Flat-Rate or Ordinary Regime: The Calculation Few People Do

Who can use the flat-rate regime in 2027?

You do not apply for the flat-rate regime (regime forfettario), the simplified tax regime for self-employed individuals with a VAT number: it applies automatically to anyone who met the requirements in the previous year. For 2027, then, 2026 is what counts. The requirements are those of Law 190/2014, art. 1, paragraphs 54-89, which from 1 January 2027 move, unchanged in substance, into articles 232-243 of the new Consolidated Income Tax Act (Testo unico delle imposte sui redditi, Legislative Decree 117/2026, which applies from 2027 under its article 377).

To stay in the regime in 2027 you must have had, in 2026:

1. Revenue of up to €85,000. If you exceed it but stay within €100,000, you leave the regime the following year. Above €100,000 you leave it immediately, and VAT applies from the invoice that takes you over the threshold (Italian Revenue Agency, circular 32/E of 2023).
2. Spending on employees and collaborators of up to €20,000 gross.
3. Employment or pension income of up to €30,000, unless the employment has ended. The limit had been raised to €35,000 for 2025 and 2026 only (Law 207/2024, art. 1, paragraph 12, as amended by Law 199/2025, art. 1, paragraph 27). The new Consolidated Act, in article 233, sets €30,000.

Among others, the regime excludes people who invoice mainly their current employer or the one of the previous two years, partners in partnerships or family businesses, and anyone who controls a limited company (SRL) carrying on an activity linked to their own.

How is tax calculated under the flat-rate regime?

Income is not revenue minus expenses. It is a fixed percentage of revenue, the profitability coefficient, which depends on the ATECO activity code. The compulsory social security contributions paid are deducted from the income calculated in this way, and the rest pays a 15% substitute tax in place of IRPEF, Italian personal income tax, and its regional and municipal surcharges. For the first five years of a new business the tax falls to 5%, if in the previous three years you did not carry on a business or profession and the new activity does not continue your previous job as an employee.

Source: annex D of the Consolidated Income Tax Act, identical to annex 4 of Law 190/2014. The new coefficients for the ATECO 2025 codes have not yet been approved: until they are, the 2007 codes apply.

The third column is the simplest way to read the regime: it is the part of revenue the law treats as expenses, whatever you actually spend.

How much do INPS contributions weigh under the two regimes?

Under the flat-rate regime contributions to INPS, the Italian social security institute, are calculated on flat-rate income; under the ordinary regime, on actual income. The 2026 rates are:

• Separate scheme (gestione separata), for professionals without their own professional fund: 26.07% (INPS circular 8/2026).
• Craftsmen 24% and traders 24.48%, with a minimum contribution owed in any case on €18,808 of income, that is €4,521.36 a year for a craftsman (INPS circular 14/2026).

Craftsmen and traders under the flat-rate regime can ask for a 35% reduction in contributions. Those already in the regime apply to INPS by 28 February of the year; once you give it up you cannot claim it again. The reduction has a price: lower contributions mean a lower pension. Professionals in the separate scheme do not have this option.

Four profiles compared, in euros

We ran the flat-rate and the ordinary regime on the same revenue with our simulator's engine, under 2026 rules. Common assumptions: a full year of steady activity, no other income, real costs net of VAT, IRPEF surcharges of 1.23% regional (Veneto) and 0.8% municipal with an exemption up to €11,000 (Vittorio Veneto). Under the ordinary regime IRPEF is 23% up to €28,000 and 33% up to €50,000 (Law 199/2025, art. 1, paragraph 3), with the self-employment tax credit of article 13 of the income tax code.

• A. Consultant in the separate scheme (78% coefficient): €40,000 of revenue, €3,000 of real costs (7.5%).
• B. Craft joinery (67% coefficient): €70,000 of revenue, €21,000 of real costs (30%).
• C. Professional with a family (78%): €60,000 of revenue, €9,000 of costs (15%), a dependent spouse, a 23-year-old child at university, €3,000 of interest on the home mortgage (taken out before 2022) and €1,500 of medical expenses.
• D. Professional with an office (78%): €50,000 of revenue, €20,000 of costs (40%).

"You keep" is revenue minus real costs, contributions and taxes. Amounts are rounded to the euro.

How to read case A, line by line. Flat-rate: 40,000 × 78% = €31,200 of income; contributions at 26.07% = €8,134; 15% tax on €23,066 = €3,460. Ordinary: income €37,000; contributions €9,646; IRPEF on €27,354 = €6,291, minus €295 of self-employment tax credit, plus €555 of surcharges = €6,551.

