Flat-rate regime 2026
Requirements, tax and social security benefits
How the Italian flat-rate regime (regime forfettario) works: 15% or 5% flat tax, no VAT or withholding tax, lighter paperwork and INPS contribution reductions. Find out with us whether it suits you.
Flat-rate regime
What the flat-rate regime is and how it works
The flat-rate regime (regime forfettario) is the tax scheme for individuals with a VAT number (sole traders and professionals) with revenue or fees of up to €85,000 a year. Instead of IRPEF (personal income tax), regional surcharges and IRAP (regional business tax), you pay a single substitute tax of 15%, reduced to 5% for the first five years of a new business. No application is needed: if you meet the requirements, the regime applies automatically, from the moment you open your VAT number.
Who can use it in 2026
- Revenue or fees collected in the previous year of no more than €85,000.
- Spending on employees, collaborators and occasional work of no more than €20,000 gross.
- Income from employment or pensions in the previous year of no more than €35,000 (threshold confirmed for 2026); the limit does not apply if the employment relationship has ended.
Who cannot use it (grounds for exclusion)
- Those who apply special VAT regimes or flat-rate income determination regimes.
- Non-residents, except residents of an EU or EEA country who earn at least 75% of their income in Italy.
- Those who exclusively or mainly sell buildings, building land or new means of transport to other EU countries.
- Those who are partners in partnerships, professional associations or family businesses, or who control an SRL (limited liability company) carrying out an activity related to their own.
- Those who invoice mainly their current employer, or their employer in the previous two years.
How tax is calculated
Income is not worked out by deducting actual costs, but by applying to the revenue collected a fixed profitability coefficient linked to the ATECO activity code. Social security contributions paid during the year are then deducted, and the 15% or 5% tax is applied to the resulting base.
| Activity | Profitability coefficient |
|---|---|
| Wholesale and retail trade, food industries, accommodation and catering, street vendors of food products | 40% |
| Street vending of other products | 54% |
| Trade intermediaries (agents and representatives) | 62% |
| Other economic activities | 67% |
| Professional, scientific, technical and health activities, education, financial and insurance services | 78% |
| Construction and real estate activities | 86% |
Example: a consultant with €40,000 in fees and €5,000 in contributions paid has taxable income of €26,200 (40,000 × 78% − 5,000). Tax is €3,930 at 15%, or €1,310 at 5% if within the first five years.
The 5% rate for new businesses
The reduced rate applies in the year the business starts and the following four years if:
- you carried out no business, art or professional activity in the previous three years;
- the new activity is not a mere continuation of a previous job, including employment (except for the compulsory traineeship needed to practise a profession);
- if you take over someone else’s business, the transferor’s revenue in the previous year did not exceed €85,000.
When you leave the regime
- Revenue between €85,001 and €100,000: you remain in the flat-rate regime until the end of the year and move to the ordinary regime the following year.
- Revenue above €100,000: you leave immediately, in the same year, and VAT applies from the invoice that takes you over the threshold.
- Exceeding the €35,000 employment income threshold or the staff cost limit: you leave from the following year.
Flat-rate regime
Tax advantages
Besides the reduced tax, the flat-rate regime simplifies the day-to-day management of a VAT number: no VAT on invoices, fewer obligations and no withholding tax.
No VAT on invoices
Flat-rate taxpayers do not charge VAT to customers and do not have to pay it to the Treasury. Invoices must carry the wording “Operation without application of VAT pursuant to art. 1, paragraphs 54-89, Law no. 190/2014”.
For those who work with private customers this is a direct competitive advantage: for the same fee, the customer does not pay 22% VAT on top. In exchange, VAT paid on purchases cannot be deducted and becomes a cost.
A €2 revenue stamp must be applied to invoices above €77.47, and it can be charged to the customer.
Fewer tax obligations
Flat-rate taxpayers are exempt from:
- recording invoices and keeping VAT and accounting registers;
- periodic VAT settlements and payments;
- the annual VAT return and periodic VAT communications;
- IRAP and the related return;
- ISA, the synthetic indices of tax reliability.
