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Flat-rate scheme news: 5% flat tax applicable in case of invoices issued to the former foreign employer

2024 news on the flat-rate scheme: 5% flat tax for those who transfer their residency to Italy.

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The Italian Revenue Agency’s Reply n. 50/2024 clarifies one of the most frequent cases for those who transfer their residency to Italy and continue to carry out their professional activity as freelancers. It is the case of entrepreneurs or freelancers who intend to apply a flat-rate scheme in Italy and perform their activity mainly in favour of their former foreign employer.

5% flat-rate scheme: the news

As already known, one of the causes preventing the application of the flat-rate scheme (5% flat tax) is the performance of a self-employed activity mainly in favour of the former employer.

Law n. 190/2014, art. 1, par. 57, lett. d-bis prohibits access to the favourable regime to those who derive their annual remuneration from their employer or former employer, for more than 50% of the total, according to the conditions provided by the following provision:

“(…) natural persons whose activity is carried out mainly in favour of employers with whom they currently have or have had an employment relationship during the two previous tax years, or in favour of subjects directly or indirectly linked to such employers, excluding those subjects who start a new activity after having concluded a mandatory training period for the purpose of exercising arts or professions, may not avail themselves of the flat-tax regime (…)”

To learn all the requirements for applying the flat-tax scheme, take a look at our complete guide on the 5% flat tax.

The effects of the Revenue Agency’s reply

Reply n. 50/2024 modifies this important condition, only in the case of taxpayers who are foreign tax residents and intend to move their tax residency to Italy and carry out a self-employment activity in favour of their former foreign employer.

The taxpayers’s case

Subject Alfa resides abroad and intends to move her residency to Italy, starting from January 1st, 2024.

To this purpose, the taxpayer agrees with her employer to:

  • Terminate her employment contract by 31/12/2023;
  • Open an Italian VAT position, starting from 01/01/2024;
  • Invoice her foreign employer for her services;
  • Have the possibility to carry out her activity and invoice also in favour of other companies.

Subject Alfa also declares that she has received a remuneration for employed work exceeding €30,000 during 2023.

The taxpayer thus asks the Revenue Agency to be able to open an Italian Partita Iva and benefit from the flat-tax regime.

The Revenue Agency’s reply to Ruling n. 50/2024

The Revenue Agency starts off by recalling that being an Italian tax resident is an essential condition to be able to benefit from the flat-tax scheme.

Therefore, the Agency’s reply starts from the assumption that the taxpayer is considered as a foreign tax resident for the year 2023 and an Italian tax resident for the year 2024. Thus, the assessment of the requirements for tax residency shall be dealt with separately.

If you want to know how tax residency is determined and what obligations arise from it, read our complete guide on tax residency in Italy.

The Agency also recalls that the reply is given on the basis that all other requirements for the flat-rate scheme are met.

Want to check if you meet all the requirements for the 5% flat tax? Our Senior Tax Advisors are available for an online tax consultation.

Invoicing a former foreign employer is possible

With reference to the cause of exclusion provided by letter d-bis of the aforementioned par. 57, the Agency recalls that the aim of such provision is to prevent an employment activity from being artificially transformed into a self-employment activity.

Such working activity is intended within Italian legislation and within the employment contracts provided by Italian law.

In case of a foreign employment contract, such impeding cause ceases to exist, since there is no link between the territory of the Italian State and the employment income received abroad.

Therefore, the taxpayer will be able to invoice and receive more than 50% of her self-employment income from her former foreign employer, without losing the flat-tax scheme.

How to obtain the 5% flat tax with an employment income exceeding €30,000

The Agency responds positively also to the second question raised by the taxpayer, who has received more than €30,000 in the previous year, as employment income.

Indeed, letter d-ter of paragraph 57 provides that the following subjects may not benefit from the flat-tax regime:

“the subjects that received employment income and assimilated income, as per artt. 49 and 50 of the Consolidated Income Tax Act (Presidential Decree n. 917 of December 22nd 1986), exceeding the amount of €30,000 during the previous year; the verification of such threshold is irrelevant if the employment relationship has ended.”

Therefore, only if the taxpayer terminates her employment relationship by 31/12/2023, the cause of exclusion from the regime will not be valid and the taxpayer will be able to apply the flat-tax scheme also in the presence of employment income exceeding the €30,000 threshold (Circular n. 32/E of December 5th 2023).

When the 5% flat tax becomes 15% flat tax

This reply by the Revenue Agency fails to highlight an important aspect, related to the application of the flat-tax regime. Indeed, the Agency delivers a favourable opinion with regard to the application of the regime. However, it does not specify the tax rate to be applied.

It is to be noted that the flat tax provided for the flat-tax regime is equal to 15%, while it is possible to reduce taxation to 5%, only if specific conditions are met.

One of the conditions to obtain the 5% flat tax is that the activity carried out is not a mere continuation of an activity that was previously carried out, in the form of employment or self-employment. The case in which the previous activity consisted in a mandatory training period, for the purpose of exercising arts or professions, is excluded.

Therefore, on the basis that the aforementioned subject Alfa carries out the same activity in favour of her former employer, such income will not be taxed at 5%, but it will be subject to the 15% rate.

For more information on the rate applicable to subjects who continue an activity that was previously carried out abroad, read our comment on Reply n. 197/2022.


In a nutshell, foreign residents who intend to transfer their residency to Italy may opt for the flat-rate scheme, even if:

  • They have received an employment income exceeding €30,000 during the previous year, provided that they terminated their employment contract by December 31st of that year.
  • They carry out an activity in the form of self-employment, through an Italian VAT number, mainly in favour of the former foreign employer;
  • They will have to apply a 15% tax rate (not the 5% rate) on the income received, since the activity represents a prosecution of an activity that was previously carried in the form of employment. In case of a different activity, it will be possibile to apply a 5% tax rate.

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Regulatory Framework

Reply to ruling n. 50/2024

Reference (Italian only)

Law n. 190 of December 23rd 2014, par. 57

Reference (Italian only)

Circular  n.  32/E  of December 5th 2023

Reference (Italian only)

Reply to ruling n. 197/2022

Reference (Italian only)

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