Flat-Rate Tax Regime 2027 in Italy – Planned Changes and Potential Implications
The Italian government intends to increase the revenue threshold for the flat-rate tax regime (regime forfettario) from €85,000 to €100,000, but only for the purposes of the substitute tax. For VAT purposes, the threshold will remain at €85,000 for the time being, as such an increase requires special authorization from the EU.
Furthermore, the €35,000 threshold for employment income is expected to remain in place for 2027.
| Measure | Current Rules | Possible Changes in 2027 |
|---|---|---|
| Revenue threshold for the substitute tax | €85,000 | €100,000 |
| VAT exemption | €85,000 | €85,000, pending special EU authorization |
| Immediate exit during the current year | Above €100,000 | Above €115,000 for the substitute tax, above €100,000 for VAT |
| Employment income threshold | €35,000 | Extension of the €35,000 threshold to 2027 |
| Substitute tax rate | 15% or 5% | Unchanged |
Individuals who received revenues of up to €100,000 in the previous year could apply the flat-rate tax regime for income tax purposes from 2027 onwards. Taxable income will continue to be calculated by multiplying revenues by the profitability coefficient applicable to the respective business activity. The resulting taxable income is subject to a substitute tax of 15% or 5%.
For VAT purposes, the exemption threshold remains at €85,000, as an increase requires special authorization from the EU. This is therefore expected to result in a dual system from 2027:
| Revenue in the Previous Year | Substitute Tax | VAT |
|---|---|---|
| Up to €85,000 | Flat-rate tax regime (15% or 5%) | Exempt |
| Above €85,000 up to €100,000 | Flat-rate tax regime (15% or 5%) | Ordinary VAT accounting with all related reporting obligations |
| Above €100,000 | Ordinary taxation (IRPEF) | Ordinary VAT accounting with all related reporting obligations |
With our flat-rate tax regime calculator, you can compare the tax burden under the flat-rate regime with that of the regular, progressive IRPEF taxation system.
The planned increase to €100,000 would make the flat-rate tax regime accessible to significantly more sole proprietors and self-employed professionals, noticeably reducing their tax burden. However, for revenues between €85,000 and €100,000, a dual system would emerge: substitute tax applies, but VAT exemption does not – at least until special authorization is granted by the EU.
Further information on the flat-rate tax regime can be found in our glossary article.