reporting for the pre-filled return and the family’s tax credit are based precisely on the invoice.

The hearse and other equipment are depreciable assets. VAT on purchase is deducted in proportion to the pro rata for the year and must be adjusted over the four years following the year the asset came into use if the pro rata changes by more than ten percentage points (Article 19-bis2). However, the adjustment does not apply to assets with a unit cost of up to €516.46 or to those with a depreciation rate above 25% (Article 19-bis2(6)), so it does not apply to the hearse either, depreciated at 30%. A business that starts with a pro rata close to zero and then opens a marble workshop builds up a favourable adjustment on its other depreciable assets, such as refrigerated cells and furnishings. A business that records only exempt transactions is not required to file the annual VAT return (Article 8 of Presidential Decree 322/1998) or to carry out periodic VAT settlements. This relief no longer applies if there are taxable transactions, reverse-charge purchases or intra-Community purchases.

Invoice, addressee, stamp duty

A funeral is documented by an electronic invoice even when supplied to private individuals: recipient code ‘0000000’, the customer’s tax code, and a courtesy copy handed to the family. The invoice must be made out to the family member who signs the instructions and pays, not to the deceased. The file format allows only one customer: where several family members share the cost, the cleanest solution is to issue separate invoices for each share, each made out to the person paying with his or her own traceable means of payment. Alongside the exempt items (nature code N4, Article 10, point 27) and the excluded items (N1, Article 15), taxable items must be shown with their rate.

If the amounts not subject to VAT, exempt and excluded combined, exceed €77.47, stamp duty of €2 is due on the invoice, paid virtually. The party liable to the Treasury is the issuer of the invoice, but the duty may lawfully be recharged to the customer as an excluded item. It is advisable also to state on the invoice the name of the deceased, the date of death and the method of payment.

Reporting funeral expenses

Anyone issuing invoices for funeral expenses must send the Agenzia delle Entrate, for each death, data on the previous year’s expenses. The obligation stems from the Ministerial Decree of 13 January 2016, with the technical specifications in the measure of 19 February 2016; the deadline currently indicated by the Agenzia delle Entrate is 16 March. Data for 2026 must be sent by 16 March 2027. Only expenses paid by traceable means are reported. The Agenzia delle Entrate’s FAQs exclude flowers and marble work.

These are the first data that the tax authorities cross-check against municipal authorisations for transport, burial and cremation. An invoice without the customer’s tax code cannot be reported and deprives the family of the tax credit. An invoice made out to someone who did not pay generates incorrect data in the pre-filled return and exposes the customer to challenges.

The family’s tax credit, including borderline cases

The 19% tax credit applies to funeral expenses ‘incurred by anyone’ on the death of a person, with no requirement of kinship, up to €1,550 for each death (point (d) of Article 15(1) TUIR). Since 2020 it has required payment by traceable means (Article 1(679) of Law 160/2019). It is reduced for incomes between €120,000 and €240,000 (Article 15(3-bis)) and, from 2025, for incomes above €75,000 it counts towards the overall cap in Article 16-ter TUIR (circular No. 6/E of 29 May 2025). For the business, traceability is also useful information to give the family when preparing the estimate: those who pay in cash lose the tax credit.

• Several people pay for the same funeral. The €1,550 limit is not multiplied. A person to whom the invoice is not made out may claim the credit for his or her share only if the split is shown on the document.
• Reimbursements from insurance policies or other bodies. The credit applies only to the part that remains payable by the family. A distinction must be drawn between a policy that pays the business directly, where the family bears no expense, and a life policy that pays a sum to the beneficiary, who then pays for the funeral: in the second case the credit appears defensible, but there is no specific administrative practice.
• Prepaid funeral. The expenses must be contemporaneous with the event: those incurred in advance in anticipation of a future funeral are excluded (resolution No. 944 of 28 July 1976, cited in the Agenzia delle Entrate’s guide to tax credits). A person who pays for his or her own funeral while alive receives no tax credit, and the heirs receive it only on any balance paid after the death.
• Expenses abroad. The credit applies if the documents are translated; a sworn translation is not needed for documents in English, French, German or Spanish.

International transport of remains

If transport is part of a single funeral service, it follows the principal supply and is not to be treated as a separate transport of goods. The place of supply is determined under the general rule in Article 7-ter. A service supplied to a family, even one resident abroad, by a business established in Italy is supplied in Italy and exempt. If the customer is a foreign funeral business, the service is supplied in the customer’s country: the invoice, issued through the SdI (Exchange System), is without VAT, marked ‘reverse charge’ if the customer is in the EU and ‘transaction outside the scope of VAT’ if it is outside the EU (Article 21(6-bis)). Invoices received from foreign operators for the leg of the journey abroad must be reported.

One detail is often overlooked. Transactions outside the scope of VAT because they are not supplied in Italy give a right to deduct only if they would have done so had they been carried out in Italy (point (b) of Article 19(3)). An exempt funeral service would not, so invoicing a foreign business does not improve the deduction. This analysis is not the subject of specific administrative practice and must be checked against the individual contract.

Income taxes, accounting and audits

Choosing the legal form

The flat-rate regime (regime forfettario) is open to the sector: division 96 has a profitability coefficient of 67% (Annex 4, Law 190/2014) and the revenue limit is €85,000. In practice it is almost always ruled out. The limit of €20,000 of expenditure on employees and contractors is incompatible with the four operatives required by the regional laws.

Sole proprietorships have not paid IRAP (regional tax on productive activities) since 2022 (Article 1(8) of Law 234/2021). Companies and partnerships remain liable, at the standard rate of 3.9%, which the regions may vary: in Emilia-Romagna, from 2026, the rate for funeral services is 4.20% (L.R. 1/2025). In an srl, IRES (corporate income tax) is charged at 24%. In the first year, under the historical method, no tax payments on account are made, and the ISA (synthetic reliability indices) do not apply in the period in which the business starts. The enhanced deduction for the cost of new hires (Article 4 of Legislative Decree 216/2023, extended for 2025-2027 by Law 207/2024, paragraphs 399-400) requires the business to have operated for at least 365 days in the previous period (circular No. 1/E of 20 January 2025): newly incorporated companies do not benefit immediately. Incorporation costs are amortised over no more than five years (Article 2426, point 5, of the Civil Code). The numerical comparison of taxes between a sole proprietorship, the flat-rate regime, a partnership and an srl is set out in the examples below.

The hearse and other assets

Hearses are special-purpose motor vehicles under the Highway Code (Article 54) and its implementing regulation. Article 164 TUIR limits the deductibility of cars, motor caravans, motorcycles and mopeds and does not concern these vehicles. Hearse costs are therefore fully deductible, subject to the business-purpose test, unless the vehicle is in fact used otherwise.

