03 - Italy's Flat-Rate Tax Regime (Regime Forfettario) for Indie Makers: Optimization

How much tax you pay under the regime forfettario

If you sell software, subscriptions or digital services on your own, the question that comes before any price is: out of every hundred euros collected, how many are left? Under the regime forfettario (Italy's flat-rate scheme for small sole traders and professionals with a partita IVA, an Italian VAT registration) the answer has a simple shape. You do not subtract expenses: you apply to the revenue actually received a profitability coefficient that depends on your ATECO code (the Italian classification of economic activities), and on the result you pay a substitute tax (imposta sostitutiva) of 15%, reduced to 5% if you meet the conditions for new activities. This is what law 190/2014 says, article 1, paragraphs (commi) 64 and 65, in the consolidated text I read on Normattiva (the Italian state's online database of legislation) on 2026-11-13.

This article explains the rule, shows a calculation as a simplified example and declares what it does not verify. It is not tax advice: every real case has details (other activities, income from employment, collaborating family members) that change the result, and for those you need an accountant (commercialista). The rules can also change: always check that the text in force is the one cited here.

Who can use it and who cannot

Access depends on two thresholds and on a series of exclusions. Paragraph 54 requires, in the previous year, revenue or fees not above 85,000 euros, and expenses for ancillary work, employees and collaborators not above 20,000 euros gross. Paragraph 55 specifies that, if you carry on several activities with different ATECO codes, the revenue of all of them is added up. Whoever starts an activity can declare, in the notice of start of activity, that they presume they meet the requirements (paragraph 56).

The exclusions in paragraph 57 are the ones that most often surprise an indie maker, and they deserve to be read with your own data in front of you.

• Other special VAT schemes or flat-rate income schemes (letter a).
• Non-residents, except residents in the European Union or in the European Economic Area with adequate exchange of information who earn in Italy at least 75% of their income (letter b).
• Shareholdings in partnerships, associations or family businesses, or control of limited liability companies that carry on activities connected with yours (letter d).
• Activity carried out mainly for current employers or those of the previous two years, or for persons connected with them (letter d-bis).
• Income from employment and similar above 30,000 euros in the previous year, a threshold that does not apply if the employment relationship has ended (letter d-ter).

For someone with a job who builds the product in the evening, the last two items are the decisive ones. Letter d-bis excludes whoever works for their own employer: if your first customer is your own company, the regime is not for you. Letter d-ter takes you out of the regime if your salary in the previous year exceeds 30,000 euros and the employment has not ended. The other items are rarer, but a stake in another company is easily forgotten: check it before opening the partita IVA.

How the tax is calculated, step by step

Paragraph 64 defines the procedure: to the revenue or fees received (so on a cash basis, in the year) you apply the coefficient of Annex 4, which differs by group of ATECO codes. The substitute tax is calculated on the income obtained that way. The social security contributions paid are deducted from the income determined in this way. The costs you incur do not enter the calculation: if you spend more than the share the coefficient leaves you, there is no deduction.

In Annex 4 (text in force from 2019-01-01, latest version on Normattiva) codes 58 to 63 fall in the group "Altre attività economiche" (other economic activities) with a coefficient of 67%. Codes 69-75 and 85, which include professional, scientific and technical activities and education, are in the group with a coefficient of 78%. Retail trade, for example, is at 40%. Your ATECO code is the one that appears when you opened your partita IVA: read it there, do not guess it.

The listing below puts these steps into code. It uses Decimal so as not to accumulate floating-point errors on the cents, and ROUND_HALF_UP to round the way you do by hand. The contributions (3,000 euros) are a number invented for the example, not an INPS rate (INPS is the national social security institute): the same goes for the revenue. The function calcola adds up, group by group, the revenue multiplied by the coefficient, subtracts the contributions and applies the rate; verdetto_soglie compares the total of all codes with the thresholds of paragraphs 54 and 71.

