How the regime forfettario actually works
The regime forfettario is Italy's flat-rate tax scheme for individual freelancers and sole traders. Instead of deducting your real business expenses like the ordinary regime, it applies a fixed coefficiente di redditività — a percentage set by your ATECO activity code — to your gross revenue. Whatever that percentage produces is treated as your taxable income, regardless of what you actually spent. A management consultant with a 78% coefficient and €50,000 in revenue is taxed as if €39,000 were profit, whether their real costs were €2,000 or €20,000.
On that taxable base, you pay a single imposta sostitutiva (substitute tax) instead of IRPEF, regional and municipal surcharges. It replaces several ordinary-regime taxes with one flat rate: 15% normally, or 5% for the first five years of a genuinely new activity that meets specific conditions (see the FAQ). There's no VAT to charge, collect, or reclaim on domestic sales, and bookkeeping is far lighter than the ordinary regime — no VAT registers, no complex depreciation schedules.
Separately from the substitute tax, you owe mandatory pension contributions to INPS. Which scheme applies depends on your activity, not your preference: professionals without their own dedicated fund (Cassa) go into Gestione Separata; craftspeople register as Artigiani; shopkeepers and commercial activities register as Commercianti. Gestione Separata charges a straight percentage of taxable income with no fixed minimum. Artigiani and Commercianti instead have a fixed contribution calculated on a minimum income threshold (the minimale) regardless of how much you actually earn below it, plus a percentage above it — and, unlike Gestione Separata, they can opt into a 35% reduction on both portions if they choose to trade some pension coverage for lower payments now.
Worked example
Take a freelance consultant (coefficient 78%) starting their first year of activity, expecting €40,000 in revenue, registered in Gestione Separata:
- Taxable base: €40,000 × 78% = €31,200
- Substitute tax at the 5% startup rate: €31,200 × 5% = €1,560
- INPS (Gestione Separata) at 26.07%: €31,200 × 26.07% ≈ €8,134
- Net income: €40,000 − €1,560 − €8,134 ≈ €30,306
Note the substitute tax base and the INPS base are related but not identical in this simplified model: strictly, INPS contributions actually paid in the year are deductible from the taxable base before the substitute tax is applied, which lowers the tax slightly further in real filings. This calculator applies that deduction; hand-worked examples that skip it will show a marginally higher tax figure.
Coefficient table by activity
| ATECO group | Coefficient |
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Frequently asked questions
Who qualifies for the regime forfettario?
Individuals with annual revenue under €85,000, gross annual staff costs under €20,000, income from employment or pensions under €35,000 in the prior year, and none of the specific exclusions — special VAT schemes, certain shareholdings in partnerships or closely-held companies doing related work, or non-EU residency without at least 75% of income earned in Italy.
What is the €85,000 ceiling exactly?
It's the maximum revenue actually collected (cash basis, not invoiced) in a calendar year to remain eligible the following year. A second, higher threshold of €100,000 triggers immediate exit mid-year: cross it, and VAT applies from the transaction that breaches it, not from the following January.
What happens if I exceed the ceiling?
Between €85,000 and €100,000: you exit the regime from 1 January of the following year. Above €100,000 in the same year: you exit immediately, with ordinary VAT and income tax rules applying from that point in the year forward.
Do forfettari charge VAT?
No — invoices are issued without VAT, and VAT paid on purchases isn't deductible. Some cross-border transactions (reverse charge, intra-EU acquisitions, imports) still carry their own VAT obligations even under the regime.
How does this compare to the ordinary regime?
The ordinary regime taxes real profit (documented revenue minus documented costs) at progressive IRPEF rates plus local surcharges, reaching roughly 43% at the top band, and requires full VAT compliance. The forfettario trades that complexity and precision for a flat coefficient and flat rate — it tends to suit freelancers whose real costs are lower than their coefficient assumes, and to disadvantage those with high genuine deductible expenses. This tool doesn't model the ordinary regime for direct comparison; if your costs are high relative to revenue, get a comparison from an accountant before choosing.