For depreciation, the table in the Ministerial Decree of 31 December 1988 has a specific item for ‘Transport and funeral undertaking businesses’ (Group XVIII, categories 6a-9a): 30% for public service cars and vans; 20% for lorries and miscellaneous small equipment, including ‘funeral drapes’; 12% for office furniture and machines; 4% for buildings. The table does not mention the hearse. The 30% rate is generally used, but it is an interpretative choice that must be justified. In comparing leasing and purchase, the pro rata carries significant weight: with a pro rata close to zero, VAT is a cost in both cases; on purchase it forms part of the cost to be depreciated and is paid immediately, while with leasing it is spread over the lease payments. For fuel, VAT deduction and deductibility of the cost require payment by traceable means.

ISA

The sector’s synthetic reliability index (for the 2025 tax period, EG55U ‘Funeral services and related activities’, approved by the decree of 31 March 2026) covers the three codes 96.30.01, 96.30.02 and 96.30.09. In a business made up of many services of similar value, the decisive data are the number of funerals, the average price, coffins purchased and taken out of stock, and staff. These are the same data the tax authorities can reconstruct from outside.

The accounting that is really needed

The accounting system must be set up before the first service is carried out and must include at least the following:

• Separate revenue accounts for exempt services, taxable sales (headstones, goods, flowers sold separately) and other services, so that the pro rata and the ISA can be read directly from the financial statements.
• The disbursements account, to be cleared for each funeral.
• A numbered file for each funeral. It contains the estimate and signed instructions, the coffin or urn taken out of stock with its code, staff hours and use of the hearse, disbursements with the documents made out to the family, the invoice, receipts and means of payment. It shows the margin on each service and is the first line of defence in a tax assessment.
• The stock of coffins and urns, with goods in and goods out, a physical stocktake at 31 December and valuation under Article 92 TUIR. Coffins held on consignment from the supplier are not inventory of the business, but a written agreement and transport documents stating the correct reason are needed. Without them, the presumptions of purchase and sale in Presidential Decree 441/1997 apply.
• The fixed asset register for the hearse, refrigerated cells, farewell room furnishings and equipment.
• The daily cash book, linking each receipt to the funeral, and reconciliation of card payments. The cash balance must never be negative: for an auditor it is the simplest evidence of unrecorded receipts.

The typical entries for a funeral, from disbursements to the payment on account for a prepaid funeral, are set out in the examples below.

The coffin stock is not a formality. In the case decided by Cass., order of 1 August 2019, No. 20750, the Guardia di Finanza (financial police) had counted the coffins in stock and found 31 more than in the accounts. The tax office had attributed to each one an undeclared funeral at the average service price. The Court of Cassation referred the case back only because the lower court had not examined the certificates from the Comuni produced by the business; the reconstruction method itself was not criticised.

Cash

The ban on cash transfers applies to amounts of €5,000 or more (Article 49(1) of Legislative Decree 231/2007): the maximum cash payment for the same funeral is therefore €4,999.99, and artificial splitting still breaches the ban. Funeral businesses are not among the parties required to carry out anti-money-laundering customer due diligence (Article 3 of Legislative Decree 231/2007), but the limit applies to everyone. From 10 July 2027 Regulation (EU) 2024/1624 will apply, with an EU cap of €10,000 that leaves lower national thresholds in place.

Payments on account and prepaid funerals

More and more people want to arrange their own funeral during their lifetime and pay for it in advance, often so as not to leave decisions and expenses to their children at a difficult time. Three perspectives (VAT, financial statements, income tax) and two contractual arrangements must be kept apart.

Contract directly with the business. For VAT purposes, advance payment means the supply is treated as made, up to the amount paid (Article 6(4)): each payment on account must be invoiced immediately, as exempt if the agreed service is a funeral service, with stamp duty if the conditions are met. In the financial statements the payment on account remains a liability to the customer (item D.6 ‘Payments on account’) until the service is performed. For income tax purposes, the revenue is attributable to the period in which the service is completed (point (b) of Article 109(2) TUIR). If a price fixed years earlier no longer covers costs, a provision for onerous contracts should be considered. If the contract is terminated (change of mind, withdrawal by the heirs, death abroad with the service entrusted to others), the business refunds all or part of the amount and documents the change with a credit note (Article 26). Any price difference at the time of the service is invoiced to whoever pays it, usually an heir, not to the deceased.

Insurance policy. If the customer takes out a policy that pays for the funeral on death, the main relationship is with the insurer. A business that places policies on behalf of an insurer is carrying on insurance distribution, which requires registration in the IVASS (insurance supervisory authority) register. Anyone collecting money described as ‘set aside’ for the funeral, with no service contract and no policy, is exposed to civil and regulatory challenges even before tax ones.

Amounts owed by families and heirs

Almost every business has a few unpaid funerals on file: sometimes because the family is in genuine difficulty, sometimes because relatives keep passing the expense to one another. The business’s claim is first and foremost contractual: the debtor is the person who gave instructions. If only one family member signed, that person must pay the full amount and may then ask the others to reimburse their shares. This is why it is decisive that the instruction form is signed by an identified person who is personally liable. If all those entitled to inherit renounce the estate, the business can only take action against the person who signed or lodge a claim in the vacant estate through its curator (curatore).

Funeral expenses ‘necessary according to custom’ have a general preferential right over the debtor’s movable property (Article 2751, point 1, of the Civil Code). This matters when the estate is accepted with the benefit of inventory or other creditors are competing, but it does not cover non-essential items. Instalment plans granted by the business must be put in writing, with the schedule and the family member who owes the debt. With an invoice and signed instructions, a payment order (decreto ingiuntivo) can be sought. If a partner finance company is involved, the business is paid by it and the claim passes to it.

Family members often ask to pay for the funeral from the deceased’s account. Article 48(3) of Legislative Decree 346/1990 prohibits debtors of the deceased, and therefore the bank, from paying the heirs without proof that the inheritance tax return has been filed, unless a statement that no return is required has been made. The law makes no exception for funeral expenses. Some banks pay the invoice directly with the consent of all the heirs, others do not. For the business, the prudent course is not to rely on that account: the invoice is made out to the family member who signs the instructions, and payment from the deceased’s funds is a choice for the family and the bank. For inheritance tax purposes, funeral expenses are deductible from the assets of the estate, if supported by receipts, up to €1,032.91 for the entire estate (Article 24(2) of Legislative Decree 346/1990, not amended by the reform in Legislative Decree 139/2024).

An uncollected receivable is deductible as a loss only where there is definite and precise evidence or insolvency proceedings (Article 101(5) TUIR). For small receivables (up to €2,500 for businesses that are not large) overdue for at least six months, that evidence is presumed. Above this threshold, proof of attempts to recover is needed: reminders, a formal letter of demand, an unsuccessful enforcement.

