Flat-Rate Tax Regime 2026: Taxes, Limits, How It Works

The flat-rate tax regime (regime forfettario) is the most widely used simplified tax regime by freelancers, self-employed professionals, and small businesses with a VAT number in Italy. With a substitute tax of 5% or 15% and simplified bookkeeping, it represents a real opportunity to reduce the tax and bureaucratic burden. In this guide updated for 2026, we cover all the requirements, how taxes are calculated, the profitability coefficients, and the factors to consider before choosing this regime.

What is the flat-rate tax regime

The flat-rate tax regime (regime forfettario) is a tax regime introduced by Law 190/2014 (2015 Stability Law) and subsequently amended several times, most recently by the 2023 Budget Law. It is called "forfettario" (flat-rate) because taxable income is not calculated as revenue minus actual costs, but by applying a flat-rate profitability coefficient to revenue or fees collected.

In practice, the tax authority assumes that a certain percentage of your revenue represents "costs" and only taxes the remainder. It does not matter how many actual costs you incurred: the taxable base is always determined by the coefficient.

Requirements to access the flat-rate regime in 2026

To opt into the flat-rate regime, all of the following requirements must be met:

Access requirements

• Revenue or fees in the previous year not exceeding 85,000 euros
• Expenses for employees and collaborators not exceeding 20,000 euros gross per year
• Tax residency in Italy (or production of at least 75% of income in Italy for EU/EEA residents)

Grounds for exclusion

The following cannot access the flat-rate regime:

• Those who participate in partnerships, professional associations, or limited liability companies (SRL) (if they carry out related activities)
• Those who in the previous year received employment income exceeding 30,000 euros (if the employment relationship is still active)
• Those who use special VAT regimes or flat-rate income determination regimes
• Non-residents (with the exceptions noted above)
• Those who primarily sell buildings, building land, or new means of transport
• Those who invoice more than 50% to their current employer or employer from the previous 2 years

The 85,000-euro threshold

Since 2023, the revenue limit has been raised to 85,000 euros. If you exceeded this threshold in the previous year, you switch to the standard regime from January 1 of the following year. If you exceed 100,000 euros during the year, the exit from the regime is immediate and retroactive for that year, with an obligation to apply VAT to all invoices issued.

Profitability coefficients by ATECO code

The core of the flat-rate regime is the profitability coefficient, which differs for each business sector. Here are the main ones:

The coefficient indicates the percentage of revenue that is taxed. If you are a professional (coefficient 78%) and you collect 50,000 euros, your taxable income is 50,000 × 78% = 39,000 euros.

How taxes are calculated: 5% or 15% substitute tax

The substitute tax under the flat-rate regime can be either 5% or 15%.

Reduced rate of 5%

The reduced 5% rate applies for the first 5 years of business, provided that:

• In the 3 years prior, you did not carry out any business or professional activity (even in associated or family form)
• The activity is not merely a continuation of a previously carried out employed activity (except in the case of mandatory internships)
• If you are continuing another person's activity, their revenue in the previous year did not exceed 85,000 euros

Standard rate of 15%

After the first 5 years, or if the conditions for the 5% rate are not met, the rate is 15%. This rate replaces IRPEF, regional and municipal surcharges, and IRAP.

Complete calculation example

Giulia is a freelance web designer (ATECO code 74.10.21, coefficient 78%) in her second year of business. In 2025, she collected 40,000 euros. Here is the tax calculation:

1. Flat-rate gross income: 40,000 × 78% = 31,200 euros
2. INPS contributions paid (Separate Management, 26.07%): 31,200 × 26.07% = 8,133.84 euros
3. Taxable income: 31,200 - 8,133.84 = 23,066.16 euros
4. 5% substitute tax: 23,066.16 × 5% = 1,153.31 euros

Total taxes and contributions: 8,133.84 + 1,153.31 = 9,287.15 euros
Net income: 40,000 - 9,287.15 = 30,712.85 euros
Effective tax rate: 23.2%

If Giulia were under the standard regime with the same situation, she would pay approximately 7,100 euros in IRPEF + surcharges (average rate ~30% on taxable income) + the same INPS contributions, for a total of approximately 15,200 euros. The savings with the flat-rate regime are nearly 6,000 euros per year.

To calculate your specific situation, use our flat-rate regime tax calculator: enter your revenue, ATECO code, and contributions, and instantly get the tax due and estimated net income.

INPS contributions under the flat-rate regime

Social security contributions vary depending on the pension fund:

INPS Separate Management (professionals without their own fund)

2026 rate: 26.07% of flat-rate income. This applies to all professionals not registered with a professional board that has its own fund (consultants, web designers, copywriters, social media managers, etc.).

