The Regime Forfetario is a preferential tax regime designed for individuals carrying out business activities, arts, or professional services.
Who Can Access It
Taxpayers may apply the flat-rate regime if, in the previous tax year, they simultaneously:
- Earned revenues or received fees, calculated on an annual basis, not exceeding €85,000 (the previous threshold of €65,000 was increased by the 2023 Budget Law).
If multiple activities are carried out under different ATECO codes, the total revenues and fees from all activities must be considered. - Incurred expenses for personnel not exceeding €20,000 gross, including costs for ancillary work, employees, and payments to collaborators (including project-based collaborators). This limit also includes profit shares paid to associates contributing only labor, as well as remuneration for work performed by the entrepreneur or their family members.
Individuals starting a new activity may also opt for the flat-rate regime by declaring, for VAT purposes, that they expect to meet the required conditions.
Termination of the Flat-Rate Regime
The flat-rate regime ceases to apply starting from the year following the one in which even just one of the access requirements is no longer met or when an exclusion condition arises.
However, if revenues/fees exceed €100,000, the regime becomes inapplicable in the same year the threshold is exceeded. In this case, VAT is due on transactions that cause the threshold to be exceeded.
Exclusion Conditions
The flat-rate regime cannot be applied by:
- Individuals using special VAT regimes or other flat-rate income determination regimes
- Non-residents, except for those residing in an EU Member State or in a State party to the European Economic Area Agreement that ensures adequate exchange of information, provided that at least 75% of their total income is produced in Italy
- Taxpayers who exclusively or mainly carry out transactions involving the sale of buildings or parts thereof, building land, or new means of transport
- Entrepreneurs, professionals, or artists who simultaneously participate in partnerships, professional associations, or family businesses, or who directly or indirectly control limited liability companies or joint ventures that carry out activities directly or indirectly attributable to those performed individually
- Individuals whose activity is carried out mainly for employers with whom they have an ongoing employment relationship or had such a relationship in the previous two tax periods, or for entities directly or indirectly attributable to those employers. An exception applies to those starting a new activity after completing the mandatory apprenticeship required to practice a profession
- Individuals who, in the previous year, received employment and/or similar income exceeding €30,000 (€35,000 for tax years 2025 and 2026), unless the employment relationship ended in the previous year and no pension income or income from another employment relationship was received in that same year.
Taxable Income and Taxation
Under the flat-rate regime, taxable income is calculated by applying the profitability coefficient established for the relevant activity (Annex no. 2 to Law no. 145/2018) to the total revenues or fees earned.
From the flat-rate income thus determined, mandatory social security contributions are deductible, including those paid on behalf of family business collaborators who are fiscally dependent, or—if not fiscally dependent—provided the owner has not exercised the right of recourse against them. Any excess contributions may be deducted from total taxable income.
A single substitute tax of 15% applies to taxable income, replacing ordinary income taxes and regional and municipal surtaxes.
In the case of family businesses, the substitute tax—applied to income before deducting compensation due to the spouse and family members—is payable by the entrepreneur.
Income subject to the flat-rate regime is always considered when assessing eligibility for deductions, tax credits, or benefits (including non-tax benefits) where income thresholds apply.
Additional Benefits for New Businesses
The substitute tax rate is reduced to 5% for the first five years of activity, provided that:
- The taxpayer has not carried out any artistic, professional, or business activity (including in associated or family form) in the previous three years
- The new activity does not, in any way, constitute a mere continuation of a previously carried out activity as an employee or self-employed worker, except in the case of mandatory professional training periods
- If the activity continues one previously carried out by another person, the revenues and fees generated in the tax period preceding the recognition of the benefit do not exceed the threshold allowing access to the regime.
Please note: although tax calculation is simplified, social security contributions remain payable. We therefore recommend paying close attention to this aspect.
Taxpayers Already in Business
As the flat-rate regime is a natural regime, taxpayers already carrying out a business, artistic, or professional activity may access it automatically, without any prior or subsequent notification.
Adopting the flat-rate regime entails several simplifications for both VAT and direct taxes.
VAT Simplifications
Taxpayers applying the flat-rate regime:
- Do not charge VAT on invoices issued to customers and cannot deduct VAT paid on purchases
- Are exempt from VAT settlement and payment obligations and from filing the annual VAT return
- Are not required to record issued invoices, receipts, or purchases
- Are not required to apply electronic invoicing rules
However, a reward scheme applies to flat-rate taxpayers whose annual turnover consists exclusively of electronic invoices: the statute of limitations for tax assessments is reduced by one year (four years instead of the standard five).
They remain subject to obligations relating to:
- Numbering and retention of purchase invoices and customs documents
- Certification of receipts
- Integration of invoices for transactions in which they are liable for VAT, indicating the applicable rate and VAT amount, payable by the 16th day of the second month following each calendar quarter
- Issuing and receiving electronic invoices for domestic transactions and reporting cross-border transactions (esterometro), where applicable.
Income Tax Simplifications
Taxpayers under the flat-rate regime:
- Are exempt from bookkeeping and accounting record-keeping obligations, without prejudice to the obligation to keep and retain records required by non-tax regulations
- Are excluded from the application of synthetic tax reliability indices (ISA)
- Are not required to apply withholding tax, except on employment income and similar income. In the tax return, they must indicate the tax code of recipients for whom no withholding was applied and the related amounts
- Are not subject to withholding tax on revenues or fees received. To this end, they must provide a specific declaration to the withholding agent stating that the income is subject to substitute tax.
Conclusion
If your annual turnover is below €85,000, you may benefit from a preferential tax burden of approximately 25–30% maximum, including social security contributions.
Contact us for further information and a more detailed overview tailored to your situation.
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