What is the Regime Forfettario?
The regime forfettario is Italy's simplified flat-rate tax regime for self-employed individuals and small businesses. Instead of paying progressive IRPEF rates on actual net income, you pay a single substitute tax of 15% on a deemed income figure calculated from your revenue. This substitute tax replaces IRPEF, regional and municipal surcharges, and IRAP (the regional production tax).
For many freelancers and small business owners in Italy, the regime forfettario offers significantly lower effective tax rates than the ordinary progressive system — and dramatically simplified accounting.
Eligibility Requirements
To access the regime forfettario, you must:
- Revenue cap: Annual revenue must not exceed €85,000. If you exceed this in a calendar year, you exit the regime from the following year. If you exceed €100,000 in a single year, you exit immediately mid-year.
- No employment income over €30,000: If you also have employment income exceeding €30,000 in the same year, you cannot use the forfettario
- No controlling stake in companies: You cannot hold a controlling participation in a company operating in the same sector as your freelance activity
- No employment with a current or recent client: Specific anti-avoidance rules prevent employees from leaving a job and immediately invoicing their former employer as a forfettario freelancer (within 2 years)
How the Tax Is Calculated
The taxable income is not your actual revenue minus your actual expenses. Instead, a fixed "profitability coefficient" is applied to your revenue — the coefficient varies by ATECO business category, typically ranging from 40% to 86%.
Example: A software developer (ATECO code 62.01) has a profitability coefficient of 67%. With €60,000 in annual revenue:
- Taxable income: €60,000 × 67% = €40,200
- Tax: €40,200 × 15% = €6,030
- Effective rate on actual revenue: ~10%
Compare this to the same income under ordinary IRPEF, where you'd pay 23–35% on a much larger taxable base after deducting actual expenses.
The 5% Rate for New Activities
For the first five years of a genuinely new business activity (one you haven't previously carried out as a Partita IVA holder or as an employee in the same sector), the substitute tax rate drops to 5% instead of 15%. This makes the regime especially attractive for new entrants to self-employment.
What the Forfettario Doesn't Include
- No VAT collection: Forfettario holders don't charge VAT on their invoices and can't reclaim input VAT on purchases. For B2C work this is fine; for B2B clients who need to reclaim VAT, the inability to invoice with VAT can occasionally be a disadvantage.
- No expense deductions: Because tax is calculated on deemed income (revenue × coefficient), you can't deduct actual business expenses. If your real expenses are high relative to your revenue, the ordinary regime may yield a lower tax bill.
- INPS still applies: The forfettario doesn't replace INPS contributions. Forfettario holders enrolled in the artisan (Artigiani) or trader (Commercianti) funds can request a 35% reduction on their INPS contributions. This reduction does not apply to Gestione Separata — professionals in Gestione Separata pay the full 26.07% rate regardless of tax regime.
Electronic Invoicing
Since 2024, fattura elettronica is mandatory for all forfettario holders. There's no longer an exemption for low-revenue forfettario users — everyone must transmit invoices through the SDI system.