A freelancer who leaves Italy's flat tax by choice for one costly year cannot return for three, and at €50,000 the two years they did not want cost €9,756

A consultant on Italy’s flat-tax regime, the forfettario, bills €50,000 a year. One year looks expensive: a large project needs subcontractors, and the flat tax ignores real costs, so they move to the ordinary income-tax rules, where costs are deducted. A year later their costs are back at 10% of billing and they want the flat tax back. The law holds them in the ordinary rules for at least three years, and the two years they did not want leave them €9,756.30 less than the flat tax would have.123

That figure gives the ordinary side every benefit of the doubt. It lets the consultant recover the VAT on every cost, as a business can and a flat-tax holder cannot, and it leaves out the regional and municipal surcharges that the ordinary rules add and the flat tax replaces. With the national-average surcharge, the two years cost €11,269.80.34

How long you are out depends on how you left

The flat tax applies to anyone whose previous year met its conditions, the first of which is billing no more than €85,000. Someone pushed out by their billing is therefore out only until a year in which the conditions hold again. Someone who chose to leave is held by comma 70 of the 2014 law that created the regime: the option is “valida per almeno un triennio”, valid for at least three years, and after that it renews itself each year for as long as it is applied.51

Earning too much costs at least one year away from the regime; choosing to leave costs at least three. The general rule behind comma 70 is article 3 of a 1997 decree on tax options, which binds anyone who opts for a way of computing their tax “almeno per un triennio”. The new consolidated income-tax code that takes over on 1 January 2027 repeats comma 70 word for word as its article 237.27

The choice is made on 1 January

There is no form to file before the year starts and no way to decide after it ends. The option exists by conduct, by keeping the books and charging VAT the ordinary way, and article 1 of the same decree makes it valid only if it is applied “sin dall’inizio dell’anno”, from the first day of the year. It is then reported in the next annual VAT return. The Agenzia delle Entrate adds that forgetting to report it does not undo it.89

So the decision rests on what the year’s costs are expected to be, and it commits two further years whose costs are not yet known.

What the two locked years cost

Each locked year is priced as the same practice billing the same amount with the same costs, once on the flat tax and once under the ordinary rules, with the Gestione separata pension contribution of 26.07% on both sides. At €50,000 and costs of 10%, the ordinary rules leave €4,878.15 less each year. The less the practice spends, the more each locked year costs:3101112

How costly the first year has to be

The ordinary rules win a single year once costs pass a certain share of billing, which is the subject of the piece on where costs cancel the flat tax. Because the choice holds for three years, the year that prompts it also has to pay for the two that follow. At €50,000, with costs back at 10% afterwards, that happens only when the first year’s costs reach 60.8% of billing. A year in which costs take half the revenue saves money under the ordinary rules and still leaves the three years together behind the flat tax.3

The bar rises with billing, because the ordinary rules’ progressive brackets take more from each locked year as income grows. It falls when the later years are expensive too: with costs at 20% in the locked years, a first year at 38.7% is enough. With no costs at all in them, it is 82.4%.3

On the 5% start-up rate

A new practice pays 5% instead of 15% “per il periodo d’imposta in cui l’attività è iniziata e per i quattro successivi”, the year it started and the four after. The count runs from the start of the activity, not from the years spent on the flat tax. When the Agenzia let people who had opted out in 2015 return in 2016, it gave them the 5% rate only for “il periodo che residua al compimento del quinquennio”, what was left of the five years.139

Locked years spent in the ordinary rules are therefore start-up years used up. At €50,000 and 10% costs, the two of them cost €15,522.84 against the 5% rate, and the first year would need costs above nine-tenths of billing to make up for them.3

What this does not cover

Two assumptions push the figures in the ordinary regime’s favour, and the table shows what each is worth at €50,000 with 10% costs:

The 1997 decree does allow an option to be changed early when new legislation modifies the system it belongs to, and the Agenzia used that in 2016, after the regime was rewritten. No document read for this piece says the 2027 code opens the same door; its article 237 changes nothing in comma 70’s wording. Nor does any document read here say whether closing the partita IVA and opening a new one ends the three years.897

The figures hold billing, costs and the 2026 rates constant across the three years, and count contributions in the year they are for. They cover professionals in the Gestione separata only; an artisan or a trader pays a fixed minimum contribution and would come out differently. Coming back to the flat tax can also mean handing back some of the VAT deducted in the ordinary years, which the piece on switching to the flat tax prices. What the figures show is the rules’ arithmetic, not advice on whether to opt out.