In this guide we compare the flat-rate scheme (regime forfettario) and the simplified ordinary scheme (regime semplificato), the two most common options for those opening or running an individual VAT-registered business, to understand the requirements, the taxation and which one is more convenient for your specific situation.
Flat-Rate Scheme and Simplified Scheme: What to Remember
The choice between the flat-rate scheme and the simplified scheme depends on your turnover, the costs you actually incur, and your business’s growth prospects. Our firm helps you compare the two regimes and choose the most advantageous solution.
What the Flat-Rate Scheme Is
The flat-rate scheme is a preferential tax regime designed for individuals carrying out a business, trade or profession on a sole-trader basis. Instead of ordinary taxes and VAT, those who opt in pay a single substitute tax calculated on income determined on a flat-rate basis, that is, by applying a fixed percentage linked to the type of activity to the revenue, without having to itemise every single cost incurred. The result is much simpler tax and accounting management than under the ordinary regime.
Who Can Access the Flat-Rate Scheme
To opt into the flat-rate scheme, certain requirements must be met, the best known of which is the revenue or fee limit, set at €85,000 in the previous year. If revenue exceeds €100,000 during the year, the scheme stops applying immediately, within the same tax year. There are also some exclusion criteria, linked for example to simultaneously holding an interest in a partnership or to an employment relationship with your main client: for this reason it’s important to check your position before opening a VAT number under this scheme, or before switching to it from another regime.
The Main Advantages
The best-known advantage is the reduced taxation: a substitute tax of 15% applies, dropping to 5% for the first five years of activity for those starting a new business and meeting specific requirements. In addition, there’s exemption from charging VAT on invoices, simplified bookkeeping with no obligation to keep VAT registers, and exemption from the tax reliability indices (ISA). It is therefore a scheme particularly suited to those starting a business with limited costs, while it may be less advantageous for those who incur high costs, which cannot be itemised and deducted under the flat-rate scheme.
Who It Suits, and Who It Suits Less
- Those starting a new business with limited costs find the flat-rate scheme simple and advantageous, especially in the first five years with the reduced 5% rate.
- Those who incur high costs to run their business (for example purchasing goods, hiring staff, significant rent) should check whether the ordinary regime, with itemised deduction of costs, might not be more advantageous.
- Those approaching the €85,000 threshold should plan the switch to the ordinary regime in good time, to avoid changing regime mid-year, which also affects invoicing.
The Simplified Scheme: How It Works and How It’s Taxed
Anyone who does not meet the flat-rate scheme’s requirements, or who exceeds its limits, generally applies the simplified ordinary scheme (for individuals and partnerships using simplified accounting). Unlike the flat-rate scheme, which applies a single substitute tax on income determined on a flat-rate basis, the simplified scheme taxes actual income (revenue minus itemised, documented costs) under the ordinary IRPEF rules.
Tiered IRPEF Taxation
Taxable income determined under the simplified scheme is added to overall IRPEF income, taxed according to the three brackets in force since 2026 (2026 Budget Law):
- up to €28,000: 23% rate;
- from €28,001 to €50,000: 33% rate;
- above €50,000: 43% rate.
On top of this come regional and municipal IRPEF surtaxes, which vary from area to area (roughly between 0.7% and 3.3% combined), and, for businesses subject to it, IRAP (ordinary rate 3.9%, with possible regional variations), as well as the 20% withholding tax applied by clients acting as withholding agents for professionals, to be recovered in the tax return, and paid via F24 by the 16th of the month following payment.
A Numerical Comparison of the Two Regimes
Purely illustrative figures. A professional with €40,000 in annual fees and modest actual costs (e.g. €5,000) can assess the two options as follows: under the flat-rate scheme (78% profitability coefficient for many professional activities), taxable income is €31,200, taxed with a substitute tax of 15% (or 5% for the first five years if start-up requirements are met): tax of €4,680 (or €1,560 at the reduced rate), with no itemised deduction of costs. Under the simplified scheme, taxable income is instead €35,000 (€40,000 minus €5,000 of actual costs), taxed under the ordinary IRPEF brackets: around €6,440 in IRPEF alone (23% on €28,000 plus 33% on €7,000), plus regional/municipal surtaxes and, where due, IRAP. The comparison should always be made case by case: the flat-rate scheme is more advantageous when actual costs are lower than those recognised on a flat-rate basis by the profitability coefficient; the simplified scheme is more advantageous when documented costs are high, or when the flat-rate scheme’s access threshold (€85,000 in revenue/fees) has been exceeded.
FAQ – Frequently Asked Questions
What is the revenue limit to stay in the flat-rate scheme?
The limit is €85,000 in revenue or fees in the previous year; if you exceed €100,000 during the year, the scheme stops applying immediately.
How much tax do you pay under the flat-rate scheme?
A substitute tax of 15% applies on income determined on a flat-rate basis, reduced to 5% for the first five years of activity for those meeting the requirements for new businesses.
Do you charge VAT on invoices under the flat-rate scheme?
No: those under the flat-rate scheme issue invoices without charging VAT, with a specific wording referencing the relevant legislation.
Is it always more advantageous than the ordinary regime?
Not always: those with high business costs may find the ordinary regime more advantageous, as it allows the itemised deduction of costs actually incurred.
Let’s Work Out Together Whether the Flat-Rate Scheme Is Right for You
If you’re about to open a VAT number, or want to check whether it’s worth staying in the flat-rate scheme or switching to the ordinary regime, we can help you make a concrete assessment of your situation, with an initial no-obligation conversation.
Free Initial Assessment
Do you have a similar situation?
Describe your situation below: we’ll tell you right away how to proceed. If you already have useful documents, you can simply send them to us by replying to our confirmation email.
Prefer to talk it through? Call the firm on +39 011 349 0809 (Mon–Fri 8:30 am–1:00 pm / 2:00–5:30 pm CET) or message us on WhatsApp.