A shop billing €10,000 pays no income tax, and €3,173 more than its own rate asks

A small shop in Milan takes €10,000 across 2026, its first settled year on the flat tax. The income tax on that is nothing at all. The bill is €4,611.64, and every cent of it is a pension contribution that would have been the same if the shop had taken €4,000 or €11,000.29

Applying the same contribution rates to the income the law itself presumes that shop earned, and nothing else differently, the year would have cost €1,438.64 instead. The minimum is worth €3,173.00 to the state and the same amount to the shopkeeper, and it grows as the year gets worse.

The bill on €10,000

Two rules produce the whole of it. Allegato 4 of the flat tax’s statute presumes a retail business keeps 40% of its takings, so €10,000 of turnover is €4,000.00 of income for both tax and contributions. INPS then computes the contribution not on that €4,000.00 but on a statutory minimum of €18,808.00, because the minimum is higher.72

The right-hand column is not a proposal and not a regime anyone can elect. It exists to separate the minimum from the rate: it holds the coefficient, the percentages and the substitute rate fixed, and removes only the floor under the base. What the two columns differ by is therefore the floor and nothing else.

A minimum from 1990

The floor is older than the flat tax by twenty-four years. Article 1, comma 3 of L. 233/1990 fixes the minimum taxable base for artisan and trader contributions “nella misura del minimale annuo di retribuzione che si ottiene moltiplicando per 312 il minimale giornaliero” — 312 times the daily minimum wage figure used for employees in those sectors, plus the €671.39 a 1991 statute bolted on. INPS revalues the daily figure with consumer prices and publishes the result each February. For 2026 that is €58.13 a day, an annual minimum INPS states as €18,808.00, and a contribution on it of €4,521.36 for an artisan and €4,611.64 for a trader — the trader pays the extra 0.48% that funds the indemnity for closing a shop.12

That is a contribution of €4,611.64 against €4,000.00 of presumed income: €611.64 more than the same body of law says the shop earned. Below €11,529.10 of turnover the gap opens; at €2,000 of turnover the contribution is larger than the takings.9

A professional never meets it. The Gestione Separata charges a percentage “sul reddito delle attività” and stops there — and the same €18,808.00 turns up in that scheme doing a different job. Comma 29 of L. 335/1995 imports it to decide how much of a year the contributions buy: “in caso di contribuzione annua inferiore a detto importo, i mesi di assicurazione da accreditare sono ridotti in proporzione alla somma versata”. A professional who pays less gets fewer months. A trader who earns less still owes the whole amount. Which INPS scheme the activity was registered in decides which of those two happens, and the flat tax has no part in it.46

Why the tax disappears

Comma 64 of the flat tax’s statute says “i contributi previdenziali versati in ottemperanza a disposizioni di legge […] si deducono dal reddito determinato ai sensi del presente comma; l’eventuale eccedenza è deducibile dal reddito complessivo” — contributions paid come off the flat-rate income, and anything left over goes against the person’s total income. A shop with no other income has no total income to put it against, so the leftover is lost. The taxable base is zero and the substitute tax with it.5

Zero tax is the symptom, not the relief. The base vanished because a payment larger than the income was subtracted from it, and the payment was the expensive part. On the 40% coefficient the substitute tax stays at zero all the way to €11,529.10 of turnover, which is the contribution on the minimum divided by the coefficient.

Comma 64 deducts contributions paid, and the four instalments of the minimum fall on 18 May, 20 August and 16 November 2026 and 16 February 2027, so a settled calendar year pays three instalments of this year’s minimum and one of last year’s. That comes to €4,596.15 rather than €4,611.64, and it does not change the result: the base is still gone. The cash calendar of a first and second year is a different problem, and one we have already priced.23

Where the floor stops biting

The minimum stops costing anything the moment presumed income reaches €18,808.00, since above that the contribution is simply the rate times the income in both worlds. For a retail business that is €47,020.00 of turnover. Everything below it is charged as though the shop had earned €18,808.00.9

The line runs the wrong way for anyone having a bad year. At €40,000 of turnover the minimum costs €584.29; at €10,000 it costs €3,173.00; at €2,000 it costs €4,318.85. A shop that halves its takings does not halve this part of its bill, and below €11,529.10 it does not reduce it at all.

Which coefficient the activity carries decides where those lines fall, because the coefficient sets how much presumed income a euro of turnover makes. A builder on 86% reaches the minimum at €21,869.77 of turnover; a shop on 40% needs more than twice that.

The builder on 86% keeps the least of the five at this turnover, €4,866.84, and is the only one of them paying real tax. The shop keeps the most and pays none. Neither result is about the tax rate.

The 35% reduction

Comma 77 lets an artisan or trader on the flat tax ask for “la contribuzione dovuta ai fini previdenziali, ridotta del 35 per cento”. Applied to the same €10,000 year, the contribution falls to €3,031.77, €145.23 of substitute tax reappears because there is now a base left to tax, and the shop keeps €6,823.00. That returns €1,434.64 of the €3,173.00 and leaves €1,738.36.69

The reduction is not free, and the request has a deadline: 28 February, and leaving the regime is final. Paying 65% of the contribution on the minimum buys 65% of a pension year — we priced the months it costs in an earlier piece.

What this does not settle

The 40% is a presumption, not a measurement, and that is the honest limit on the whole comparison. A shop whose real costs run below 53.9% of turnover does earn enough to cover the €4,611.64; the coefficient assumes 60%, so a shop matching the statute’s own assumption does not. Nothing here says what any particular business really made.

Two other things are outside it. A first year is charged by the month, at €384.31 a month for a trader, so an autumn opening pays a fraction of the €4,611.64 — and meets the whole of it in year two. And the €4,611.64 is not the only fixed cost of being registered as a business rather than a professional; the chamber of commerce fee and the accident insurance are real and are not counted here.

The figures assume no other income, which is what makes the leftover deduction worthless. Someone with a salary alongside the shop puts the excess against it under comma 64 and recovers part of the €3,173.00 — though the flat tax bars anyone whose employment income passed €35,000 in the previous year, so that person has a different problem first.58

We checked whether the result was a quirk of this year’s revaluation. On 2025 parameters the minimum was €18,555.00, the trader’s contribution €4,549.70, and the substitute tax on a €10,000 year was zero then too.3