# SIMPLIFIED example of the forfettario calculation (L. 190/2014, art. 1, paragraphs 54-89).
# Not advice: it ignores advance payments, contribution reductions, exclusion grounds
# and every special case. The percentages are those read on Normattiva on 2026-11-13.
from decimal import Decimal as D, ROUND_HALF_UP

SOGLIA_ACCESSO = D("85000")      # paragraph 54, letter a): revenue of the previous year
SOGLIA_USCITA_IMMEDIATA = D("100000")  # paragraph 71: above it, you leave in the same year
ALIQUOTA_ORDINARIA = D("0.15")   # paragraph 64
ALIQUOTA_STARTUP = D("0.05")     # paragraph 65, first year and the four following, if the conditions are met
# Annex 4: coefficient per group of ATECO codes (only the two the example needs here)
COEFFICIENTI = {"58-63 (information and communication)": D("0.67"),
                "69-75 (professional and technical activities)": D("0.78")}

def euro(x):
    return x.quantize(D("0.01"), rounding=ROUND_HALF_UP)

def calcola(ricavi_per_gruppo, contributi_versati, aliquota):
    # paragraph 64 applies the coefficient to revenue RECEIVED, group by group
    reddito = sum(r * COEFFICIENTI[g] for g, r in ricavi_per_gruppo.items())
    imponibile = max(reddito - contributi_versati, D("0"))   # contributions are deducted
    return euro(reddito), euro(imponibile), euro(imponibile * aliquota)

def verdetto_soglie(totale):
    if totale > SOGLIA_USCITA_IMMEDIATA:
        return "above 100,000: the regime ends in the same year"
    if totale > SOGLIA_ACCESSO:
        return "above 85,000: the regime ends from the following year"
    return "within 85,000"

casi = [
    ("A) 30,000 euros, group 58-63 only, rate 15%",
     {"58-63 (information and communication)": D("30000")}, D("3000"), ALIQUOTA_ORDINARIA),
    ("B) as A, rate 5% (conditions of paragraph 65 to be checked)",
     {"58-63 (information and communication)": D("30000")}, D("3000"), ALIQUOTA_STARTUP),
    ("C) 20,000 to group 58-63 and 10,000 to group 69-75, rate 15%",
     {"58-63 (information and communication)": D("20000"),
      "69-75 (professional and technical activities)": D("10000")}, D("3000"), ALIQUOTA_ORDINARIA),
]
for titolo, ricavi, contributi, aliquota in casi:
    reddito, imponibile, imposta = calcola(ricavi, contributi, aliquota)
    print(f"{titolo}\n   income {reddito} | taxable {imponibile} | substitute tax {imposta}")

print("--- thresholds (sum of the revenue of all codes, paragraph 55 letter b)")
for totale in (D("84999"), D("86000"), D("100001")):
    print(f"{totale}: {verdetto_soglie(totale)}")

# Output:
# A) 30,000 euros, group 58-63 only, rate 15%
#    income 20100.00 | taxable 17100.00 | substitute tax 2565.00
# B) as A, rate 5% (conditions of paragraph 65 to be checked)
#    income 20100.00 | taxable 17100.00 | substitute tax 855.00
# C) 20,000 to group 58-63 and 10,000 to group 69-75, rate 15%
#    income 21200.00 | taxable 18200.00 | substitute tax 2730.00
# --- thresholds (sum of the revenue of all codes, paragraph 55 letter b)
# 84999: within 85,000
# 86000: above 85,000: the regime ends from the following year
# 100001: above 100,000: the regime ends in the same year

Read the three cases carefully. In case A, on 30,000 euros the flat-rate income is 20,100 (67%), after 3,000 of contributions the taxable amount is 17,100 and the tax 2,565 euros: that is 8.55% of revenue, not 15%. Case B shows the effect of the 5% rate: 855 euros, but only if the conditions of paragraph 65 are truly met. Case C mixes the two groups and gives a higher income because part of the revenue has 78%. The last part shows that the 85,000 limit does not remove the regime immediately: it removes it from the following year, while above 100,000 it removes it in the same year. The example has a big limit: it ignores advance payments, contribution reductions and every exclusion of paragraph 57, so its output is not a forecast but a demonstration of the mechanism. Run it twice: the output is identical.

The 5% rate: the conditions, read carefully

Paragraph 65 reduces the rate to 5% for the tax period in which the activity started and for the four following ones, on three conditions together. First: in the previous three years you did not carry on artistic, professional or business activity, even in associated or family form. Second: the activity is in no way the mere continuation of an activity previously carried on as an employee or self-employed person (with an exception for the period of compulsory traineeship). Third: if you continue the activity of another person, the revenue of that activity in the previous year must not exceed the limit of paragraph 54.