If craftsman B asks for the 35% reduction, contributions fall to €7,324 and he keeps €35,740, but with a lower future pension.

Above what share of costs does the ordinary regime pay off?

This is the number worth knowing before any other. For each activity and level of revenue, we looked for the share of real costs at which the two regimes leave the same net amount. Below that share the flat-rate regime wins; above it, the ordinary regime wins. Assumptions: a single person, no other income, costs net of VAT, Veneto surcharges, 2026 rules.

The threshold rises with revenue because IRPEF is progressive: the more you earn, the more costs you need for the ordinary regime to catch up. Two factors move it noticeably. With the 5% tax of the first five years, for the consultant on €40,000 the break-even point rises from 32% to 44%. For a professional with €60,000 of revenue, a dependent spouse and a dependent 23-year-old child, €3,000 of mortgage interest and €1,500 of medical expenses, it falls from 34.5% to 28.4%.

Myth 1: "The flat-rate regime always pays off"

No. It pays off when your actual costs are low compared with the share the coefficient grants you. A professional in the separate scheme who spends €20,000 on €50,000 of revenue, 40%, is granted only 22% by the flat-rate regime: under the ordinary regime he keeps €1,574 more a year. The same goes for a shop with €80,000 of revenue and 70% of costs between stock, rent and utilities: the ordinary regime leaves €1,683 more.

One detail surprises many people. In that case the flat-rate regime charges more contributions (€10,167 against €7,821), because it calculates them on 78% of revenue even when actual income is lower. Those contributions go towards your pension, but today they come out of your cash.

Myth 2: "At 15% I pay little"

The 15% applies to income already reduced by the coefficient and by contributions, and it does not include the contributions themselves. For a consultant in the separate scheme with €40,000 of revenue and €3,000 of costs, the tax is €3,460, 8.6% of revenue; with contributions the total take rises to €11,594, 29% of revenue. On €1,000 of extra revenue, net of the same share of costs, he keeps €635 under the flat-rate regime and €488 under the ordinary one. The flat-rate regime is still lighter, but much less than the 15% suggests.

Myth 3: "Under the flat-rate regime I can deduct my pension fund"

No. Only compulsory social security contributions can be deducted from flat-rate income (Law 190/2014, art. 1, paragraph 64; Italian Revenue Agency, resolution 69/E of 2019). Pension fund contributions are deductible, up to €5,300 a year from 2026 (Legislative Decree 252/2005, art. 8), only from other income subject to IRPEF, a salary for example.

Take a professional with €60,000 of revenue, €9,000 of costs and a family to support. If he pays €5,300 into a pension fund, under the ordinary regime he saves €1,857 in tax (33% IRPEF plus surcharges); under the flat-rate regime, with no other income, nothing. The flat-rate regime's advantage falls from €4,542 to €2,686 a year. Anyone under the flat-rate regime who wants to build a supplementary pension does so without tax relief on contributions: for how a pension fund works, see our guide to supplementary pensions.

Myth 4: "With dependants, the ordinary regime pays off"

On its own, usually not. Under the flat-rate regime the tax credits for family members and expenses cannot be used, because there is no IRPEF to set them against. For a professional with €60,000 of revenue, a dependent spouse and a dependent 23-year-old child, a mortgage and medical expenses, they are worth €2,144 and are all lost: €710 for the spouse, €604 for the child, €570 for mortgage interest, €260 for medical expenses. Under the ordinary regime the same items are worth €1,771, a little less because the higher income reduces the family tax credits.

The result: compared with the same person without a family, the flat-rate regime's advantage falls from €6,313 to €4,542. A family brings the two regimes closer, but tips the balance only when high costs or a large pension fund contribution are added. Children under 21 do not change the comparison: since 2022 they receive the single child allowance (assegno unico) instead of the tax credit.

What do the figures leave out?

The net amount is not the only criterion. Before deciding, also weigh:

• VAT. Under the flat-rate regime you do not charge it to customers and you do not recover it on purchases. With private customers it is a price advantage of up to 22%; with many purchases, unrecovered VAT is an extra cost that our tables do not count.
• Your pension. Lower contributions today, with the 35% reduction or with the ordinary regime on a low income, mean a lower pension tomorrow.
• Paperwork. Under the flat-rate regime you keep no accounting records and customers do not withhold the 20% withholding tax: lower running costs and more cash during the year.
• IRAP, the regional business tax, is not a difference: since 2022 individuals do not pay it under either regime (Law 234/2021, art. 1, paragraph 8).

