Italy's Flat-Tax Regime (Regime Forfettario): How the 5% and 15% Rates Work

In a nutshell

The regime forfettario (Italy's flat-rate tax regime) is the simplest way to be self-employed in Italy. You pay a single substitute tax — 5% for the first five years of a brand-new business, then 15% from year six onward. You don't charge VAT on your invoices, you skip most bookkeeping requirements, and the annual revenue cap is €85,000. The regime is open to foreign nationals who are tax-resident in Italy.

At a glance

Cost to open a Partita IVA	Free
Substitute tax rate	5% (first 5 years, new business) or 15%
Revenue cap	€85,000 / year
How to open a Partita IVA	Agenzia delle Entrate online with SPID/CIE, form AA9/12
Timeline	Partita IVA issued immediately
Main obligations	Electronic invoicing required; annual tax return, quadro LM section

A Partita IVA (Italian VAT number — required to invoice as a self-employed worker) under this regime costs nothing to open and comes with dramatically reduced administrative overhead compared to the standard tax regime.

How the tax is calculated

The regime forfettario doesn't tax your actual expenses. Instead, it applies a profitability coefficient to your gross revenue — the coefficient varies by business type (identified by your codice ATECO, Italy's business-activity classification code). The result is your taxable income, and the flat tax rate is applied to that figure.

Business type	Coefficient
Wholesale and retail trade (ATECO 45-46-47)	40%
Accommodation and food services (55-56)	40%
Food and beverage manufacturing (10-11)	40%
Construction and real-estate activities (41-43, 68)	86%
Trade intermediaries (46.1)	62%
Professionals, consultants, healthcare, education (64-75, 85-88)	78%
Other activities (craftspeople, personal services, etc.)	67%

Worked example: you're a consultant with ATECO code 74.90.

• Revenue collected in 2025: €30,000
• Coefficient: 78% → taxable income: €23,400
• Deductible INPS (Italy's social-security agency — pensions, unemployment, family benefits) contributions: €6,000 → net taxable income: €17,400
• Tax at 15%: €2,610 — or at 5% (start-up rate): €870

Who qualifies for the 5% start-up rate

The reduced 5% rate applies when you open your Partita IVA, provided you meet all of the following conditions at that moment:

1. You have not carried out any artistic, professional, or business activity — including as a member of a partnership or family enterprise — in the three years before opening.
2. The new activity is not a straightforward continuation of a previous employment or self-employment (the only exception is a legally required traineeship).
3. If you are taking over an existing business from someone else, that business's revenue in the previous year did not exceed €85,000.

The five-year clock starts on the date you open the Partita IVA. Example: if you open on 1 July 2026, you stay at 5% until 31 December 2030, then move to 15%.

Requirements to enter the regime

To join the regime forfettario for 2026 you must meet all of the following conditions based on your 2025 figures:

• Revenue or fees within €85,000: for professionals the cash basis applies (when you collect), for businesses the accrual basis (invoice date).
• Spending on employees or collaborators no more than €20,000 gross in the previous year.
• No exclusion grounds apply (see the section below).

Watch the €100,000 threshold: if you cross it during the year, you must leave the regime immediately and charge VAT starting from the next payment you receive. Between €85,000 and €100,000 you leave only from the following calendar year.

How to open a Partita IVA under this regime

Starting fresh: complete form AA9/12 online at the Agenzia delle Entrate (Italy's tax-revenue agency) using SPID (Italy's digital identity for accessing online public services) or CIE (Italian electronic ID card), or go to a tax-office branch in person. Enter your ATECO code, tick the "regime forfettario" box, and indicate whether you meet the requirements for the 5% rate. Your Partita IVA is issued on the spot.

Switching from the standard regime: if you already have a Partita IVA under the ordinary regime and met the requirements in the previous year, you can switch simply by starting to invoice without VAT from 1 January of the new year. You notify the switch in the VO section of your last VAT return under the ordinary regime. Note that you will need to reverse the VAT you deducted on unsold stock and business assets.

