The Regime Forfettario is Italy's most popular tax scheme for freelancers, sole traders, and small businesses. It offers a dramatically simplified tax regime with a flat substitute tax rate of just 15% (or 5% for qualifying startups). If you are starting a business in Italy or working as a libero professionista, understanding this scheme is essential.
Key Features of the Regime Forfettario
- Flat tax rate: 15% substitute tax (imposta sostitutiva) replacing IRPEF, addizionali regionale and comunale, and IRAP
- Startup rate: 5% for the first 5 years of activity
- Revenue limit: €85,000 per year (raised from €65,000 in 2023)
- No IVA: You do not charge or collect IVA (VAT) on your invoices
- No ritenuta d'acconto: Clients do not withhold the 20% advance tax
- Simplified accounting: No double-entry bookkeeping required
How Taxable Income Is Determined
Unlike the ordinary regime where you deduct actual expenses, the Regime Forfettario uses fixed profitability coefficients based on your ATECO activity code:
- Professional services: 78% (you are taxed on 78% of revenue)
- Commerce: 40%
- Food and hospitality: 40%
- Construction: 86%
- Intermediaries: 62%
- Other activities: 67%
For example, a software consultant earning €60,000 with a 78% coefficient has taxable income of €46,800. After deducting INPS contributions, the 15% flat tax is applied to the remainder.
Eligibility Requirements
To qualify for the Regime Forfettario, you must meet all of the following conditions:
- Annual revenue must not exceed €85,000
- You must not have employment income exceeding €30,000 in the same year (unless the employment has ended)
- You must not participate in partnerships (societa di persone) or SRLs with more than minimal involvement
- You must not operate primarily with a single client who was your employer in the previous two years
- Annual expenses for employees and collaborators must not exceed €20,000
Calculating Your Tax: A Worked Example
Consider a graphic designer in their second year of business with €50,000 in revenue:
- Profitability coefficient: 78% → Taxable base: €39,000
- INPS Gestione Separata (26.72%): €10,421
- Taxable income after INPS: €39,000 - €10,421 = €28,579
- Flat tax (15%): €28,579 × 15% = €4,287
- Total tax + INPS: €14,708
- Net income: €50,000 - €14,708 = €35,292
Compare this to the ordinary regime, where the same income could face IRPEF rates of 23-35% plus addizionali — the savings are substantial.
Advantages and Disadvantages
Advantages:
- Significantly lower tax rate compared to ordinary IRPEF
- No IVA obligations — no quarterly or monthly IVA filings
- Minimal bookkeeping — just invoices and a register of receipts
- No electronic invoicing requirement (though it became mandatory from 2024 for forfettari too)
Disadvantages:
- You cannot deduct actual business expenses (only the fixed coefficient applies)
- No detrazioni fiscali for personal expenses (medical, mortgage interest, etc.)
- Revenue ceiling may limit business growth
- Not charging IVA may be disadvantageous for B2B clients who cannot recover input IVA
Use our Italy contractor calculator to compare the Regime Forfettario against the ordinary regime for your specific situation.