Regime Forfettario: Italy's Flat-Rate Tax Scheme Explained

Regime forfettario started out as a flat-rate tax scheme for individuals running a business, craft or profession in Italy. It changes how tax gets calculated, built for people with modest revenue who’d rather skip the more complex bookkeeping of the ordinary regime.

Who can join the regime forfettario: the requirements

According to Agenzia delle Entrate, Italy’s tax authority, entry is open to those who earned revenue or received payments, prorated for partial years, not exceeding €85,000: that’s the threshold in force since 2023, introduced by the 2023 budget law (L. 197/2022). Someone opening a new partita IVA can choose the flat-rate scheme from day one, provided they fall under this limit and don’t trigger any of the exclusions listed further down.

There’s a lesser-known condition too: anyone who earned employment income above a certain threshold in the previous year is shut out of the scheme. That threshold used to be €30,000, then was raised to €35,000 for 2025 and 2026. Someone working part-time who opens a partita IVA as a side activity needs to check this figure too, not just the revenue from the new activity.

The revenue limit: €85,000 a year

When the regime forfettario launched, in 2015, the threshold was €65,000; it was raised several times since, up to the €85,000 in force since 2023. Staying under that annual ceiling is a condition for remaining in the scheme.

The exclusions

Staying under the revenue limit isn’t enough on its own. Among others, the regime forfettario shuts out: people using special VAT regimes or flat-rate income-determination regimes; non-residents, unless they earn at least 75% of their total income in Italy; those who mainly or exclusively sell buildings, building land or new vehicles; those who work mainly for an employer they had a working relationship with in the previous two years, unless they’re completing a mandatory training period; and those who simultaneously hold a stake in a partnership, professional association or family business, or control a limited company whose activity overlaps with their individual one.

Practical example: a consultant who leaves her job in January and opens a partita IVA in March to invoice services to her former employer generally can’t stay on the flat-rate scheme for that activity: a recent employment relationship with the same party falls under the exclusions, except for people completing a mandatory professional training period.

How the tax works: the rate and the profitability coefficient

People on the regime forfettario don’t pay ordinary income tax, surtaxes or the other taxes normally due, but a single substitute tax instead. The standard rate is 15%, applied not to total revenue but to taxable income worked out by applying a profitability coefficient to revenue — a coefficient that differs by business activity code and is set out in a table attached to the law that created the scheme. For the first five years of activity the rate drops to 5%, provided the taxpayer hasn’t carried out a comparable artistic, professional or business activity in the previous three years, and the new activity isn’t simply a continuation of work already done in another form.

Practical example: a freelance professional on the flat-rate scheme whose taxable income, after applying her activity’s profitability coefficient, comes to €15,000 pays €750 in substitute tax if she’s within her first five years of activity and meets the conditions (5% of €15,000), or €2,250 once that reduced-rate period ends (15% of the same figure).

The VAT exemption and other simplifications

People on the regime forfettario don’t charge VAT to their clients on invoices and can’t reclaim the VAT paid on purchases. They’re also exempt from periodic VAT payments and filings and from the annual VAT return. In most cases they don’t even have to follow the rules on mandatory electronic invoicing, though anyone who chooses to invoice exclusively electronically anyway gets an extra perk: the deadline for tax assessment notices shrinks by a year, to four years instead of the ordinary five. On the whole, people on the flat-rate scheme also aren’t subject to withholding tax on the revenue or payments they receive, with the exception of employment and similar income.

Regime forfettario versus the ordinary regime: the differences

The most visible difference between the two regimes shows up on an invoice.

	Regime forfettario	Ordinary regime
VAT on invoices	Not charged	Charged and reclaimed on purchases
VAT filings	Exempt from filing and payment	Periodic (monthly or quarterly)
Electronic invoicing	Generally not required	Required
Tax calculation	Profitability coefficient on revenue, then 15% or 5%	Itemized deduction of costs, ordinary income tax rates
Withholding tax	Doesn’t apply to business revenue	Applies under the ordinary rules

Someone working in the labor market as a self-employed professional, without an employer, often weighs up this table before even deciding how to open a partita IVA: the regime forfettario cuts down on paperwork, but it isn’t the most convenient choice for someone with a lot of deductible costs, because the flat-rate calculation doesn’t itemize those costs one by one.

INPS contributions for craftspeople and shopkeepers

Anyone enrolled in the relevant INPS social security schemes for craftspeople and shopkeepers who also joins the regime forfettario can apply for a 35% cut in the contributions owed, both on income up to the minimum threshold and on any income above it. The break, set out in Article 1, paragraph 111 of L. 208/2015, isn’t automatic: it has to be requested explicitly, and it’s calculated on the flat-rate income already determined for tax purposes, not on gross revenue.