Tax audits: where they start

Few businesses have turnover that can be reconstructed from outside as easily as a funeral business. Every funeral leaves a trace in several public databases: the death certificate, the transport authorisation, the burial or cremation authorisation, cemetery registers, the reporting of funeral expenses, electronic invoicing, and financial relationships. On top of these come purchases of coffins and urns, which come from a small number of suppliers. Differences between these data and declared revenue are the typical basis of an analytical-inductive assessment (accertamento analitico-induttivo, point (d) of Article 39(1) of Presidential Decree 600/1973).

Case law offers pointers on both sides. An assessment was set aside when the customers questioned confirmed the prices invoiced (Cass., order of 16 March 2018, No. 6616). The court may not ignore the business’s evidence to the contrary, such as certificates from the Comuni on the services performed (Cass. No. 20750/2019, cited above). On the merits, a first-instance court held that a fixed mark-up on the price of coffins cannot measure the revenue from a complex service in which the coffin accounts for only part of the price (CTP Bergamo, provincial tax court, judgment No. 538/3/2018).

Bank investigations are the most feared tool. For businesses, unexplained deposits are presumed to be revenue. The same applies to unexplained withdrawals above €1,000 a day and in any event €5,000 a month (Article 32(1), point 2, of Presidential Decree 600/1973). Applying the exemption to taxable transactions exposes the business to the penalty under Article 6(1) of Legislative Decree 471/1997, equal to 70% of the tax for breaches committed on or after 1 September 2024.

Closely held srls: undeclared revenue is taxed twice

In srls with a small number of shareholders, once unrecorded revenue has been assessed in the hands of the company, the off-the-books profits are presumed to have been distributed to the shareholders in the same year. The shareholder is then taxed on a dividend, in addition to the tax charged to the company. For years the presumption was purely judge-made, with conflicting decisions on rebuttal evidence. One line of cases allows the shareholder to rebut it by proving that he or she had no involvement whatsoever in management (Cass., order of 9 July 2024, No. 18764; order of 2 February 2025, No. 2464); other decisions rule this out (Cass. No. 21158/2024).

From 12 August 2026 the presumption is laid down by law. Article 23 of Legislative Decree No. 148 of 7 August 2026 frames it as a rebuttable presumption (‘unless proven otherwise’) and limits it to unrecorded and undeclared revenue and to non-existent costs, which the tax authorities must prove with definite and precise evidence. The provision does not say what the rebuttal evidence consists of and has no transitional rules; early commentary rules out retroactive application. It therefore remains open whether and how a shareholder can escape the presumption by proving that he or she had no involvement in management. In the sector’s family-run srls, where all the shareholders work in the business, that proof is in any case almost impossible.

Payments to ‘tipsters’ and costs linked to offences

Payments to people who report a death or steer a family towards a particular business are a practice that criminal investigations have repeatedly brought to light, and they harm above all the businesses that operate properly. For tax purposes three cases must be distinguished.

• Lawful business introducer. A fee paid to a private business introducer (procacciatore d’affari), unconnected with healthcare facilities and documented, is deductible if it relates to the business. If the introducer works occasionally, the withholding tax under Article 25-bis of Presidential Decree 600/1973 applies. It must be remembered, however, that in Emilia-Romagna any intermediation in funeral activity is prohibited (Article 13(5) of L.R. 19/2004): the room for a lawful introducer is very narrow.
• Undocumented or cash payment. It is not deductible, for lack of certainty and documentation (Article 109(1) TUIR). The cash withdrawal needed to make the payment still leaves a trace, and in audits it becomes an indication of off-the-books funds.
• Payment to staff of a healthcare facility. This constitutes bribery, if the recipient is a public official or a person in charge of a public service, or private-sector bribery (Article 2635 of the Civil Code) if the facility is private.

In the last case, costs directly used to commit an intentional offence are also non-deductible once the public prosecutor has brought criminal proceedings. Until 31 December 2026 the provision is Article 14(4-bis) of Law 537/1993. From 1 January 2027 the same rule is in Article 6(5) of the new consolidated income tax Act (Legislative Decree 117/2026). In the event of final acquittal, or dismissal of the case on grounds other than the offence being statute-barred, the additional taxes are refunded. The tax risk is in any case the lesser one: the criminal and administrative risks, up to a ban on carrying on the business, are far more serious.

Worked examples: accounting entries and tax calculations

The rules discussed so far are easier to understand with figures. In this chapter we follow a fictitious business, based on figures we frequently see in the accounts we review in the sector. First we record the typical transactions in double entry, from a complete funeral to the hearse, the coffin stock and payroll. Then we take the same profit and tax it under four different legal forms, to see how much is really left for the people who work in the business.

The references are to the rules in force in 2026: TUIR, Presidential Decree 633/1972, Legislative Decree 446/1997. From 1 January 2027 the new consolidated Acts apply; they change the numbering of the articles but not the mechanisms illustrated here. Amounts are rounded to the nearest euro and in each entry total debits equal total credits.

The model business and the starting assumptions

The business is based in Emilia-Romagna, with main ATECO 2025 code 96.30.01. Two family members work there, together with four permanent employees (necrofori and drivers), the minimum number of operatives required by the regional rules. It owns a hearse bought at the beginning of 2026 and rents its premises, including the farewell room. It also sells headstones and cemetery goods and resells flowers outside the funeral service.

On these figures revenue is €501,000 (455,000 exempt, 46,000 taxable), plus €260 of stamp duty recharged. The 2026 pro rata is 9%, and profit before taxes and before any remuneration of the owners or shareholders is €107,150. The calculations are set out in the following sections.

1. A complete funeral: payment on account, final invoice, disbursements

On the death of his mother, Mr Bianchi instructs the business and signs the estimate. The exempt service costs €3,500. He also asks for memorial cards, which following the Court of Cassation (order No. 40726/2021) we treat at 22%, and for a flower arrangement for the home, supplied outside the service, at 10%. The business pays on his behalf €420 of cemetery fees, €280 for the death notice and €50 for putting up posters. The documents are made out to him. On the day he gives instructions he pays €1,000 on account by bank transfer.

The payment on account means the supply is treated as made for the amount paid (Article 6(4) of Presidential Decree 633/1972). It must therefore be invoiced immediately, as exempt, and since it exceeds €77.47 it bears stamp duty of €2.

The entries, in the order in which they occur:

In entry d) debits and credits balance at €4,655. Mr Bianchi’s ‘Customers – disbursements’ account opens with €750 in c) and closes with €750 in d). If a balance remains, there is a disbursement that has not been recharged or a recharge without a document. For pro rata purposes this funeral contributes €3,500 of exempt transactions and €350 of taxable ones. Disbursements and stamp duty are not included in the calculation.

