Sell the same €40,000 to EU consumers and keep €2,779 less

A founder in Milan sells €40,000 of online courses this year, on the flat-rate regime and well inside its ceiling. If the buyers are in Italy she keeps €28,406.24 after the substitute tax and her contribution. If the buyers are consumers in Germany, Spain or Poland she keeps €25,627.37 — €2,778.87 less for the same course, sold at the same price, from the same desk.1412

That gap is the lower bound. It assumes her customers live in a country charging the lowest standard VAT rate European law permits, which article 97 of the VAT directive fixes at 15 per cent. At a rate equal to Italy’s own 22 per cent the same €40,000 leaves €3,841.83 less.56

Where the exemption stops

The regime forfetario exempts its taxpayers from charging VAT, and the provision that does it says how far the exemption reaches. Comma 58 of the founding article opens the list of VAT rules with lettera a): a flat-rate taxpayer does not exercise rivalsa — does not add VAT to the invoice — “per le operazioni nazionali”. For domestic operations. The same comma then sends everything with a foreign counterparty to “gli articoli 7-ter e seguenti” of the VAT act, the ordinary territoriality rules, and closes by removing any right to deduct the VAT that comes back the other way.1

For most services that changes nothing. Article 7-ter puts a service sold to a private customer where the supplier is established, so a consultant in Milan advising a private individual in Lisbon is making an Italian supply and the exemption holds. The exception is electronically supplied services — a course, an app, a subscription, a download — and goods shipped to consumers in another member state. Those go to article 7-octies, which puts them where the customer is.34

Comma 3 of that article holds them in Italy while the seller stays small. Cross-border consumer sales, electronic services and distance-sold goods counted together, must not have exceeded €10,000 in the previous calendar year, and the exemption lasts “fino a quando, nell’anno in corso, tale limite non è superato” — until the limit is passed in the current year. The transaction that passes it is taxed where the customer lives; the ones before it are not reopened. Two further conditions ride along: the seller must not be established in another member state as well, and must not have opted for destination taxation.4

What the crossing costs

Past that line the customer’s country wants its VAT on the price the customer paid. An ordinary Italian business hands it over and carries on, because VAT is not its money and its own input VAT comes off elsewhere. A flat-rate seller has no input VAT to set against anything — the same comma 58 says so — and cannot raise a consumer price by a fifth because a threshold moved. So the tax comes out of the price, and the price was the revenue.112

On €40,000 of receipts with every buyer abroad, €10,000 stays Italian and the remaining €30,000 carries destination VAT: €3,913.04 at the 15 per cent floor, €5,409.84 at 22 per cent. Revenue falls by exactly that, and so do the two Italian charges that sit on revenue. Take-home lands at €25,627.37 and €24,564.41 against €28,406.24 at home.1211

How much of it the seller actually carries

Not all of the VAT is lost to the seller. Revenue is smaller, so the substitute tax and the contribution are smaller too, and part of the charge comes back through Italy taking less. The part that comes back is 28.98 per cent of it, and the part that does not is 71.02 per cent — the flat regime’s own take-home rate on revenue. It does not move with the VAT rate or with the amount, which is why it is a share rather than a figure.1311

It does move with the activity. The coefficient is the share of revenue the law presumes is profit, and it runs from 40 to 86 per cent by ATECO group. A high coefficient means more Italian tax on each euro of revenue, so more of it falls away when revenue falls. A trader on the 40 per cent coefficient therefore carries 85.14 per cent of the destination VAT and loses €3,331.42 where the professional loses €2,778.87. The activity with the lightest presumed profit takes the heaviest border cost.1113

The exemption that does travel

Since 1 January 2025 there is a way to carry a small-business VAT exemption across a border. A decree of November 2024 wrote a new title V-ter into the VAT act, defining a regime di franchigia — a scheme whose taxpayers “non esercitano la rivalsa e non hanno diritto alla detrazione dell’imposta”, which is the flat-rate seller’s position exactly — and an identification number carrying an EX suffix that says which other member states have admitted its holder to theirs.7

Article 70-octiesdecies sets what an Italian-established seller has to meet. Annual turnover across the whole Union must not have exceeded €100,000 in the previous calendar year, nor in the current one up to the notice; turnover in each state where the exemption is claimed must stay inside that state’s own franchise threshold, which that state sets; and the Agenzia delle entrate has to be told first. It then attaches the EX suffix within 35 working days, longer if the other state asks for time to check.89

Two consequences follow, and neither is visible from the €85,000 ceiling. The Union-wide cap is measured on everything sold anywhere in the Union, Italy included, so a person already billing the flat tax’s full €85,000 at home has €15,000 of room in the other twenty-six states before the cross-border exemption stops being available at all. And the second condition is written by somebody else: whether a given state admits this particular seller depends on a threshold in that state’s law, which is not established here.811

The traffic runs the other way too, and the flat tax’s own article now says so. Comma 57 lettera b), the provision that otherwise shuts the regime to non-residents, carries a second sentence added for this: a taxable person established in another member state claims the Italian exemption through title V-ter, not through the forfettario.107

Who this does not reach

Selling to a business in another member state is a different rule and costs nothing here: article 7-ter treats a service as Italian only when the taxable customer is established here, so the customer abroad accounts for the VAT under reverse charge and the Italian seller charges none. Nor does any of this touch ordinary services sold to private individuals abroad, which stay Italian under the same article. The rule bites on electronically supplied services and on goods shipped to consumers, and on nothing else in article 7-octies.234

What arrives from the other direction has been measured separately: buying from suppliers outside Italy puts VAT on the flat-rate purchaser under the reverse charge, with no deduction against it. This piece is the selling side of the same asymmetry.

What this does not settle

The destination rate is the largest thing left open. Twenty-six other standard rates exist and none of them is sourced here, so the two columns are a floor that European law guarantees and a familiar reference point rather than anyone’s actual bill. A reader selling into one country should read that country’s rate and its franchise threshold before doing anything with these figures.5

Everything above also assumes the consumer price holds. Charging the destination VAT on top instead leaves the seller’s take-home at €28,406.24, unchanged, and puts €4,500.00 on the customer’s bill at the floor rate. Both were computed; which one happens is a pricing decision rather than a tax rule, and the point common to them is that the charge lands somewhere and the Italian exemption does not travel with the sale.12

Three smaller things. The figures carry no real business costs, which on the flat rate reduce cash without reducing the tax. The €10,000 is measured across all member states together and on the previous calendar year as well as the current one, so a seller who crossed it last year is outside the shelter from the first sale of this one. And nothing here counts the administrative side of collecting another state’s VAT, through the one-stop shop or by registering there; that is a real cost to a one-person business and it is not in any of these numbers.4