Artisans and Traders

Contributions have a fixed portion (approximately 4,200 euros/year for traders, 4,000 for artisans in 2026) due regardless of income, plus a variable portion above the minimum threshold (approximately 18,400 euros). Those under the flat-rate regime can request a 35% reduction on artisan/trader contributions.

Professional pension funds (lawyers, engineers, doctors...)

The rules vary for each fund. For example, the Bar Association Fund requires minimum mandatory contributions regardless of income, plus proportional contributions based on declared income.

Electronic invoicing under the flat-rate regime

Since January 1, 2024, electronic invoicing is mandatory for all flat-rate regime taxpayers, without any exceptions based on revenue volume. Invoices must be issued in XML format through the Exchange System (SDI).

Invoices from flat-rate regime taxpayers have some special features:

• No VAT is charged: the invoice states "Transaction carried out pursuant to Art. 1, paragraphs 54-89, Law 190/2014"
• No withholding tax is applied: the client pays the full amount
• Revenue stamp: mandatory (2 euros) on invoices exceeding 77.47 euros

Advantages and disadvantages of the flat-rate regime

Advantages

• Reduced taxation: 5% for the first 5 years, then 15%
• No VAT: you do not charge VAT to clients and do not deduct VAT on purchases
• Simplified bookkeeping: no VAT registers required, just keep invoices
• No IRAP (regional business tax)
• No withholding tax
• No sector studies/ISA (reliability indices)

Disadvantages

• No deduction of actual costs: if you have many expenses, the flat-rate regime may not be advantageous
• No IRPEF deductions: you cannot deduct medical expenses, mortgage interest, renovation bonuses
• Cannot recover VAT on purchases
• 85,000-euro limit: if you grow, you must change regime
• Penalizing for those invoicing 50%+ to a former employer

When the flat-rate regime is NOT advantageous

The flat-rate regime may not be the best choice if:

1. Your actual costs exceed the flat-rate percentage: if you are a trader (coefficient 40%, flat-rate costs 60%) but your actual costs are 80% of revenue, you would pay taxes on a taxable base of 40% when you actually earn only 20%.
2. You have significant deductions: primary residence mortgage, building renovation bonuses, high medical expenses. These deductions are lost with the flat-rate regime.
3. Your clients are businesses with a VAT number: since they cannot deduct VAT, your price without VAT is competitive. But if you work with private individuals, the absence of VAT is an advantage because your final price is lower.

Example: when the standard regime is better

Marco is an IT consultant (coefficient 78%) with revenue of 60,000 euros and actual costs of 25,000 euros (equipment, software, office rent, car).

Flat-rate regime: taxable income = 60,000 × 78% = 46,800 euros (flat-rate deducted costs: only 13,200 euros)

Standard regime: taxable income = 60,000 - 25,000 = 35,000 euros (actual costs deducted: 25,000 euros)

In this case, the standard regime produces a taxable income 11,800 euros lower. At an IRPEF rate of 35%, the savings on the taxable base is worth approximately 4,130 euros, compared to a lower flat-rate tax (15% vs ~35%). The final calculation depends on the overall situation, which is why our calculator is useful for simulating both scenarios.

Frequently asked questions

Can I switch from the standard regime to the flat-rate regime?

Yes, if you meet all the requirements, you can opt into the flat-rate regime from January 1 of the following year, declaring it in your tax return. No prior notification to the Tax Agency is required, but it is advisable to inform your accountant in advance.

What happens if I exceed 85,000 euros?

If you exceed 85,000 euros but stay below 100,000 euros, you exit the flat-rate regime from the following year. If you exceed 100,000 euros, the exit is immediate and retroactive: you must reissue all invoices for the year with VAT and apply the withholding tax.

Do I have to pay INPS even if I don't invoice anything?

It depends. Those enrolled in the INPS Separate Management pay contributions only on actual income (no income = no contributions). Artisans and traders must pay a minimum annual fixed contribution (approximately 4,000-4,200 euros) even with zero income.

Can someone under the flat-rate regime have employees?

Yes, but expenses for employees and collaborators must not exceed 20,000 euros gross per year. This limit includes gross salaries, fees for coordinated and ongoing collaborations, fees for accessory work, and profit shares due to associates in a profit-sharing arrangement.

How do advance payments and balance payments work?

As with the standard regime, flat-rate regime taxpayers pay taxes through a system of advance and balance payments. The advance payment (equal to 100% of the previous year's tax) is paid in two installments: 40% by June 30 and 60% by November 30. The balance is paid by June 30 of the following year. You can use our calculator to estimate the amounts and plan your payments.

Does the 35% reduced INPS contribution also apply to professionals in the Separate Management?

No. The 35% contribution reduction is reserved exclusively for artisans and traders enrolled in their respective INPS management funds. Professionals in the Separate Management pay the full rate (26.07% in 2026) with no possibility of reduction.