Flat-Rate Regime: What is It?
The flat-rate regime (Law No. 190 of December 23, 2014) is a simplified tax system that replaces personal income tax (IRPEF), offering tax benefits and limitations for VAT holders.
For further details, read our informational guide on the Flat-Rate Regime.
If you need assistance with your VAT registration, check out our services for opening and managing an Italian VAT number.
Flat-Rate Regime 2025 Requirements: Updates
The flat-rate regime is available to individuals conducting business, artistic, or professional activities. However, specific requirements must be met in the year preceding the adoption of the Flat Tax system.
What Are the Requirements?
Revenue and Income Limits
Revenues and income must not exceed €85,000 gross. If multiple activities are conducted under different Ateco codes, the combined revenue and income for all activities must remain within this threshold.
Tax Residency in Italy
Non-residents in Italy cannot apply for the flat-rate regime unless they meet specific exceptions.
(2025 UPDATE) Increased Income Threshold for Employees and Pensioners
Employees and pensioners can also opt for the flat-rate regime, provided their gross annual income from the previous year is €35,000 or less.
This threshold has been raised—for 2025 only—to €35,000 by the 2025 Budget Law (Law No. 207 of December 30, 2024, Article 1, Paragraph 12). Previously, the limit was €30,000 (Article 1, Paragraph 57 d-ter of Law No. 190/2014).
This limit does not apply if the employment relationship ended by December 31 of the previous year, provided no pension income or income from other employment relationships was earned during the same year.
Activities Conducted for Former Employers
The flat-rate regime cannot be accessed by individuals issuing invoices:
- Primarily to employers with whom they currently have an employment relationship;
- To former employers with whom they had an employment relationship in the previous two years; or
- To entities directly or indirectly linked to such employers.
An exception applies for those starting an activity after completing mandatory training, allowing them to invoice primarily to the firm where the training was completed.
Participation in Companies
The regime is not available to individuals who hold stakes in partnerships, professional associations, or family businesses.
For limited liability companies (LLCs), exclusion applies if the individual directly or indirectly controls more than 50% of the company’s share capital, and the company conducts an activity identical to or related to the individual’s activity. Both conditions must be met for incompatibility to arise.
Limit on Employment-Related Expenses
In the previous year, expenses for employment and collaborations must not exceed €20,000 gross. This includes costs for supplementary work, employees, collaborative contributions, and services provided by the entrepreneur or their family members.
Incompatibility with Special Regimes and Specific Activities
The flat-rate regime is incompatible with special VAT regimes or other flat-rate income determination methods.
It also cannot be applied by individuals exclusively or predominantly engaged in the sale of real estate, building plots, or new vehicles.
Causes for Loss of Flat-Rate Scheme
The flat-rate regime remains applicable until an exclusion criterion arises or one of the required conditions is no longer met. In such cases, exclusion occurs starting from the following year.
However, if revenues or income exceed €100,000, exclusion applies in the same year the €85,000 threshold is surpassed.
Flat-Rate Regime and Employment: 2025 Updates
Among the causes for exclusion is the provision that:
Individuals cannot access the regime if their activity is primarily conducted for employers with whom they currently have or have had an employment relationship in the previous two tax years, or for entities linked to those employers.
However, Law No. 203 of December 13, 2024, Article 17 introduces a partial exemption to this exclusion under letter d-bis) of Paragraph 57, Article 1 of Law No. 190 of December 23, 2014.
This exemption applies to specific individuals under certain conditions.
New 2025 Flat Tax Regime: requirements to benefit from the exemption
The requirements for taking advantage of this waiver are as follows.
Subjective Requirements
- Individuals applying the flat-rate regime must be registered in professional associations or registers for liberal professions.
Activities falling under Article 409 No. 3 of the Code of Civil Procedure are included:
“agency, sales representative and other collaborative relationships that result in the performance of continuous and coordinated work, predominantly personal, even if not of a subordinate nature. Collaboration is considered coordinated when, in accordance with the coordination arrangements mutually agreed upon by the parties, the collaborator independently organizes the work activity.”
Exception: In the absence of enrollment in professional registers or registers, the disqualifying cause is also waived with respect to individuals engaged in self-employment, in the cases and subject to the terms and conditions provided by specifications under Article 8 of Decree Law No. 138 of August 13, 2011.
Objective Requirements
The activities carried out as a business or self-employment under the flat-rate scheme that benefit from the exemption are:
- Activities carried out for employers employing more than 250 employees. The number of employees is calculated as of January 1 of the year in which the contract of employment and the contract of self-employment or professional work were entered into at the same time;
- Activities carried out by workers employed at the same time on permanent part-time contracts: working hours must be between 40 percent and 50 percent of the full-time provided according to the relevant CCNL contract;
- Activities carried out by self-employed workers required to elect a separate professional domicile from that of the person with whom they have entered into the part-time employment contract.
Moreover, the provisions apply only if:
- The freelance contract is certified by the relevant bodies (Article 76 of Legislative Decree No. 276/2003);
- Non vi è sovrapposizione tra i due contratti (subordinato e autonomo) per quanto riguarda:
- Scope and method of performance;
- Working hours and workdays.
INPS Contribution Reduction: 2025 News
Paragraph 186 of Law No. 207/2024 (2025 Budget Law) introduces a social security contribution reduction for new enrollees in special independent artisan and trader schemes.
Who can benefit from the reduction?
The reduction is for individuals earning business income, even under the flat-rate regime, who register for the first time in 2025 in special independent artisan and merchant schemes.
What is the benefit?
Beneficiaries can request a 50% social security contribution reduction.
Duration
The reduction applies for up to 36 consecutive months from the start date of the activity between January 1, 2025, and December 31, 2025.
The reduction is an alternative to other existing reliefs that provide rate reductions.
Impact on Pension Contributions
The crediting of social security contributions follows the provisions of Article 2, paragraph 29, of Law No. 335/1995.
Contributions paid must be calculated on a minimum income to ensure full crediting of contribution months. If the amount is less than the minimum, the months will be credited proportionally. Choosing for the reduction described above could therefore result in not reaching the minimum required for the purpose of calculating contribution periods. As a result, one year of contributions may not correspond to one full year for pension purposes.