2. The same expenses, but with the documents made out to the business

We change just one element. The Comune issues the receipt for the €420 of cemetery fees to the business, and the crematorium invoices the cremation to the business: €600 plus VAT at 22%, that is, €732. There is no longer a disbursement in the name and on behalf of the client. These are costs of the business, and recharging them to the family becomes consideration. The cemetery fees are absorbed into the exempt service. Cremation, which is a separate service subject to standard VAT, must be re-invoiced with VAT.

The family pays €1,152, exactly what it would have paid if the two amounts had been disbursed on its behalf. For the business, however, three things change. Revenue increases by €1,020 with no margin at all. Output VAT on the cremation is €132, but of the VAT paid to the crematorium only €12 (9%) is deducted. The difference of €120 remains a cost borne by the business. Finally, the pro rata shifts, because both exempt and taxable transactions increase.

3. The hearse: purchase, depreciation, leasing

The hearse costs €95,000 plus VAT at 22% (€20,900). With a pro rata of 9%, €1,881 is deducted. The remaining €19,019 is an ancillary cost and increases the cost of the asset, which rises to €114,019 (OIC 16, the Italian accounting standard on property, plant and equipment).

For depreciation, the table in the Ministerial Decree of 31 December 1988 contains in Group XVIII categories 6a-9a, ‘Transport and funeral undertaking businesses’. These categories do not mention the hearse. The closest item is ‘Vans and motor tricycles’, at 30%. The same rate applies to ‘Cars in general (public service)’. ‘Lorries and trailers for the carriage of goods’, at 20%, is a poorer description of a vehicle that carries the deceased and not goods. We therefore apply 30%, halved in the first year (Article 102(2) TUIR). The tax depreciation schedule is as follows: €17,103 in 2026, €34,206 in 2027 and in 2028, €28,504 in 2029.

Now consider leasing instead. The contract runs for 60 months, with an initial lump-sum payment of €9,500, 59 instalments of €1,650 and a purchase option of €950: a total of €107,800 plus VAT (assumed offer). VAT amounts to €23,716, of which, with the pro rata, €21,582 remains a cost. The total cost of the lease is €129,382. With purchase the cost is €114,019, to which the interest on the financing must be added.

If the purchase is financed by a loan and the interest equals the finance element of the lease (€12,800), the difference between the two solutions is €2,563. This is the non-deductible VAT that leasing makes the business pay on the interest. Lease payments are subject to 22% VAT, whereas loan interest is exempt (Article 10(1), point 1, of Presidential Decree 633/1972). For a business with full deduction this difference does not exist; with a pro rata of 9% it matters.

For income tax purposes, lease payments are deductible over a period of not less than half the depreciation period (Article 102(7) TUIR): since 2014 the length of the contract has no longer been a condition for deductibility. With a 30% rate, half is about 20 months, so the payments under the 60-month contract are deducted over its term. The interest element implicit in the lease payments is not deductible for IRAP purposes.

4. Provisional pro rata, final pro rata and adjustments

In 2026 the business pays €53,710 of VAT on purchases. Of this, €32,810 relates to goods and services (17,930 for coffins, 5,720 for headstones, 360 for flowers, 8,800 for services) and €20,900 to the hearse. In the periodic VAT settlements the deduction is calculated using the final percentage for the previous year, 8% (Article 19(5) of Presidential Decree 633/1972), and amounts to €4,297. At year end the final pro rata is calculated (Article 19-bis):

The balancing adjustment also changes the cost of the assets: at 8% the hearse would have absorbed €19,228 of VAT, at 9% it absorbs €19,019. For this reason it is advisable, during the year, to hold VAT in a suspense account and charge it to costs, or to the asset, only at year end using the final percentage. Sales of depreciable assets and exempt transactions under points 1-9 of Article 10 that are not part of the business’s core activity, such as bank interest income, are excluded from the denominator.

Suppose now that in 2027 the business opens a marble workshop. Taxable transactions increase and the pro rata rises to 25%, sixteen points above the 9% of 2026. For depreciable assets bought in 2026, the adjustment under Article 19-bis2 is triggered: if the percentage changes by more than ten points, the deduction is recalculated by one fifth a year over the four years following the year the asset came into use. Let us add an assumption that is not part of the model business’s figures: refrigerated cells and farewell room furnishings bought in 2026 for €40,000 plus €8,800 of VAT and depreciated at 20%. The favourable adjustment is 8,800 × 16% / 5 = €282 for each year in which the gap remains above ten points.

With a marble workshop of this size, the question arises whether to opt for separate activities (Article 36(3)). The comparison over a typical year is as follows:

The advantage must be reduced by the cost of keeping two sets of accounts. In addition, headstones supplied by the marble workshop for funerals become internal transfers relevant for VAT. The option is binding for at least three years, and entry into the separate regime must also be assessed in light of the adjustments on assets already in use. With taxable turnover of €46,000, as in the model business, the advantage would be a few hundred euros and would not cover the costs.

5. The prepaid funeral

On 15 March 2026 a woman signs a prepaid funeral plan directly with the business, at a fixed price of €4,000, and pays by bank transfer. The business immediately issues an exempt invoice, with stamp duty (Article 6(4) of Presidential Decree 633/1972). The revenue, however, does not belong to that financial year. In the financial statements the amount is a liability for payments on account (item D.6) and remains so until the service is performed. Revenue arises when the service is performed, under OIC 34 and, for tax purposes, point (b) of Article 109(2) TUIR.

If, on the other hand, the contract is terminated, for example on withdrawal or because the service is entrusted to someone else, the business refunds the amount and issues an exempt credit note (Article 26 of Presidential Decree 633/1972). The entry is: debit Payments on account from customers €4,000 and credit Bank €4,000. Any cancellation fee retained under the contract is revenue, documented separately. If costs have risen in the meantime and the fixed price no longer covers them, a provision for onerous contracts must be estimated at year end.

6. The coffin stock and consignment stock

At the beginning of the year there are 18 coffins in stock, valued at €640 each (€11,520). During the year the business buys 120 at €650. It takes another 5 coffins, of a more expensive model, from the supplier’s consignment stock; the supplier invoices them at €700 when they are taken. There are 130 funerals with a coffin: 125 coffins come out of the business’s own stock and 5 from consignment. At 31 December the physical stocktake counts 13 coffins owned by the business, valued on a FIFO basis at the latest cost of €650, and 6 of the supplier’s coffins on consignment.

The income statement shows €81,500 of purchases and a €3,070 decrease in inventories: €84,570 in total. A direct count gives the same result: 18 coffins at €640, 107 at €650 and 5 at €700. The decisive check, however, is the one the auditor carries out: 18 + 120 + 5 − 130 = 13. Opening stock, plus purchases, less the funerals shown in municipal authorisations, must equal the stock counted.

