Regime Forfettario: Simplified Tax Regime in Italy

Who Can Qualify

To benefit from the Regime Forfettario, you’ll need to set up a sole proprietorship in Italy (Partita IVA for Lavoro Autonomo) and fulfill the following requirements:

• Your combined annual revenue must not exceed 85,000 €, even if you conduct multiple business activities under different ATECO codes
• To remain in the Regime Forfettario, you cannot have spent more than 20,000 € per year on employee salaries, freelancer fees, or other labor-related compensations
• You cannot combine the Regime Forfettario with other tax schemes, such as the impatriate tax regime (Regime dei Lavoratori Impatriati) 
• You are not allowed to deduct Input Value-Added Tax (TAX) on your invoices 
• You cannot have additional employment or pension income exceeding 35,000 € per year if you want to remain in the Regime Forfettario
• You cannot deduct all your business expenses (rent, eating out, travel, etc.) individually; instead, your taxable income is automatically reduced by a standard percentage (coefficiente di redditività) based on your business activity
• You cannot directly or indirectly control a business, or be a member of a partnership operating in the same line of activity or business sector
• You are not eligible if your main activity involves selling property, urbanized land, or new vehicles
• You do not qualify for the Regime Forfettario if your freelance or self-employed work is mainly or exclusively done for your former employer (from the past two tax years)

This simplified tax regime ceases to apply starting the year following the loss of even one of the above-mentioned eligibility requirements. However, if annual revenues exceed 100,000 €, the regime stops in the same year the threshold is exceeded, and you’ll have to transition to the ordinary tax regime (regime ordinario), pay standard tax rates, and start maintaining proper accounting records.

This also means that once breached, Value-Added Tax (VAT) becomes due on those transactions that caused the threshold to be surpassed, and all subsequent transactions.

Benefits of the Regime Forfettario

The Regime Forfettario offers a simple, streamlined way for freelancers and small businesses in Italy to manage taxes with reduced bureaucracy. Under this set-up, you are exempt from:

• Value-Added Tax (VAT) and VAT filing obligations
• Keeping detailed accounting records and maintaining full double-entry bookkeeping
• Paying corporate income tax: no tax brackets, no progressive rates: You pay a flat tax of 5% for the first 5 years
• Itemizing business expenses

The Regime Forfettario is ideally suited to programmers, designers, and marketing professionals (Digital Nomads) earning less than 85,000 €/year. Artisans and retailers operating under the Regime Forfettario can request a 35% reduction on INPS social security contributions.