Italy

Italy Partita IVA Tax Guide 2025: Forfettario Regime vs Ordinario

• Italy

Italy Partita IVA Tax 2025: Forfettario vs Ordinario Guide

Italian freelancers and sole proprietors must choose between Regime Forfettario (flat tax) and Regime Ordinario (progressive rates) when registering a Partita IVA. In 2025, the forfettario regime offers a simplified 15% flat tax (5% for new businesses) on gross income, while the ordinario applies standard IRPEF brackets with full deductions. This guide compares both regimes, eligibility rules, and net income scenarios to help you optimize your tax strategy.

Regime Forfettario 2025: Flat Tax Overview

Eligibility Requirements

  • Annual Revenue Cap: €85,000 (increased from €65,000 in 2023).
  • Single Business Activity: One ATECO code; multiple activities must share category.
  • No Employees: Cannot hire employees or collaborate with entities paying more than €20,000 annually.
  • No VAT Charges: Exempt from VAT collection and filing (flat rate covers all).
  • Residency: Must be Italian tax resident.

Tax Calculation

Taxable income is calculated using coefficienti di redditività (profitability coefficients) that vary by sector:

  • Trade: 40% (taxable income = revenue × 40%)
  • Services: 67%
  • Professionals (consultants, lawyers, engineers): 78%
  • Other Activities: 86%

Tax Rates

  • Standard Rate: 15% of taxable income.
  • Start-Up Rate: 5% for first 5 years if:
    • New business (never had Partita IVA before).
    • Under 35 years old (or under 40 with prior employment in same sector for 3+ years).

Social Security (INPS)

Contributions calculated on taxable income (after coefficient):

  • Professionals (Gestione Separata): 26.23% (no minimum contribution required).
  • Artisans/Traders: Fixed minimum €4,200-€4,500 + variable rate ~24% above threshold.

Calculation Example: Professional (Consultant)

Gross Revenue: €50,000 in 2025

  • Taxable Income: €50,000 × 78% = €39,000
  • Flat Tax (15%): €39,000 × 15% = €5,850
  • INPS (26.23%): €39,000 × 26.23% = €10,230
  • Total Tax + Social: €16,080
  • Net Income: €50,000 - €16,080 = €33,920 (67.8% net)

Regime Ordinario 2025: Progressive Tax Overview

When to Choose Ordinario

  • Revenue exceeds €85,000.
  • High deductible expenses (rent, equipment, staff, professional fees) reduce taxable income significantly.
  • Need to charge VAT (recover input VAT on purchases).
  • Collaborate with multiple clients or employ staff.

IRPEF Tax Brackets (2025 Reform)

  • 23%: Income up to €55,000
  • 43%: Income above €55,000

Tax Calculation

Taxable income = Gross Revenue - Deductible Expenses (rent, equipment, travel, professional development, employee salaries).

Apply IRPEF brackets + regional/municipal surcharges (~1-2%).

Calculation Example: Consultant with High Expenses

Gross Revenue: €100,000

  • Deductible Expenses: €35,000 (office rent, equipment, travel, software, professional training)
  • Taxable Income: €100,000 - €35,000 = €65,000
  • IRPEF: €55,000 × 23% + €10,000 × 43% = €12,650 + €4,300 = €16,950
  • INPS (25.72%): €65,000 × 25.72% = €16,718 (partially deductible from IRPEF)
  • Total Tax + Social: ~€30,000
  • Net Income: €100,000 - €30,000 - €35,000 expenses = ~€35,000 (35% net after expenses)

Direct Comparison: Forfettario vs Ordinario

Factor Forfettario Ordinario
Revenue Cap €85,000 Unlimited
Tax Rate 15% flat (5% start-up) 23-43% progressive + regional
VAT Exempt (no VAT charged/recovered) Charge VAT, recover input VAT
Bookkeeping Simplified (income/expense log) Full accounting (commercialista required)
Deductions None (flat coefficient) Full expense deductions
Employees Not permitted Permitted

Switching Between Regimes

  • Voluntary Switch (Forfettario → Ordinario): Notify Agenzia delle Entrate by 31 January for current year application; binding for at least 3 years.
  • Mandatory Switch (exceeding limits): Automatically move to Ordinario from following year if revenue exceeds €85,000 or hire employees.
  • Re-Entry to Forfettario: Possible after 3 years in Ordinario if eligible again.

Optimization Strategies

  • Start-Up Incentive: Maximize 5% rate for first 5 years; delay major revenue growth to year 6 if possible.
  • Expense Planning (Ordinario): Accelerate deductible expenses (equipment purchases, training) into high-income years to reduce IRPEF.
  • Revenue Management (Forfettario): Monitor quarterly revenue; if approaching €85,000, spread invoices across years or delay income to stay under cap.
  • Collaboration Limits: Structure partnerships to keep single-client income below €20,000 to maintain forfettario eligibility.

Common Mistakes

  1. Exceeding Revenue Cap Unknowingly: Track monthly revenue; exceeding €100,000 triggers immediate disqualification.
  2. Hiring Employees: Automatic exit from forfettario; plan transitions before hiring.
  3. Mixing Regimes: Can't apply forfettario to one activity and ordinario to another simultaneously.
  4. Not Consulting Commercialista: Complex transitions and INPS calculations require professional guidance.
  5. VAT Complications: Clients may prefer VAT invoices (ordinario) for input recovery; factor into pricing.

Administrative Requirements

Forfettario

  • Simplified bookkeeping: Income/expense register (registro incassi/pagamenti).
  • Annual IRPEF declaration (Modello Redditi).
  • No VAT returns.
  • INPS quarterly payments (F24 form).

Ordinario

  • Full accounting ledgers (mandatory commercialista).
  • Quarterly VAT returns (Modello IVA).
  • Annual IRPEF and VAT declarations.
  • INPS quarterly payments (higher complexity).

Next Steps: Use our Italy Partita IVA calculator to compare forfettario vs ordinario net income based on your projected revenue and expenses. Consult a commercialista for personalized regime selection and registration procedures.

← Back to Blog