The supplier’s 6 coffins are not inventory of the business. They must be kept in a separate goods-in and goods-out register, linked to the consignment agreement and to the transport documents stating ‘consignment stock’ as the reason. Without those documents, goods found on the premises are presumed to have been purchased and missing goods are presumed to have been sold (Presidential Decree 441/1997).

7. The uncollected receivable

Two receivables that fell due by 30 June 2026 remain unpaid at year end. The first is for €1,800 and the second for €6,500. The business has total trade receivables of €60,000.

The €1,800 receivable is a small receivable. For businesses with revenue below €100 million the threshold is €2,500, and the receivable has been overdue for at least six months. The definite and precise evidence required by Article 101(5) TUIR is therefore deemed to exist, and the loss is deductible without having to prove attempts to recover it. The accounting entry is: debit Bad debt losses €1,800 and credit Trade receivables €1,800. If there is a bad debt provision, the loss is charged to the provision first.

For the €6,500 receivable there is no automatic treatment. In the financial statements the business estimates that it will recover half and writes it down by €3,250 (OIC 15). For tax purposes, however, the write-down is deductible only up to 0.5% of trade receivables (Article 106 TUIR): €300. The excess, €2,950, must be added back through an upward adjustment in the tax return. The loss will become deductible when definite and precise evidence exists: a formal letter of demand, a payment order, an unsuccessful attachment. At that point it will be deducted through a downward adjustment equal to the write-down previously taxed.

8. The cost of a necroforo-driver and the payroll entry

The agreement is the CCNL for private funeral businesses. Take a necroforo-driver at level 4 super, with the minimum rates in force from 1 August 2026. Basic pay is €1,236.42, the cost-of-living allowance €515.60 and the separate pay element €10.33, for a total of €1,762.35 a month over fourteen monthly payments. The other items are assumptions, to be replaced with actual data. Overtime is calculated on the hourly rate of minimum pay and cost-of-living allowance, with a divisor of 173 that must be checked against the agreement. On-call duty uses the per-shift amounts in the 2021 text: €8 on weekdays and €16 on public holidays, to be checked after the 2025 renewal. The employer’s INPS rate is indicative for the services sector with fewer than 15 employees, and the INAIL rate is also an assumption.

For four employees the cost is €148,480, the figure used for the model business. This excludes contributions to the bilateral body and any supplementary pension fund, and the cost of mandatory training.

This is the entry for one month, with gross pay of €1,942 (contractual pay plus €180 of variable items). Employee contributions are at 9.19%, and IRPEF (personal income tax) withholding and surcharges are those calculated by the payroll software (assumed here to be €180):

The INAIL premium is recognised at the time of the annual premium calculation (autoliquidazione), with an accrual at year end. The amounts payable to INPS and the tax authorities are settled with the F24 payment form on the 16th of the following month.

New hires: in 2026 the enhanced deduction for the cost of new permanent hires (Article 4 of Legislative Decree 216/2023, extended by Law 207/2024) requires the business to have operated for at least 365 days in the previous period (circular No. 1/E of 20 January 2025). A business that opens and hires its four operatives in the first year does not benefit. An established business that increases its headcount does.

9. Taxes on the same profit under four different legal forms

We start from the profit of €107,150, before taxes and before any remuneration of those running the business. The people are the same in every case: two family members working full time in the business. Four forms are compared. The first is a sole proprietorship run as a family business (impresa familiare, Article 5(4) TUIR), with shares of 51% and 49%. The others are an snc (general partnership) held 50/50, an srl held 50/50 and the same srl opting for tax transparency.

The rates and thresholds used are these:

• IRPEF 2026: 23% up to €28,000, 33% from €28,000 to €50,000, 43% above. The second rate fell from 35% under Article 1(3) of Law 199/2025.
• Emilia-Romagna regional surcharge 2026: 1.33% up to €15,000, 1.93% up to €28,000, 2.78% up to €50,000, 3.33% above. These are the basic rate of 1.23% plus the increases under L.R. 1/2025.
• Municipal surcharge: 0.8%, as an assumption.
• INPS Gestione commercianti 2026: 24.48% up to €56,224 and 25.48% above, with a minimum income of €18,808 and a minimum contribution of €4,611.64 (INPS circular No. 14 of 9 February 2026).
• IRAP: 4.20% (explained in the box below).

Personal tax credits, dependants and deductible expenses other than contributions are not taken into account.

9.1 Sole proprietorship run as a family business

Individuals do not pay IRAP. We assume that the business is already in ordinary accounting: its revenue exceeds the €500,000 limit under Article 18 of Presidential Decree 600/1973, which, however, takes effect from the year after the one in which it is exceeded. Income is split between the owner (51%) and the family helper (49%), both of whom are registered with the Gestione commercianti on their own share.

The total burden is €49,583, leaving €57,567. Under the ordinary regime, the tax credit in Article 13(5) TUIR for business income under simplified accounting is not available. At the income levels in the example it would in any case be modest.

9.2 Snc

The income of an snc is attributed to the partners on a transparent basis (Article 5 TUIR), but the partnership pays IRAP. The IRAP base starts from the value of production and deducts neither staff costs nor interest expense. The deductions under Article 11 of Legislative Decree 446/1997 then come into play.

10% of IRAP is deducted from income, because the base includes interest expense (Article 6 of Decree-Law 185/2008): €402. This leaves €106,748, that is, €53,374 per partner. Each partner pays €13,073 of INPS contributions. On taxable income of €40,301, each then pays €10,499 of IRPEF, €792 of regional surcharge and €322 of municipal surcharge. The total burden is €53,389, of which €4,017 is IRAP, and €53,761 remains.

9.3 Srl

Assume that the two shareholders are directors, each paid €30,000, and that they are also registered with the Gestione commercianti as shareholders who work in the business habitually and as their main occupation. Those already registered with another compulsory scheme pay 24% of the fee to the Gestione separata, two thirds borne by the company and one third by the director (INPS circular No. 8 of 3 February 2026). This comes to €14,400 in total. Directors’ fees are not deductible for IRAP purposes.

Each shareholder receives the fee and pays €2,400 to the Gestione separata. He or she then pays the minimum contribution of €4,612 to the Gestione commercianti. Taxable income comes to €22,988, with gross IRPEF of €5,287. The fee qualifies for the tax credit for income treated as employment income (Article 13(1) and (1.1) TUIR), which is calculated on total income of €27,600 (the traders’ contribution is a deductible expense and does not reduce it): €2,012, including the €65 for income between €25,000 and €35,000. Net IRPEF falls to €3,276. The surcharges are €354 regional and €184 municipal.

The total burden is as follows:

• IRAP: €4,227;
• IRES: €8,911;
• Gestione separata: €14,400;
• Gestione commercianti: €9,224;
• IRPEF and surcharges: €7,628;
• withholding tax on dividends: €6,348.

