Italy’s simplified flat-tax scheme for freelancers and small businesses — here’s exactly how the substitute tax is calculated, and when you’re forced to exit.
Last updated: June 2026
Rather than applying tax to your full revenue, the regime forfettario applies a redditività (profitability) coefficient specific to your business activity code (ATECO code) to your gross revenue, producing a notional taxable income — commonly around 78% of revenue for many professional services, though the exact percentage varies by activity type. The flat substitute tax rate (15%, or 5% if eligible for the reduced rate) is then applied to that notional income, not your full revenue.
New businesses can benefit from a reduced 5% rate for the first 5 years, provided specific conditions are met — broadly, you haven’t carried on a similar activity in the previous 3 years, the new activity isn’t simply a continuation of previous employment or self-employment with the same client relationships, and (if continuing a prior activity) revenue doesn’t exceed the previous activity’s threshold. These anti-abuse conditions are specifically designed to stop people restructuring existing work as a "new" business purely to access the reduced rate.
You exit the regime forfettario (moving to regime ordinario) starting the following year if your revenue exceeds €85,000 but stays under €100,000. If your revenue exceeds €100,000 during the year, the exit is immediate — you move to regime ordinario and begin charging standard IVA from that point within the same year, not just from the following January.
A profitability percentage assigned to your specific ATECO business activity code, used to convert your gross revenue into a notional taxable income for the substitute tax calculation — it varies by profession/activity type.
No, specific anti-abuse conditions must be met, mainly around not simply continuing previous employment or a prior business activity under a new guise — check the conditions carefully before assuming eligibility.
You exit the regime forfettario immediately, moving to regime ordinario and beginning to charge standard IVA from that point in the year, rather than waiting until the following January.
Not individually — the redditività coefficient already builds in an assumed expense ratio, so you cannot separately deduct actual costs on top of the notional income calculation.
Generally yes if your revenue drops back under the threshold and other eligibility conditions are met again, though specific waiting period rules can apply depending on the circumstances of your exit.
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