Italy’s forfettario regime in 2026: requirements, benefits and exclusions

In brief

The regime forfettario is for individuals carrying on a business, trade or profession. It simplifies VAT and accounting and uses a substitute tax. Taxable income is not actual profit: receipts are multiplied by an activity-specific profitability coefficient. The ordinary receipts threshold for 2026 is €85,000, subject to all other requirements and exclusions. The law uses the spelling “forfetario”; “forfettario” is also widely used.

What does the regime involve?

It is the default regime for eligible individuals unless they opt for ordinary taxation. In general, no VAT is charged on domestic transactions and input VAT is not recoverable. Ordinary accounting-record requirements are simplified, but invoices and other documents must still be issued and retained, electronic invoicing requirements met, returns filed and applicable tax and contribution obligations fulfilled. Costs, investments, social security, other income and customer type all affect the overall result.

How taxable income and tax are calculated

The coefficient depends on ATECO classification. Pending approval of coefficients based on ATECO 2025, the applicable rules refer to the corresponding ATECO 2007 classification. Actual ordinary expenses, such as rent, computers, vehicles, advice or utilities, are not deducted individually. Businesses with identical receipts may therefore have very different outcomes.

The ordinary substitute tax rate is 15%. A 5% rate may apply in the start year and the next four years only if all the conditions for a new activity are met.

The 5% rate is not automatic

Conditions include not having carried on a business, artistic or professional activity in the previous three years; the activity must not merely continue prior employment or self-employment, apart from qualifying compulsory professional practice; and, where continuing another person’s activity, the previous year’s receipts must respect the required threshold.

What should be compared?

• Actual costs: high expenses can make deemed taxable income higher than the real economic margin.
• Input VAT: non-recoverable VAT is a cost, particularly on significant investment.
• Customers: the comparison differs between private customers and VAT-registered businesses.
• Contributions: INPS artisan/retailer schemes, Gestione separata and professional funds have different rules.
• Personal tax reliefs: substitute tax is not IRPEF. Without other IRPEF-taxed income, some personal credits may not be usable.
• Cash flow: balances and advance payments for taxes and contributions can fall in the same period.
• Growth: plan a move to ordinary taxation before receipts approach the thresholds.

The optional 35% contribution reduction

Eligible artisans and retailers can apply for the reduced contribution scheme. It does not apply to professionals in Gestione separata or a professional pension fund. Lower payments can affect credited pension coverage, so assess more than the immediate saving.

Main requirements in 2026

Check the previous year and the circumstances in the year of application: revenue or fees not above €85,000, annualised where required and combined across activities; gross qualifying employee, collaborator and similar labour costs not above €20,000; no statutory exclusions; and correct activity classification and coefficient. For a new activity, expected eligibility is stated at the start and then checked against actual figures. Monitor relevant cash receipts, not simply invoices that have been issued but remain unpaid.

Main exclusions

• Special VAT regimes or other flat-rate income determination regimes.
• Tax residence abroad, except qualifying EU/EEA residents in jurisdictions with adequate information exchange who earn at least 75% of total income in Italy.
• Exclusive or predominant sales of buildings, parts of buildings, building land or new means of transport.
• Concurrent participation in partnerships, professional associations or family businesses.
• Direct or indirect control of an SRL or an associazione in partecipazione carrying out activities directly or indirectly connected to the taxpayer’s own activity. A shareholding alone does not always exclude access: control and the activity must be examined together.
• Activity mainly for the current employer, an employer from either of the preceding two tax years or related parties, subject to specific legal exceptions, including compulsory practice and certain certified mixed employment arrangements.
• Employment and similar income from the previous year above €35,000 for application in 2026. The test may not apply where employment has ceased, but pensions and similar income need specific scrutiny. The €35,000 threshold is temporary; the structural threshold is €30,000 unless legislation changes.

Exclusions cannot be reduced to “how much did I invoice?”. Shareholdings, former employers and other income should be reviewed annually.

What if receipts exceed €85,000 or €100,000?

If receipts exceed €85,000 but do not exceed €100,000, the regime ends from the following year. If receipts exceed €100,000, it ends in the same year: income for the whole year follows ordinary rules, while VAT applies from the transaction that causes the threshold to be exceeded. This requires immediate action. €100,000 is not an alternative ordinary limit for staying in the regime.

Practical checklist

Describe the work and identify ATECO; forecast receipts, costs, investments and non-recoverable VAT; check social security and possible reductions; review employment income, customers, former employers and shareholdings; compare disposable income under both regimes; and prepare a cash plan for balance and advance payments.

Frequently asked questions

Is forfettario always the cheapest option?

No. Actual costs, VAT, contributions, personal reliefs and expected growth matter.

Can I also be employed?

Potentially, but check the 2026 threshold for 2025 employment and similar income, cessation conditions and the predominant-employer rule.

Does an SRL shareholding always exclude me?

No. Control and the relationship between activities must be examined together. Partnerships and professional associations have a separate exclusion.

Can I deduct business costs?

Ordinary expenses are reflected through the coefficient, not deducted individually. Compulsory contributions may be deducted under the applicable rules.

Forfettario assistance in Monza

A guide cannot establish eligibility for an individual taxpayer. Studio Frigerio can assess your activity, costs, contributions, other income and plans, and help organise ongoing compliance.