Still required: electronic invoicing, mandatory for all flat-rate taxpayers since 2024, keeping invoices and documents, and the annual income tax return with section LM.
No withholding tax on invoices issued
Fees received by flat-rate taxpayers are not subject to the 20% withholding tax: the customer pays the full invoice amount. The flat-rate taxpayer only needs to declare to the client that the regime applies, usually with a wording on the invoice. This improves cash flow, because tax is paid only with the tax return and is not advanced on each payment received.
No withholding tax on invoices received
Flat-rate taxpayers are not withholding agents: when they pay a professional they do not withhold or pay withholding tax, and do not have to file form 770 for these fees. The only requirement is to state in the income tax return the tax code of the payee and the amount paid.
One exception: those with employees or collaborators must withhold tax on their salaries and fees, like any other employer.
Flat-rate regime
Social security advantages
Craftspeople and traders in the flat-rate regime can significantly reduce INPS (Italian social security) contributions, which are otherwise due at a fixed amount even on low income. In 2026 the minimum contribution for a trader, calculated on the minimum income of €18,808, is about €4,600 a year; for a craftsperson about €4,500.
35% reduction for flat-rate taxpayers
Flat-rate taxpayers registered with the craftspeople or traders scheme can ask to pay contributions with a 35% reduction, on both the fixed portion and the part above the minimum income. For a trader the minimum contribution drops to about €3,000 a year.
- Those already registered apply to INPS by 28 February of the year in which they want the reduction to apply.
- Those starting a business apply right after registering with the scheme.
- The reduction remains valid in the following years as long as you remain in the flat-rate regime, with no need to reapply.
Good to know: with the reduction you pay less in contributions and therefore accrue fewer months towards your pension. The firm assesses case by case whether it is worthwhile.
50% reduction for new businesses
The 2025 Budget Law introduced a 50% reduction in contributions for 36 months for those who registered for the first time with the craftspeople or traders scheme during 2025. The reduction is requested online through the INPS Benefits Portal. For those registering in 2026 the measure does not, at the moment, appear to have been extended: the firm will update this section if there is news.
The two reductions cannot be combined: those who qualify choose between 50% for three years and the 35% for flat-rate taxpayers, and can revoke the 35% to switch to 50%. After the 36 months, flat-rate taxpayers can return to the 35% reduction.
No traders’ contributions if you are also an employee
Registration with the traders scheme is compulsory only if the activity is carried out habitually and mainly. If the VAT number holder is also an employee, INPS considers employment to be the main activity, and does not require registration with the traders scheme, in these cases:
- a full-time employment contract;
- a part-time contract above 50% of working hours, i.e. more than 20 hours a week.
In these cases the fixed annual contribution is not paid, saving at least €3,000-4,600 a year. With part-time of up to 20 hours, instead, INPS presumes the commercial activity to be the main one and registration is due, unless proven otherwise.
For professionals without a professional pension fund who are registered with the Gestione Separata (INPS separate scheme), contributions are always due, but as a percentage of actual income and with no fixed minimum; those who already have social security cover from employment pay a reduced rate.
Flat-rate regime
Frequently asked questions
Does the flat-rate regime have to be requested?
No. Those who meet the requirements apply it automatically, by indicating it in the VAT number opening declaration or simply by applying it from 1 January.
Can I be an employee and have a flat-rate VAT number?
Yes, if employment income in the previous year does not exceed €35,000 and you do not invoice mainly your employer.
Can I deduct expenses?
No, actual expenses are not deductible: they are already accounted for in the profitability coefficient. Only social security contributions paid are deducted.
Is the flat-rate regime always the best choice?
Not always. With very high costs compared to revenue, or with many personal deductions to use (dependants, mortgage, medical expenses), the ordinary regime may be more advantageous.
Want to know if the flat-rate regime is right for you?
Fiscoffice checks the requirements, calculates the tax and contributions you would pay under the flat-rate and ordinary regimes, and supports you in opening your VAT number and in INPS reduction applications.
Want a quick idea? Try our simulator: enter revenue and activity and get an estimate of tax and contributions under the flat-rate regime.