For anyone opening a Partita IVA in Italy — Italian or foreign — the regime forfettario is almost always the first option to evaluate. It’s the simplest tax regime, and often the most advantageous, for freelancers and small business owners, but it isn’t right for everyone.
What is the regime forfettario
It’s a simplified tax regime designed for small-scale activities. It simplifies bookkeeping and applies a substitute tax — replacing IRPEF and regional/municipal surcharges — calculated on a flat-rate taxable income, determined by applying a profitability coefficient to revenue, rather than on actual costs incurred.
Main requirements to access it
Not everyone can open a Partita IVA under the regime forfettario. The main requirements are:
- Revenue or fees within the annual threshold set by current legislation
- Employee and similar staff costs within a maximum annual limit
- No controlling shareholdings in companies carrying out activities related to your individual business
- No predominant employment relationship with the same employer in recent tax periods, in certain specific cases
Note: exceeding the revenue threshold during the year triggers an automatic switch to the ordinary regime, which can have retroactive effects in some scenarios. Monitoring your revenue throughout the year is essential.
The reduced tax rates
| Situation | Substitute tax rate |
|---|---|
| New business, first 5 years (if requirements are met) | 5% |
| Ordinary regime forfettario | 15% |
The reduced 5% rate is reserved for those starting a new business who meet specific “novelty” requirements (not having carried out the same activity in the previous three years, among others).
Real advantages of the regime
- Simplified bookkeeping — no VAT to charge on invoices, no periodic settlements
- Single, predictable taxation — useful for planning your net income
- No mandatory electronic invoicing in many cases (with specific exceptions)
When the ordinary regime makes more sense
The regime forfettario calculates taxable income on a flat-rate basis, ignoring actual costs incurred. For activities with high costs relative to revenue (equipment, materials, subcontractors), the ordinary regime — which taxes actual income — can be more advantageous. The right choice depends on a numerical comparison between the two options, calculated for your specific situation.
Practical example: a consultant with low operating costs generally gets the most benefit from the regime forfettario; a craftsperson with significant material costs might pay less tax under the ordinary regime, despite its higher nominal rate.
Considering opening a Partita IVA in Italy and not sure which regime to choose? Contact us for a personalized comparison between the options available. We work in English, Italian, Portuguese and Spanish.