The total is €50,738, leaving €56,412. If profits are retained in the company, the withholding tax on dividends is deferred until distribution.

Limiting the traders’ contribution to the minimum income is a contentious point. INPS maintains that the base includes the share of the srl’s profit attributable to the shareholder, even if not distributed. In several orders of 16 September 2026 (including No. 25377), the Labour Section of the Court of Cassation excluded the retained profits of an srl that had not opted for tax transparency. The saving on contributions has a downside, however: a pension built on the minimum income. The reduced 20% IRES rate (Law 207/2024) applied only to the 2025 period and the 2026 Budget Law did not renew it.

9.4 Srl opting for tax transparency (Article 116 TUIR)

The tax transparency option is subject to certain requirements:

• shareholders must all be individuals, no more than ten in number;
• revenue must be within the threshold for the ISA (€5,164,569).

The option lasts for three financial years, is notified in the income tax return and is valid only if all the shareholders exercise it. The company continues to pay IRAP (€4,227) but not IRES. Its income, €37,127, is attributed to the shareholders at €18,564 each, which is added to their directors’ fees.

Each shareholder has taxable income of €41,552: €30,000 of fees, less €2,400 of Gestione separata contributions, plus €18,564 of attributed income, less €4,612 of traders’ contributions. Gross IRPEF is €10,912; the tax credit, calculated on total income of €46,164, falls to €333 and net IRPEF is €10,579. The surcharges are €827 regional and €332 municipal. The total burden is €51,327, and €55,823 remains.

Profits earned in the transparency years, when distributed, are not subject to the 26% withholding tax, because they have already been taxed in the hands of the shareholders. They must be reported in form 770, section SK. As regards contributions, here the income attributed to each shareholder (€18,564) remains below the minimum income and the result does not change. With higher profits, it must be borne in mind that income attributed under the transparency regime is precisely the income that the same case law links to the contribution base.

9.5 The flat-rate regime: why it almost never works

The flat-rate regime is open to division 96, with a profitability coefficient of 67%, but it has two limits that make it almost always impracticable for a funeral business. The first concerns revenue, which must not exceed €85,000. The second concerns expenditure on employees and contractors, which must not exceed €20,000 gross. The cost of a single necroforo, in section 8, is €37,120. The four operatives required in Emilia-Romagna cost more than €148,000.

Purely for comparison, take a hypothetical funeral transport business with revenue of €80,000 and no employees. Flat-rate income is €53,600 (80,000 × 67%). Traders’ contributions are €13,129, or €8,534 with the 35% reduction reserved for flat-rate taxpayers, which however also reduces the pension. Without the reduction, taxable income is €40,471. The substitute tax is €6,071 at 15%, or €2,024 at 5% in the first five years of a new business that meets the requirements. No surcharges are due. Under the flat-rate regime actual costs are irrelevant: if they exceeded 33% of revenue, the regime would tax a higher income than the real one.

9.6 The comparison

With a profit of this size and two people in the family, the form with the lowest burden is the sole proprietorship run as a family business. The main reason is the absence of IRAP. The snc pays the same IRPEF and the same contributions, plus about €4,000 of IRAP: it is worthwhile only if the partners are not family members or if shared responsibility for management is needed.

The srl reaches almost the same net figure by a different route. It pays IRES and IRAP, but has lower Gestione commercianti contributions, and the directors’ fees attract the tax credit for income treated as employment income. In its favour are limited liability, the possibility of retaining profits in the company and deferring the 26%, and greater ease of sale or of admitting new shareholders. The price is lower pension contributions and a specific risk: in closely held srls, additional revenue found on assessment is presumed to have been distributed to the shareholders.

With these fees, tax transparency does not improve the result. The attributed income is added to the fees and falls into the 33% band, and the tax credit on the fees is reduced. It becomes attractive when the shareholders have little other income, when the fees are reduced, or when the aim is to distribute profits without the 26% withholding tax.

The outcome changes with the figures. With higher profits, the 43% marginal IRPEF rate makes 24% IRES on retained profits more attractive. With a single owner, the family business arrangement is not available. With a higher pro rata, the weight of non-deductible VAT also changes. The comparison must be redone on the business’s own data, before it is set up or converted.

First and second year: in the first year of business no payments on account of IRPEF, IRES or IRAP are made, because there is no previous year’s tax on which to calculate them under the historical method. In the second year the balance for the first year is paid together with the payments on account for the second, and those who do not plan for this put their cash flow at risk. The fixed Gestione commercianti contributions, on the other hand, are paid in quarterly instalments from the first year. The ISA do not apply in the start-up period. From the second year the reference index is EG55U: number of funerals, average price, coffins purchased and staff must be consistent with one another and with the data held by the Comuni.

A note on the examples

The examples are deliberately simplified. They leave out tax credits for dependants and for other income, deductible expenses other than contributions, the actual municipal surcharge rate, the business’s INAIL rate, the CCNL amounts after the renewal and the deductibility of IRAP on a cash basis. Tax adjustments are taken into account only where stated. For 2027 in Emilia-Romagna the regional increase on the €28,000 to €50,000 band falls from 1.55 to 1.40 points. Choices of legal form, depreciation rate and VAT regime must be made on the figures of the individual business, with a multi-year simulation.

Dealings with families, municipalities and healthcare facilities

Price list, estimate and instructions

A displayed price list and an estimate are required by the regional rules: in Emilia-Romagna by point 2.5 of DGR 172/2022, in Lombardy by Article 6 of R.R. 4/2022. They serve first and foremost the family, which must decide within a few hours and often for the first time, and they are also the business’s first line of defence in the event of a dispute. The estimate should distinguish three blocks: the business’s services; goods supplied, such as the coffin, urn and accessories; and amounts advanced on behalf of the family. It must be signed by the person giving instructions, with his or her personal details. An unsigned estimate does not make the contract void, since it can also be concluded orally, but in court the business will have to prove by other means who gave instructions and on what terms.

Consumer Code and the right of withdrawal

The Consumer Code (Legislative Decree 206/2005) applies, with the pre-contractual information requirements of Articles 48 and 49. The delicate point is instructions taken at the family’s home: this is an off-premises contract, and the consumer has fourteen days to withdraw (Article 52). If information on withdrawal is not given, the period is extended by twelve months (Article 53). Withdrawal is excluded for services that have been fully performed, provided performance began with the consumer’s express consent and acknowledgement that the right of withdrawal would be lost once the service was completed (point (a) of Article 59(1)). Clearly personalised goods are also excluded (point (c)). These exceptions do not apply, however, if the contract is concluded during an unsolicited home visit (Article 59(1-bis)).

