Tax transparency: how SNC and SAS income is taxed in the partners' hands

Luca and Sara run a bar in Verona as an SNC, a general partnership, with profit shares of 60 and 40 per cent. In 2026 the partnership earns €90,000 of income, but to refit the premises each partner draws only €20,000. At tax time they learn that drawings do not matter: Luca is taxed on €54,000 and Sara on €36,000, even though that money never left the partnership's bank account.

A company that pays no IRPEF

The società in nome collettivo (SNC) and the società in accomandita semplice (SAS) are real businesses: each has a name, assets, a VAT number and its own books. For income tax purposes, though, the law treats them as a channel. Income arises inside the partnership, but the income tax on it is paid by the partners.

The principle is set out in article 5 of the TUIR, in the wording that applies to 2026. The income of resident simple partnerships, SNCs and SASs is allocated to each partner, whether or not it has been received, in proportion to that partner's share of profits.

The Agenzia delle Entrate's page on tax payments puts it in practical terms. Partnerships and equivalent entities pay only IRAP. IRPEF is paid directly by the partners, to whom the income is allocated on a transparent basis, regardless of whether they actually collected it.

This is the key contrast with an SRL. In a limited company, income is taxed under IRES in the company's name, and a member is only involved on receiving a dividend. In a partnership the pass-through is immediate: the year's income becomes the partner's income in that same year.

Whether or not it is received

Those words in article 5 are what surprise new partners most. A partner is taxed on their share of income even without drawing a single euro. What counts is the profit share, not the movement of money from the partnership's account to a personal one.

Luca and Sara's bar is a textbook case. They left €50,000 in the partnership to fund the works, yet the income allocated is still €90,000, split 60 to 40. Each must pay IRPEF on a much larger sum than they actually have available in their own accounts.

The practical issue is the partners' own cash. When a partnership keeps its profits to invest, it is wise to plan a drawing large enough for the partners to cover their personal tax. Otherwise a partner faces a real tax bill on income that exists only on paper, locked inside the business.

The reverse also holds. Drawing more than your share of income does not increase the income you are taxed on: tax follows allocation, not drawings. Keeping the two ideas apart stops anyone from reading a bank statement as though it were the tax base.

Business income, whatever the activity

The income a partnership passes on has a fixed character. Article 6 of the TUIR provides that the income of SNCs and SASs, from whatever source and whatever the stated business purpose, is treated as business income and computed as a single figure.

That has concrete effects. An SNC that does nothing but let out a building does not give its partners property income; it gives them business income. Interest and gains realised by the partnership likewise flow into the same single result, computed under business income rules and then divided up.

The simple partnership does not appear in this rule of article 6, which names only SNCs and SASs. The TUIR keeps it separate precisely because of what it does: a de facto partnership with no commercial activity, for instance, is treated as a simple partnership. This course focuses on SNCs and SASs, the forms small traders and craft businesses use.

Profit shares

The remaining question is how much goes to each partner. Paragraph 2 of article 5, as it applies to 2026, sets a hierarchy. First comes whatever the deed of incorporation says, drawn up as a notarial deed or an authenticated private agreement, or another deed of the same kind dated before the start of the tax period.

If the deed is silent, shares are presumed proportional to the value of each partner's contribution. If the value of contributions is not determined either, shares are presumed equal. A two-partner SNC with nothing written on shares or contributions therefore splits its income down the middle.

The timing condition deserves care. A change of shares agreed halfway through the year, even by authenticated deed, does not apply to that tax period: the law requires a deed dated before it began. Partners who want a new split from next year must put it in writing by 31 December, if their financial year is the calendar year.

De facto partnerships, professional associations and other equivalents

Paragraph 3 of article 5 extends transparency to arrangements that do not call themselves an SNC or SAS. De facto partnerships are treated as SNCs if their purpose is a commercial activity, and as simple partnerships if it is not. What the business does matters, not the absence of a written agreement.

Associations without legal personality, formed by individuals to practise professions together, are treated as simple partnerships. They get one extra concession: the deed fixing their shares may be drawn up at any point until the association files its income tax return.

Shipowning partnerships, finally, are treated as SNCs or SASs depending on whether they were formed unanimously or by majority. It is a rare case for a small business, but it shows the logic of the rule: the TUIR maps every form of joint venture onto one of the models whose taxation it already governs.

When the partnership is resident in Italy

Article 5 transparency applies to resident partnerships. The 2026 wording treats partnerships and associations as resident if, for most of the tax period, their registered office, their place of effective management or their main ordinary management is in Italy.

The rule also defines the two less obvious terms. Effective management means the continuous and coordinated taking of strategic decisions about the entity as a whole. Ordinary management means the continuous and coordinated carrying out of day-to-day acts for the entity as a whole. An SNC run from Italy meets both tests.

The partner reports their own share

The share allocated to an individual partner goes into that partner's personal return. The Agenzia's page on the 2026 Redditi Persone fisiche return lists, among those who must use it, taxpayers with business income, including income received as a partner. An SNC partner cannot rely on the simpler 730 return for that share.

Once in the partner's return, the share is added to their other income and taxed under progressive IRPEF bands. This is where transparency bites hardest: a large income allocated to one partner climbs into the upper bands, while the same income spread over several partners stays lower for each of them.

The family business: transparency with a cap

A family business, or impresa familiare, is not a partnership, but article 5 gives it a similar rule. The income stays with the owner, who reports it; part of it, however, can be allocated to family members who work in the business on a continuous and predominant basis, in proportion to their profit shares.

The transferable portion is capped at 49 per cent of the income shown in the owner's return. The rest, at least the majority, stays taxed in the owner's hands. That is the main difference from an SNC, where all the income passes to the partners according to their shares.

The conditions are formal. Family members must be named, with their family relationship to the owner, in a notarial deed or authenticated private agreement dated before the start of the tax period and signed by the owner and the family members. The owner's return must state the shares and certify that they match the work actually done.

Each family member, in turn, confirms in their own return that they worked in the business continuously and predominantly. For income tax, family means the spouse, relatives up to the third degree and in-laws up to the second degree. A helper outside that circle cannot receive a share.