Italian Flat-Rate Tax Regime (Regime Forfettario) 2026
Everything freelancers and small businesses need to know about Italy's most popular tax regime
1. What is the Regime Forfettario?
The Regime Forfettario (flat-rate tax regime) is Italy’s most popular simplified tax scheme for freelancers, self-employed professionals, and sole proprietors. Introduced by Law 190/2014, it offers significantly lower taxes and minimal bureaucracy compared to the standard tax regime.
Key features:
- Flat substitute tax of 15% (or 5% for the first 5 years) replacing IRPEF (income tax), regional/municipal surcharges, and IRAP
- No VAT charged on invoices (and no VAT deduction on purchases)
- Simplified bookkeeping: no VAT registers, no balance sheet, just invoices and annual tax return
- No withholding tax on invoices
If you’re a freelancer or starting a business in Italy, this regime is likely your best option until your revenue grows beyond its limits.
2. Eligibility requirements 2026
To qualify for the Regime Forfettario in 2026, you must meet all of these conditions:
- Revenue cap: no more than €85,000 in the previous year
- Employee costs: no more than €20,000 gross per year in salaries
- No participation in partnerships, professional associations, or controlled SRLs
- No employment income exceeding €30,000 (unless the employment has ended)
- Tax residency in Italy (or at least 75% of revenue generated in Italy)
Important threshold rules: If you exceed €85,000 during the year but stay below €100,000, you exit the regime the following year. If you exceed €100,000, you exit immediately and must start charging VAT from that transaction onward.
3. Tax rates: 15% standard and 5% startup
For businesses active for more than 5 years
For the first 5 years of a new business
The 5% rate applies if you haven’t run a business or freelance activity in the 3 years prior, and your activity isn’t a continuation of previous employment.
4. Profitability coefficients
Under the flat-rate regime, you don’t deduct actual expenses. Instead, your taxable income is calculated by applying a profitability coefficient to your revenue, based on your ATECO code (business activity classification):
| Activity | Coefficient | Meaning |
|---|---|---|
| Retail trade | 40% | On €50,000 revenue, taxable = €20,000 |
| Food & hospitality | 40% | Restaurants, hotels, catering |
| Construction & real estate | 86% | High coefficient, few deductible costs |
| Professional services | 78% | Consultants, lawyers, IT, designers |
| Other activities | 67% | Default for unclassified activities |
5. Full tax calculation example
Profile: Maria, freelance web designer, 2 years into her business, €40,000 annual revenue
- Revenue: €40,000
- Profitability coefficient (professional services): 78%
- Taxable income: €40,000 × 78% = €31,200
- INPS contributions (separate management, 26.07%): €31,200 × 26.07% = €8,134
- Income after contributions: €31,200 − €8,134 = €23,066
- Substitute tax (5% startup): €23,066 × 5% = €1,153
- Total tax + contributions: €8,134 + €1,153 = €9,287
- Net take-home: €40,000 − €9,287 = €30,713 (76.8% of revenue)
Compare this to the standard Italian tax regime, where the same income would face progressive IRPEF rates of 23–43%, plus regional and municipal surcharges. The savings can be substantial.
6. Social security contributions (INPS)
Social contributions are mandatory on top of the substitute tax:
- Gestione Separata (professionals without a dedicated fund): ~26.07% on taxable income. No minimum payment — you pay proportionally.
- Artisans/Merchants fund: ~24% with an annual minimum of ~€4,200 (payable even with zero income). Forfettario participants can request a 35% reduction.
7. Pros and cons
Advantages
- Low tax rate (5% or 15%)
- No VAT management
- Minimal bookkeeping
- No withholding tax
- No ISA compliance
- Less bureaucracy
Disadvantages
- No real expense deductions
- €85,000 revenue cap
- No input VAT deduction
- No mortgage/insurance deductions
- Complex for international clients
- No IRPEF tax credits (children, medical)
8. Free online simulator
Get a quick estimate of your taxes under the flat-rate regime with our free simulator:
Explore all free ANIMA tools for business management.