When instructions are taken at home, at the family’s request, the form must contain three elements: information on withdrawal, an express request to begin immediately, and a statement accepting the loss of the right of withdrawal once the service has been performed. An unsolicited visit, as well as removing the exceptions, is in itself an indication of touting.

Unfair practices and the Competition Authority

The Consumer Code treats as aggressive the exploitation of a tragic event that impairs the consumer’s judgement (point (c) of Article 25(1)). Bereavement is the typical case. The Autorità Garante della Concorrenza e del Mercato (Italian Competition Authority) also acts against misleading advertising in the sector: by decision No. 31300 of 23 July 2024 (PS12571) it fined a business €30,000 for using names and symbols on its websites that made it appear linked to the Comune and to municipal rates. For those operating close to a public operator, one rule follows: no reference, not even a graphic one, to a public mandate that does not exist.

On the competition side, the Authority has repeatedly challenged local authorities’ choices that close the market. As early as 2007, in its report AS392, it found that entrusting mortuaries and cemetery services to funeral businesses seriously distorts competition to the detriment of families. Those facing competition from a public company or a company in which a public body holds an interest have two possible grounds for action: the corporate separation required by Article 5(2) of L.R. 19/2004 and the obligations in Article 8 of Law 287/1990 for public undertakings operating on the market. If the cemetery services operator favours its sister funeral business with information, opening hours, space or preferential rates, the way forward is a documented report to the Authority and the Comune.

Hospitals and care homes: bribery and the company’s liability

Criminal case law regards mortuary staff as persons in charge of a public service. Paying a staff member to be told of deaths or to give advice to the family constitutes at the very least bribery in the exercise of official functions (Article 318 of the Criminal Code, extended to persons in charge of a public service by Article 320 of the Criminal Code). There is no need to prove an act contrary to official duties: it is enough that the function was placed at the payer’s disposal in exchange for money (Cass. crim., Section II, No. 25403/2024).

For the company there is administrative liability arising from offences. Article 25 of Legislative Decree 231/2001 provides for up to 200 quotas for bribery in the exercise of official functions and from 200 to 600 quotas for bribery to act contrary to official duties, even where the person bribed is in charge of a public service, and in the most serious cases disqualification penalties. In Emilia-Romagna, since 2022, to access the mortuaries of public hospitals and public residential facilities, businesses and operatives must register on the regional platform of the E-R Salute portal (DGR 172/2022). The aim is to guarantee families’ freedom of choice and reduce the scope for unlawful arrangements.

Even a small business is well advised to have a written internal rule, signed by employees and contractors: no payments, gifts or ‘tips’ to staff of hospitals, care homes and emergency services; no commercial presence in the facilities; every contact with mortuaries traced through the registration. It protects the business and is evidence of its good faith. In larger businesses it becomes an organisational model under Article 6 of Legislative Decree 231/2001.

Who decides: the deceased, the spouse, relatives, cohabiting partners

Disputes between family members over the choice of business, the rite or the burial often reach the funeral director before they reach a lawyer, and whoever sits at the table with the family must manage them without taking sides. The order of priority is always the same: first the wishes of the deceased, then those of the closest family members. For cremation the law is explicit (point (b) of Article 3(1) of Law 130/2001). A provision in a will takes precedence. Membership of a cremation association comes next, and applies even against the wishes of the family. Failing that, the spouse decides and, if there is none, the closest relative; among several relatives of the same degree, an absolute majority decides. A civil partner is treated in the same way as a spouse (Article 1(20) of Law 76/2016). A cohabiting partner may be designated in writing as representative, including for funeral ceremonies and the treatment of the body (Article 1(40) of Law 76/2016).

If the family members disagree, the prudent rule is not to accept instructions from someone who is not entitled to give them and not to become a party to the dispute. If the disagreement concerns cremation or the ashes, the registrar will not give authorisation without the wishes required by law, and the business must wait even if the family is in a hurry, calmly explaining the reason for the delay.

Cremation and ashes

Cremation is authorised by the registrar of the Comune where the death occurred or where the deceased was last buried, on the basis of the certificate of the examining doctor ruling out suspicion of an offence or, in the cases reported, the clearance of the judicial authority (point (a) of Article 3(1) of Law 130/2001). Scattering requires the express wishes of the deceased. It is permitted in dedicated cemetery areas, in nature or in private outdoor areas with the owner’s consent and not for profit, and it is prohibited in built-up areas (point (c)). Unauthorised scattering, or scattering contrary to the wishes of the deceased, is a criminal offence (Article 411 of the Criminal Code).

In Emilia-Romagna, ashes that are not scattered are handed over in a sealed urn and may be placed in a vault, buried or entrusted to a family member; the Comune records the details of the person to whom they are entrusted (Article 11 of L.R. 19/2004). The business handing over the urn must keep the authorisation and the declaration of destination: in disputes between heirs it is the first document requested.

Transport abroad and thanatopraxy

For countries party to the Berlin Agreement of 10 February 1937 (Royal Decree No. 1379 of 1 July 1937), the coffin travels with a mortuary passport (Article 27 of Presidential Decree 285/1990). For other states, consular clearance and the procedure in Articles 28 and 29 are required, with the double coffin under Article 30. The regulation still assigns competence to the prefect, but today the passport is issued by the Comune: in Emilia-Romagna this is stated in Article 10(9) of L.R. 19/2004. The 1973 Strasbourg Agreement does not appear to have been ratified by Italy: with countries that apply it, the documents must be checked case by case with the consulate.

There are no national rules on thanatopraxy performed by non-medical staff. Presidential Decree 285/1990 regulates embalming, reserved to doctors (Article 46), and anti-putrefaction treatment (Article 48). Some regions have regulated thanatocosmetics and preservation treatments performed by the business: Lombardy, for example, allows a self-certification by the business that is valid for the mortuary passport (Article 72(5-quater) of L.R. 33/2009). Anyone offering these treatments must check what their own region allows.

Privacy and death notices

Regulation (EU) 2016/679 does not apply to the data of deceased persons. Article 2-terdecies of Legislative Decree 196/2003, however, allows the rights of access, rectification and erasure in respect of their data to be exercised by those who have an interest of their own, act to protect the deceased or have family reasons deserving protection. The data of the family members who give instructions are fully protected. What is needed, therefore, is a short privacy notice in the instruction form, the written consent of the person entitled to give it before publishing death notices, photographs or the date of the funeral, especially online, and prompt removal at the request of a family member. Publications are the ground on which disagreements between branches of the family most often arise.

