The Regime Forfettario – Flat Rate Tax Regime for Freelance Businesses

Tax Agency Guidance

The following is a list of some of the replies to official rulings made by the Tax Agency in response to taxpayers requests for an official ruling (“interpello”). Overall the replies draw attention to the rigorous approach by the Tax Agency which views eligibility for the Regime Forfettario (which is considered a favourable regime subject to conditions) to be based on meeting all of the relevant conditions. 

Circular No 9 10 April 2019  Changes to the flat-rate scheme – Article 1, paragraphs 9 to 11, Law No. 145 of December 30, 2018

Resolution  no. 7, 11 February 2020 – Regime Forfettario; timing of new access and exclusion rules (Law 2020 Budget)

Summary:
In this ruling, the Italian Tax Agency clarifies that the new eligibility criteria and causes of exclusion introduced by the 2020 Budget Law (Law 160/2019, art. 1, comma 692) impact the Regime Forfettario (Law 190/2014, art. 1, commi 54–89) starting from the 2020 tax year, not earlier:

• Any new expense thresholds (e.g. for personnel or collaborators) must be assessed based on the 2019 tax year to determine eligibility for the 2020 regime.
• Similarly, the exclusion due to employment or equivalent income exceeding €30,000 in the prior year applies starting in 2020.
  If those thresholds were exceeded in 2019, the taxpayer cannot opt for the Regime Forfettario in 2020. 

In brief: contributions paid to staff in excess of €20,000 or employment income over €30,000 counted in the 2019 year, determine eligibility or exclusion for the Regime Forfettario applicable from 2020 onwards.

Reply no. 102, 14 April 2020 – Regime Forfettario; exclusion threshold for employment/pension income; treatment of extraordinary/emoluments paid in arrears

Summary:

• Under Law 190/2014 (art. 1, comma 57, letter d‑ter), taxpayers who in the prior year were in receipt of income from  employment or pension income exceeding €30,000 generally cannot access or continue in the Regime Forfettario.
• The Italian Tax Agency clarifies that extraordinary emoluments subject to “separate taxation” (e.g. pension arrears paid in a lump sum) are not included in the €30,000 threshold calculation, as they are not employment income under Articles 49 and 50 of the TUIR, but fall to be taxed under the “separate taxation” rules under taxation per Article 17 of the Tax code which operate to calculator the tax liability as if the income had been received over a period of years rather than taxed in one amount in a single year (with otherwise a higher appliocable rate).
• In the specific case, a taxpayer who received pension income below €30,000 in 2019 plus a separate arrears payment related to 2018 did not exceed the limit and was permitted to continue using the Regime Forfettario in 2020.

In brief: Pension arrears taxed separately do not disqualify application of the Regime Forfettario even if the total amount exceeds €30,000, as long as ordinary employment/pension income remained below the threshold

Reply no. 103, 14 April 2020 – Regime Forfettario; exclusion clause d‑bis) on predominance of activity toward former employer; timing for re-entry

Summary:
A taxpayer who ceased a subordinate employment relationship in 2018 and became a self-employed professional in 2019—earning over 50% of their total revenue from the same former employer in 2019—was initially disqualified from the Regime Forfettario under letter d‑bis) of art. 1, comma 57. That clause excludes individuals whose activity is carried out predominantly toward an employer with whom they had a prior employment relationship during the two previous tax years.

The Tax Agency clarifies that:

• The dominance test is assessed at year‑end, not at onset.
• If, as in the case described, the employment relationship ended at least two full years before the year of intended re-entry (i.e., ceased in 2018, so no dominance in 2019 and 2020), the taxpayer may re-enter the Regime Forfettario starting from fiscal year 2021, provided all other eligibility requirements are satisfied.

In brief: Once the two-year observation period has passed since termination of an employment relationship, the exclusion under letter d‑bis) no longer applies—allowing the taxpayer to qualify for the flat‑rate tax regime from 2021 onward, if all other conditions are met.

Reply no. 108, 16 April 2020 – Regime Forfettario; exclusion under letter d‑bis) when employer changes only in company structure

Summary:
This ruling clarifies the application of the cause of exclusion d‑bis) under art. 1, comma 57, lett. d‑bis) of Law 190/2014. Specifically, it addresses a scenario in which a taxpayer issued most of their invoices to a company that had previously employed them, even though that company subsequently changed its legal form (e.g. from SpA to Srl) or underwent restructuring.

The Tax Agency explicitly confirms:

• Corporate transformations, renaming, or changes in governance do not break the link to the original employer for the purposes of the d‑bis) exclusion—even if the legal form changes.
• As the income is still invoiced predominantly to the “same employer” (socially or economically connected), the cause d‑bis) operates, excluding the taxpayer from the Regime Forfettario in the first two years after the employment relationship ended.
• The taxpayer in the case described will only become eligible for the Regime Forfettario starting in tax year 2021, after the two-year observation period has elapsed, assuming all other requirements are met.
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In short: corporate restructuring of a former employer does not neutralize the exclusion under letter d‑bis) if the freelancer still invoices primarily to that same entity. Eligibility for the Regime Forfettario can resume from the third year after the employment relationship ended.

Reply no. 197, 20 April 2022 – Regime Forfettario; continuation of foreign‑based activity upon transfer of tax residence to Italy

Summary:
The Italian Tax Agency confirms that taxpayers who transfer their tax residence to Italy and continue a self‑employed or professional activity originally conducted abroad for the same clients may choose the Regime Forfettario, but are not eligible for the reduced 5% start‑up rate under art. 1, comma 65 of Law 190/2014, because:

• The lower 5% rate applies only to genuinely new business activities in Italy.
• Continuing the same activity, even if previously carried out abroad, does not qualify as a new activity under that provision. 

