If you have considered setting up Partita Iva in Italy, you may have heard of Regime Forfettario and wondered what it is and what it has to do with opening a VAT account. Although Regime Forfettario may sound intimidating, it’s a simplified and favourable tax regime. But let’s take a step back. Should you want to start working autonomously in Italy, you can open a VAT account under one of two regimes: regime ordinario and regime forfettario. Regime forfettario is a favourable flat-rate tax regime for those who invoice less than €85,000 per year (as of 2025) and are still at the beginning of their careers. It provides tax and contribution benefits as long as the requirements for accessing and remaining in the scheme are met.
Requirements
Professionals who meet the following criteria can join the flat rate scheme in 2025: • Be an Italian tax resident; • Earn less than €85,000 per year with Partita Iva; • Do not earn more than €35,000 per year in case of an additional employment job.
How much does it cost?
1. Income tax
The regime forfettario is attractive because it replaces ordinary progressive income tax with a single 15% substitute tax applied to taxable income.
A reduced 5% rate may apply for the first five tax years, but only if the taxpayer meets the specific start-up requirements provided by Italian tax law.
In particular, the taxpayer must not have carried out any business, professional or artistic activity during the previous three years. The new activity must also not be a mere continuation of a previous employment or self-employment activity.
This means that the 5% rate is not available simply because someone opens a Partita IVA for the first time in Italy. Previous work experience, freelance activity, self-employment or business activity carried out abroad may also be relevant and should be carefully reviewed before confirming eligibility.
For this reason, the application of the 5% rate should always be assessed on a case-by-case basis.
2. Social contributions
In addition to income tax, taxpayers may also need to pay Italian social security contributions. The applicable rate depends on the type of activity and the relevant social security fund. For many freelance professionals registered with INPS Gestione Separata, contributions are calculated on the taxable income determined under the regime forfettario.
What is this taxable income?
Taxable income is the percentage of your earnings that is taxed. In the flat-rate scheme, this percentage depends on your activity area and varies from 40% to 86%. Your tax advisor will help you verify this. Okay, this may seem difficult, but it will be clearer with a practical example!
Sara is a recent graduate who has never worked before and wants to open a Partita Iva and work as a translator. How much will she pay? Annual gross income: €22,000 Tax base for translator: 78% → Taxable income: €17,160 Income tax for “starters”: 5% of the taxable income → €858 Contributions: 25% of the taxable income → €4,290 Total taxes: €858 + €4,290 = €5,148
So much for a brief overview of how the flat-rate scheme works. However, there are countless cases that deserve special attention and should be discussed with your accountant. For further information, please contact us