When do you decide, and what changes in 2027?

The regime applies by calendar year. Anyone who meets the requirements is in the flat-rate regime from 1 January without doing anything; anyone who wants to switch to the ordinary regime does so by applying it from 1 January, and the choice binds them for at least three years. It must be notified in the first annual return that follows.

For 2027 two changes are certain: the rules move into the new Consolidated Income Tax Act, with the same amounts, and the limit for anyone who also has a salary or a pension goes back to €30,000. Anyone who exceeds it in 2026, without having left that job, cannot stay in the flat-rate regime in 2027.

Two changes are under discussion for the 2027 Budget Law, but for now they are only proposals:

• Raising the revenue threshold from €85,000 to €100,000. The Minister of Economy revived the idea in September (MySolution, 10 September 2026), but EU Directive 2020/285 sets €85,000 as the ceiling for the national VAT exemption, and there is no text yet.
• Extending the €35,000 limit for people with a salary, a possibility reported by the specialist press (Informazione Fiscale, 7 October 2026).

What should you check before 31 December?

1. Your real 2026 costs as a share of revenue, net of VAT, and compare them with the break-even table for your activity.
2. Your 2026 salary or pension, if you have one: above €30,000 the flat-rate regime is not available in 2027, unless the limit is extended.
3. Your expected revenue for 2027: between €85,000 and €100,000 the flat-rate regime ends the following year, above €100,000 immediately.
4. If you are a craftsman or trader, whether to request or keep the 35% reduction by 28 February 2027, knowing that it lowers your pension.
5. The comparison for your own case, with your accountant: choosing the ordinary regime binds you for three years. Our income tax simulator runs the two regimes on the same revenue, with your family and your expenses.

Glossary

• Flat-rate regime (regime forfettario): a regime for individuals with a VAT number and revenue of up to €85,000, with income calculated as a fixed percentage and a single 15% tax (5% for new businesses).
• Ordinary regime: income is revenue minus documented costs, taxed with progressive IRPEF and the surcharges; small VAT-number holders usually keep simplified accounts.
• Profitability coefficient: the percentage of revenue that the flat-rate regime treats as income; the rest counts as flat-rate expenses.
• Substitute tax: a tax that replaces IRPEF and the surcharges on flat-rate income.
• INPS separate scheme (gestione separata): the pension scheme for professionals who do not have their own professional fund.
• Minimum contribution base: the minimum income on which craftsmen and traders pay contributions in any case (€18,808 in 2026).
• Deduction and tax credit: a deduction reduces the income on which tax is calculated; a tax credit (detrazione) reduces the tax already calculated.

Sources

• Law 190 of 23 December 2014, art. 1, paragraphs 54-89 (flat-rate regime, in force until 31 December 2026) (in Italian).
• Legislative Decree 117 of 19 June 2026, Consolidated Income Tax Act: arts. 232-243 and annex D (flat-rate regime), art. 376 (repeals) and art. 377 (application from 1 January 2027) (in Italian).
• Law 207 of 30 December 2024, art. 1, paragraph 12 (€35,000 limit), amended by Law 199 of 30 December 2025, art. 1, paragraph 27 (extended to 2026) (in Italian).
• Law 199 of 30 December 2025, art. 1, paragraph 3 (33% IRPEF bracket) (in Italian).
• Presidential Decree 917/1986, art. 13 (self-employment tax credit) and art. 12 (dependent family members) (in Italian).
• Legislative Decree 252 of 5 December 2005, art. 8 (deduction of pension fund contributions) (in Italian).
• Law 234 of 30 December 2021, art. 1, paragraph 8 (IRAP not owed by individuals) (in Italian).
• Italian Revenue Agency, press release on circular 32/E of 5 December 2023 (€85,000 and €100,000 thresholds); resolution 69/E of 22 July 2019 (contributions deductible from flat-rate income) (in Italian).
• INPS, circular 8 of 3 February 2026 (separate scheme) and circular 14 of 9 February 2026 (craftsmen and traders, reduced contribution scheme) (in Italian).
• MySolution, 10 September 2026; Informazione Fiscale, 7 October 2026 (proposals for 2027) (in Italian).
• Team Salvador simulator "How much is your income taxed?", for all the profile and break-even calculations.