Industries
Flat-rate regime (regime forfettario)
The flat-rate regime (regime forfettario) simplifies many tax obligations. We check whether you meet the requirements and whether the flat-rate regime fits your costs, contributions and future plans.
Industry
What matters to you
Many sole traders and self-employed professionals in Italy use the flat-rate regime (regime forfettario). Instead of progressive income tax rates, they pay a substitute tax on a lump-sum profit, issue invoices without VAT and have far fewer accounting obligations.
However, the regime has clear limits and grounds for exclusion, and it is not always the most favourable choice. We support founders, tradespeople, retailers, freelancers and people with a side business in South Tyrol with the decision, ongoing obligations and the transition to ordinary taxation.
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How the flat-rate regime (regime forfettario) works
Profit is not calculated from actual costs but by multiplying revenue by a profitability coefficient set according to the activity. Only social security contributions paid are deducted. A substitute tax of 15 per cent is levied on the resulting amount, reduced to 5 per cent for the first five years for new businesses under certain conditions.
Invoices are issued without VAT; in return, you cannot deduct the input VAT on your purchases. Taxpayers under the flat-rate regime must also issue and receive their invoices electronically.
Requirements and grounds for exclusion
The most important requirement is the revenue limit: revenue in the previous year must not exceed 85,000 euros. There are also grounds for exclusion that are often overlooked, such as certain shareholdings in companies, employment income above a statutory threshold or working mainly for your former employer.
Anyone who applies the regime despite a ground for exclusion risks back payments of income tax and VAT plus interest and penalties. We check the requirements before you start and again every year.
- Previous year’s revenue threshold
- Shareholdings in companies
- Concurrent income from employment
- Work for former employers
Keep an eye on revenue thresholds
Anyone who exceeds the relevant limit for remaining in the regime must prepare to switch to standard taxation. For revenue above 100,000 euros different timings apply: standard income calculation applies to the entire current year, while VAT generally applies from the transaction whose payment causes the limit to be exceeded.
That is why it pays to track revenue during the year, especially with larger contracts towards the end of the year. We keep an eye on your turnover with you and prepare the switch before it comes as a surprise.
Is the flat-rate regime (regime forfettario) the right choice for you?
Whether the flat-rate regime (regime forfettario) pays off depends on the ratio between actual costs and the flat-rate cost allowance. Investments, non-deductible input VAT, social security contributions and other income also play a role. We compare the overall burden based on your figures.
We calculate both options using your figures, also taking into account social security contributions, your family situation and your plans for the coming years.
Step by step
How we work together
Initial meeting
We discuss your activity, your expected income and costs and your personal situation.
Review and comparison
We check the requirements and compare the expected burden under the flat-rate regime (regime forfettario) with standard taxation.
Start-up and ongoing support
We handle the registrations, set up e-invoicing and prepare your tax return every year.
Annual check
Every year, we check whether the regime is still suitable and, if necessary, prepare the switch in good time.
Frequently asked questions
Answers on eligibility, cost deductions and switching tax regimes.
Can I use the flat-rate regime alongside my employment?
In principle yes, as long as your employment income in the previous year did not exceed a statutory threshold and you do not work mainly for your current or former employer. We check the exact conditions on the basis of your payroll documents.
What happens if I exceed 100,000 euros mid-year?
If revenue exceeds 100,000 euros, the flat-rate regime (regime forfettario) ends during the current year. For income tax, the entire year is treated under the standard rules. VAT is generally due from the transaction whose payment causes the threshold to be exceeded. We clarify the necessary invoicing adjustments and bookkeeping obligations.
Can I deduct expenses under the flat-rate regime?
Actual costs play no role in determining profit, because profit is calculated on a flat-rate basis from revenue. Only the social security contributions paid are deductible. You should nevertheless keep your receipts, for example for a later change of regime.
Does the 5 per cent rate apply to me too?
The reduced rate is intended for newly started activities and is subject to conditions; among other things, the new activity must not be a mere continuation of a previous activity or employment. We check before you start whether you meet the requirements.
Let’s talk about your plans.
Arrange a no-obligation initial meeting in Merano, Laces or online.