Foreign nationals: EU citizens who are tax-resident in Italy can access the regime on the same terms as Italian nationals. Non-EU citizens need a valid Permesso di soggiorno (residence permit for non-EU citizens). Citizens of EEA countries (Norway, Iceland, Liechtenstein) can also access it if they earn at least 75% of their total income in Italy. Non-residents are excluded.

Your obligations as a forfettario

Even with simplified accounting, there are a few things you must do:

• Electronic invoicing: mandatory since 1 January 2024 for all forfettari, through the Sistema di Interscambio (SDI, Italy's e-invoice exchange system). Every invoice must include the statement: "Operazione effettuata ai sensi dell'art. 1, commi 54-89 della Legge n. 190/2014 — regime forfettario."
• Revenue stamp tax: €2 on every invoice above €77.47, payable quarterly via F24 (F24 is the universal Italian payment form for taxes and contributions) with tax code 2521.
• Annual tax return: Modello Redditi PF (Italy's standard personal tax return), quadro LM section. You do not file a VAT return or ISA compliance forms.
• INPS contributions: the regime does not exempt you from social-security contributions. Professionals without a sector-specific pension fund enrol in the Gestione Separata INPS (the self-employed contribution scheme, rate 26.07% in 2025). Craftspeople and traders pay fixed contributions (roughly €4,292–€4,310 per year) plus a percentage on income above the threshold. All contributions paid are deductible from your taxable income.

Who is excluded

You cannot use the regime forfettario if, in the previous year, any of the following applied to you:

• You use a special VAT regime (agriculture, publishing, travel agencies, etc.)
• You are not tax-resident in Italy (with the 75% EEA exception noted above)
• You sell mainly buildings or building land
• You are simultaneously a partner in a partnership, professional association, or family business
• You control a limited-liability company (SRL) that carries out activities related to yours
• You received employment income exceeding €30,000 gross (unless that employment ended during the year)
• The majority of your invoicing goes to your current employer or a former employer from the past two years

Mistakes to avoid

1. Forgetting the mandatory disclaimer on your invoices. Without the phrase "regime forfettario art. 1 c. 54-89 L. 190/2014", your client may withhold tax at source, which will create problems in your tax return.
2. Accidentally adding VAT to an invoice. If you include VAT by mistake you are legally required to pay it to the tax authority — and you risk losing the regime entirely.
3. Missing INPS and substitute-tax advance payments. These are due by F24 in June (first instalment, tax code 1790) and November (second instalment, tax code 1792), with a final balance the following June (tax code 1791). Missed deadlines trigger penalties and interest.

Special cases

Employed and holding a forfettario Partita IVA at the same time: this is allowed, but two limits apply. Your employment income in the previous year must not exceed €30,000 gross (unless that job ended). And the invoicing you direct to your current employer — or a former employer from the past two years — must not exceed 50% of your total revenue.

Changing your ATECO code during the five-year start-up period: the 5% clock runs from the date you opened the Partita IVA, not from the ATECO code. Changing the type of activity does not reset the counter.

Leaving and rejoining the regime: you leave from the following year if you exceed €85,000, or immediately if you exceed €100,000. You can rejoin the following year once you are back below the thresholds.

INPS contribution discount for craftspeople and traders: the 35% reduction (provided by art. 1 c. 77 L. 190/2014) is not automatic. You must specifically request it through your INPS online account (cassetto previdenziale).

Official sources

• Agenzia Entrate — Regime forfetario
• Agenzia Entrate — General information on the regime forfetario
• Circolare AdE 10/E/2016
• Normattiva — Legge 190/2014
• INPS — Gestione Separata

Legal references: L. 190/2014 art. 1 commi 54-89; L. 197/2022 art. 1 commi 54-55; L. 213/2023; L. 207/2024; Circolare AdE 10/E/2016; Circolare AdE 9/E/2019; Circolare AdE 32/E/2023.