The rota service and the funeral of those without means

Many Comuni organise a rota service, through a tender or an agreement, for the recovery of bodies from public roads and their transport to the mortuary when called by the police. The sticking point is who pays. According to the Ministry of the Interior’s opinion of 2 October 2014, the Comune where the death occurred must provide transport free of charge to the observation room or the mortuary (Articles 16 and 19 of Presidential Decree 285/1990). The expenses become court costs only if the judicial authority orders investigations. Those who carry out these services without a written agreement risk not being paid by anyone: a written service order must be obtained from the requesting authority each time. The rota must not become a way of obtaining instructions for the funeral. In several criminal cases a business presented itself to the family as the ‘rota business’ in order to obtain instructions. The family, on the contrary, remains free to choose another business and must be told so.

For people who die destitute, whose families are in need or whose relatives take no interest, burial in a common plot and cremation are free of charge and paid for by the Comune (Article 1(7-bis) of Decree-Law 392/2000). For deceased persons who were not resident, there is disagreement over which Comune pays. These are services that many businesses perform with the same care as any other, even when no one follows the coffin. For precisely this reason the business engaged by the Comune must have a formal award with the price agreed before the service. If heirs or assets later come to light, it is the Comune that seeks recovery; for the business the counterparty remains the public body.

Cemetery concessions

Private burial places are administrative concessions over public property, for a fixed term of no more than ninety-nine years, subject to renewal (Article 92 of Presidential Decree 285/1990). The concession holder has a right of use governed by the municipal regulation, not ownership. The business must never guarantee a vault to the family or promise succession to a concession: those decisions lie with the Comune or the operator. If it pays the concession charge, it does so in the name and on behalf of the concession holder, with the concession document made out to that person. In Lombardy, concession holders are free to choose who installs and maintains monuments and headstones, subject to notifying the Comune (Article 75(5) of L.R. 33/2009).

Grey areas

This chapter covers some issues that the law resolves only in part and on which there is no official administrative practice. For each, we indicate the solution we consider prudent.

Transfers, removals from vaults and ashes

For operations after the first burial, two activities must be separated. Cemetery operations in the strict sense (exhumation, removal from a vault, opening and closing vaults, transfer within the cemetery) are taxable under resolution 376/E/2002, as are building and stonework. Transport of the remains or the urn to another burial place, with the related paperwork, carried out by a funeral business has a link with burial that makes the exemption defensible, following the approach of the 1973 and 1976 resolutions. In the absence of a specific ruling, the invoice must keep the two parts separate.

Cremation included in the ‘package’ but invoiced to the business

If the crematorium invoices the business and the business passes the cost on in the overall price of the funeral, the treatment is uncertain: cremation is a separate taxable service for the operator, and administrative practice has not clarified whether it can be absorbed into the business’s exempt service. The solution that avoids the problem is a disbursement in the name and on behalf of the client, with the crematorium’s invoice made out to the family member.

The farewell room made available to another business

The regional law requires the farewell room to be open to anyone who requests it. When another funeral business uses it, the fee for using the room is not a funeral service supplied to the family but the provision of an equipped space. In the absence of administrative practice, the prudent choice is the standard rate; if, on the other hand, the business that owns the room supplies the family, as part of the service, with the keeping and display of the deceased, the exemption is defensible.

A prepaid funeral paid for by one person and carried out for another

Sometimes a person who has prepaid his or her own funeral dies far away and the service is carried out by another business, or that the contract is assigned. The amounts must be refunded or transferred in accordance with the contract, with a credit note for the part not performed. This is one more reason to state in the prepaid funeral plan what happens in these cases, who may request a refund and with what deductions.

Floral tributes from the business

Wreaths that the business offers on its own initiative, for example to the family of a member of staff, are not part of a service: they are gifts or entertainment expenses (Article 108(2) TUIR), fully deductible if the unit value does not exceed €50. They must not be confused with wreaths supplied and charged as part of the service.

What to do

At start-up

1. Check the office and garage (permitted use, fitness for use, Azienda USL opinion) before signing the lease.
2. Good-character and anti-mafia requirements for shareholders and directors; for anyone coming from a competing business, end the employment before incorporating the company.
3. Regional courses for the manager in charge and operatives; hearse with Azienda USL certificate.
4. Sector CCNL, INPS and INAIL registrations, hiring with UNILAV the day before, registration of working shareholders with the Gestione commercianti and, if directors’ fees are paid, with the Gestione separata.
5. Risk assessment document covering biological risk, manual handling, road risk and stress; occupational physician; register of protective equipment.
6. SCIA to the SUAP and ComUnica filing, with the correct ATECO 2025 codes.
7. Chart of accounts with separate revenue accounts, disbursements account, coffin stock and fixed asset register; instruction form with information on withdrawal and privacy; written internal rule against payments and gifts to facilities.
8. Registration on the regional platform for hospital mortuaries.

For each funeral

1. Estimate and instructions signed by an identified family member, with the three blocks shown separately.
2. Numbered file with the coffin taken out of stock, hours, hearse, disbursements and receipts.
3. Disbursement documents made out to the family.
4. Electronic invoice made out to the person paying, with tax code, stamp duty and details of the deceased; traceable payment, never cash of €5,000 or more.

During the year

1. Every day: cash book and reconciliation of card payments.
2. Every month: disbursements account cleared; schedule of public holiday, night, overtime and on-call hours reconciled with the libro unico; notifications of calls for intermittent workers.
3. By 16 March: reporting of funeral expenses for the previous year.
4. By 30 April, if there are taxable transactions: annual VAT return.
5. Within the ordinary deadlines: income taxes and IRAP, with the ISA form from the second year; shareholders’ fixed Gestione commercianti contributions in four instalments.
6. At 31 December: physical stocktake of coffins and check of those on consignment; valuation of receivables with evidence of recovery efforts; calculation of the pro rata and any adjustments; check that new recruits have completed their training within six months.
7. To be kept for an audit: funeral files, an annual list of services that can be reconciled with municipal authorisations, consignment agreements, service contracts with other businesses and instalment agreements, on-call instructions and the call log.

What the firm does for these businesses

Readers who have come this far will have noticed that in a funeral business the accounts, payroll and the rules of the trade cannot be separated. The name on a receipt from the Comune shifts the pro rata; a badly drafted on-call instruction becomes an employment dispute; a coffin not taken out of stock becomes, in a tax audit, an undeclared funeral.

We assist funeral businesses with accounting and VAT, setting up disbursements and the pro rata as described in these pages, and with payroll under the sector agreement, on-call duty and business travel. We support those opening a business with the SCIA, the check of requirements and the budget for the first months, when staff must be paid before the first funeral. We set up the file for each funeral, which shows how much each service earns and stands up in a tax assessment, and we assist the business in tax audits and labour inspections.

We know the rhythm of this work: we ask for documents when there is time to provide them, not on the day of a funeral. The firm has offices in Codigoro, Ferrara and Milan.

This guide is for general information only and does not constitute professional advice on any specific case, which requires an examination of the documents and the specific facts. The content is up to date as at 16 October 2026; subsequent legislation, administrative practice and case law may alter its conclusions.

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