The second condition is the one freelancers underestimate. If for years you did the same job as an employee or under withholding tax, and now you do it under a partita IVA with the same customers, it is likely not a new activity. Launching a different product, for a different market, is another matter; the classification of your case is decided by the accountant, not by this article.

VAT, invoices and withholding tax

For domestic transactions the forfettario does not charge VAT on the invoice (paragraph 58, letter a): it does not pass the VAT on to the customer (rivalsa), and paragraph 59 exempts it from paying the tax and from almost all the other obligations of Presidential decree (DPR) 633/1972, except numbering and keeping purchase invoices and customs bills, certification of receipts and keeping of documents. Paragraph 67 provides that fees are not subject to withholding tax (ritenuta d'acconto), against a declaration by the taxpayer that the income is subject to the substitute tax.

On sales to consumers in other European countries you have to distinguish. For electronic services supplied to a non-taxable person, Article 58 of Directive 2006/112/EC places the supply where the customer is established or resides, and Article 59c provides for a threshold of 10,000 euros a year in total for services and goods to consumers in other Member States, below which the supplier's place remains applicable. How this rule combines with your position as a forfettario, and whether you can use the One Stop Shop (OSS, Articles 369a et seq.), I did not verify on an open Italian official source today: it is the first point to take to the accountant before selling subscriptions in Europe.

On electronic invoicing I did not open a sufficient source to describe the obligations of the forfettario, and I do not describe them. I only point out that article 1 of legislative decree 127/2015 appears on Normattiva, in the version in force from 1 January 2027, as repealed by legislative decree 10/2026, the VAT consolidated act (testo unico IVA): the legal references of many obligations will change number, and guides written earlier must be rechecked.

Social security contributions

Contributions are paid on top of the tax, and for many people they are the part that weighs the most. Law 190/2014 provides that whoever carries on a business activity may apply the reduced contribution regime (paragraphs 76-84), with contributions reduced by 35% on the flat-rate income (paragraph 77). Paragraph 77 refers to the taxable base of article 1 of law 233/1990 and paragraph 76 reserves the relief for those who carry on a business activity; the reduction ends together with the regime (paragraph 82). Whether your activity is a business or a professional one, and which fund it falls under, is not established by this article. The rates and minimums for the current year are published by INPS in an annual circular: I did not verify them and I do not report them. Ask the accountant and INPS which fund your activity falls under, because the payment changes substantially.

Common mistakes

• Counting expenses. They do not enter the calculation of paragraph 64: your profitability is decided by the coefficient.
• Calculating tax on the month's gross turnover. The calculation is annual, on what is received.
• Ignoring the exclusion for the employer. It also applies to persons connected with them.
• Forgetting contributions in the quote. The tax is only a part of the levy.

These are four mistakes with the same root: reasoning by feel instead of redoing the calculation with the rule. The first makes you overestimate the advantage of a purchase, the third can make you lose the regime, and the last makes the product look more profitable than it is. The site's partita IVA management tool has a presentation page; I did not verify what it calculates, so use it as a reminder and not as a source of truth.

Frequently asked questions

If I collect 90,000 euros can I stay in the forfettario?

For that year yes, but not the year after: paragraph 71 says the regime ends from the year following the one in which a condition of paragraph 54 ceases to be met. If you exceed 100,000 euros, on the other hand, the regime ends in the same year and VAT is due on the transactions that lead to exceeding it.

Do I have to charge VAT to customers?

For domestic transactions no, according to paragraphs 58 and 59 of law 190/2014. For customers in other European states the picture is different, see above, and it must be verified with a professional before selling.

Can I deduct the hardware and software subscriptions I buy?

In the calculation of paragraph 64 the income is obtained by applying the coefficient to revenue, so expenses are not deducted. The advantage of the regime is simplicity, not optimization: if your real expenses far exceed the share left by the coefficient, an ordinary regime may be better. The comparison is made by the accountant with your numbers.

What you can do now

You can read the requirements and exclusions of paragraphs 54-57, calculate with a program the substitute tax and the taxable amount starting from revenue and ATECO group, recognize when the regime ends, and you know which questions to bring to the accountant on European VAT, contributions and electronic invoicing. The articles on payments and on the risk of getting tax wrong take up these points from other angles, and the first article shows how to estimate fixed costs.

To get found by the customers who will pay those taxes, move on to organic marketing; to evaluate with a critical eye the figures you find about other people's earnings, read the article on success stories.