In brief:
A taxpayer relocating to Italy and resuming the same professional activity for the same overseas clients can apply the Regime Forfettario at the standard 15% rate, provided all eligibility criteria are met, but cannot benefit from the 5% start‑up rate reserved for new activities.

Reply no. 245, 8 March 2023 – Responsibility and remedies in case of improper application of the Regime Forfettario

Summary:
The Italian Tax Agency clarifies the responsibilities arising when a taxpayer erroneously applies the regime forfettario (under Law 190/2014, art. 1, paras 54–89):

• A freelancer or subcontractor who wrongfully claims the Regime Forfettario, issuing invoices without VAT or withholding tax, bears full responsibility for any resulting late or missing VAT payments and applicable penalties—including for undeclared or late withholding taxes.  Italian businesses are generally required to withhold tax at source on payments of invoices issued by the self employed, subject to exemption from the requirement for those on the Regime Forfettario. 
• The payer (the client), however, is not held liable for withholding tax or related penalties, if:
  • They acted with appropriate diligence, and
  • Relied on the subcontractor’s own declaration of entitlement to the Regime Forfettario, which is later proven false.
  • This is supported by reference to Article 6 of Legislative Decree 472/1997, which absolves someone from responsibility when an error is made in good faith.
• Practical remedies if the regime was wrongly applied include:
  • Issuing a credit note to increase the invoice amount and reflect VAT plus the withholding tax obligation.
  • Issuing replacement invoices under the ordinary regime (with VAT and withholding) to correct the initial misstatement.
• By tax year:
  • For invoices in 2021 issued under the flat-rate regime, if the subcontractor properly filed amended declarations (and paid taxes, interest and penalties), the payer does not need to issue withholding certificates, nor file a supplementary 770 form or CU.
  • For 2022 invoices made under the Regime Forfettario and later corrected with credit notes and ordinary-regime invoices, the payer must perform withholding tax (even if late), pay any interest, issue the CU, and file a correct 770/2023 submission.
• Summary conclusion:
  Although the taxpayer applying the Regime Forfettario incorrectly may face tax and penalty exposure, the payer can avoid liability—provided they exercised normal professional diligence.

Reply no. 226, 2024 – Regime Forfettario; eligibility when switching from ordinary regime mid‑year

Summary:
The Italian Tax Agency clarifies that if a taxpayer operating under the ordinary VAT regime transitions to the Regime Forfettario (“regime forfettario”) mid‑tax year, they are ineligible for the 5% start-up tax rate under art. 1, comma 65 of Law 190/2014:

• The reduced 5% rate applies only where the Regime Forfettario is adopted from the very beginning of the business activity in that tax year.
• If the taxpayer initially used the ordinary or simplified tax regime (in this case they were excluded from applying the regime forfettario due to being in receipt of income from employment exceeding the threshold in prior years, and then switched to the regime forfettario in a subsequent year, they must apply the standard flat-rate 15% rate, not the “start‑up” discount.

In brief: To qualify for the special 5% startup rate, the Regime Forfettario must be adopted at the start of operations— transitions to the Regime Forfettario in a successive year precludes applying the discounted rate.

Reply no. 50, 22 February 2024 – Regime Forfettario – Law 190/2014, art. 1, paras 54–89 – exclusion conditions letters d‑bis) and d‑ter) – transfer of residence from abroad to Italy – invoicing to former foreign employer – income threshold €30,000 exceeded

Summary:
The Italian Tax Agency clarifies that a taxpayer who was resident abroad in 2023, transfers to Italy in 2024, ceases a foreign employment contract and starts self‑employment activities as a freelancer invoicing that same former employer, is not prevented from accessing the Regime Forfettario due to:

• Cause d‑bis): predominance of activity with former employer
  → Not triggered, because the previous employment was performed abroad, outside Italian territory 
• Cause d‑ter): employment income over €30,000 in previous year
  → Not disqualifying, so long as the employment relationship ended in 2023 before starting the Italian self‑employment in 2024 

In brief: the taxpayer may qualify for the 15% flat‑rate tax regime in 2024, even if invoicing a former foreign employer and having earned over €30,000 in employment income in 2023—provided they move tax residence to Italy and terminate the employment before starting the freelance activity

Reply no. 149, 9 June 2025 – Regime Forfettario; transfer of residence abroad;  loss of eligibility

Summary:
A professional engineer, already benefiting from Italy’s flat-rate tax regime (“regime forfettario”) in 2024, transferred residence away from Italy registering with A.I.R.E. (registry of Italians abroad) on 15 May 2024. Tax residency outside Italy is a disqualifying condition under art. 1, comma 57, letter b) of Law 190/2014. The taxpayer queried whether they must correct the invoices issued in 2024 (which applied no VAT or withholding tax), given this loss of eligibility.

The Tax Agency’s ruling confirms:

• Termination of eligibility due to change of residency status (non‑residency in Italy) does not trigger immediate cessation of the flat-rate regime within the year in which it occurs (2024).
• Only upon exceeding €100,000 of revenues or fees does the regime cease immediately under comma 71; other disqualifying events prompt exit only from the following fiscal year.
• Hence, no correction (credit notes, application of VAT or withholding) is required for invoices already issued in 2024 under the flat-rate regime.