Income locked in
Actual income above the agreed figure is not taxed. Over two years of growth, this is the main benefit.
VAT numbers · Tax choices
Two-year tax agreement (concordato preventivo biennale)
The Revenue Agency proposes an income figure, and you decide whether to accept it for two years. If you earn more, you do not pay more; if you earn less, you still pay on the agreed figure. It is a bet, and it has to be made with the numbers in front of you.
01 · The mechanism
What the two-year tax agreement is
It is an advance agreement between the taxpayer and the Agenzia delle Entrate (the Italian Revenue Agency) on taxable income for two tax years. The Agency makes a proposal based on the data it already holds; the taxpayer can accept or reject it.
Once the proposal is accepted, the agreed income becomes the base on which taxes and contributions are calculated for the two years, regardless of how much you actually earn. Higher actual income is not taxed; lower actual income does not reduce what you owe.
- The proposal is drawn up by the Agency on the basis of past tax returns, reliability indicators and its databases.
- You access it through the software provided, which produces the proposal from the data you enter.
- Joining is optional and must be done by a deadline linked to the tax return.
- It binds you for two tax years, unless a cause for termination or forfeiture arises.
- All filing, bookkeeping and VAT obligations remain: the agreement concerns the taxable base, not the compliance work.
The agreement covers income taxes and, under its own rules, IRAP (the regional tax on productive activities). VAT stays completely outside it: it is calculated and paid on actual transactions, and the agreed income has no effect on it.
02 · The requirements
Who can access it
It is open to people with business income and self-employment income, subject to compliance requirements that need checking before you look at the numbers.
- You must have no tax or social security debts above a threshold, or must have paid them off before joining.
- You must have filed the tax returns for the previous tax years.
- There must be no convictions for certain tax and company offences.
- Some specific causes rule you out: starting the business in the previous period, extraordinary transactions, failure to declare significant income.
- Taxpayers under the flat-rate scheme (regime forfettario) have had their own rules, with terms and a duration that differ from the ordinary ones.
- Joining is never compulsory: turning it down does not in itself lead to any penalty.
Whether your debts are in order must be checked first. If you have amounts handed to the collection agent above the threshold, you must pay them off or set up instalments by the joining deadline, and checking this requires an up-to-date statement of the amounts entrusted for collection: it is not something to do in the last week.
03 · What you get
What you gain by joining
The advantage is not only a tax one. To a large extent it is less uncertainty, which has a value of its own for anyone who works for themselves.
Limits on tax assessments
For the agreed years, presumptive assessments are ruled out, except where the agreement is forfeited.
ISA reward benefits
Joining gives access to the reward regime of the ISA (the synthetic tax reliability indices).
Predictability
You know in advance how much you will pay over the two years: a useful figure for planning investment.
Substitute tax on the higher income
On the part of the agreed income above the income previously declared, a lighter substitute tax can apply under certain conditions.
Contributions
The contribution base follows the agreed income, with the option of paying on actual income if it is higher.
04 · The calculation
When the two-year tax agreement pays off, and when it does not
The comparison is between two figures: the income proposed and the income you can reasonably expect over the two years. Everything else is secondary.
| Expected situation over the two years | Assessment |
|---|---|
| Income rising above the proposal | It pays off: the extra income stays outside the taxable base |
| Income stable and close to the proposal | Neutral in tax terms, positive in terms of certainty |
| Income expected to fall | Risky: you would pay tax on income you do not have |
| Highly variable or seasonal business | Assess carefully: variability is the real enemy of the agreement |
| Major investments planned | Needs calculating: depreciation lowers actual income but not the agreed income |
| Business may close | There are grounds for termination, but check them beforehand |
Questions to ask yourself first
The calculation is not just arithmetic.
- Do the two years ahead look like the two behind you?
- Are there contracts already signed that change the picture?
- Are investments planned that will lower your income?
- Is there a risk of losing your main client?
05 · The ways out
When the agreement comes to an end
There are two different routes: termination, which depends on objective events, and forfeiture, which depends on the taxpayer's conduct.
- The agreement terminates if the business closes, if the activity carried on changes substantially, or if exceptional events reduce income beyond a threshold.
- The agreement is forfeited if significant undeclared income or activities come to light.
- It is also forfeited if serious violations are found in the agreed years or in earlier ones.
- It is forfeited if you do not pay what is due under the agreement.
- If it is forfeited, the effects lapse for both years and ordinary taxation applies again.
- Losing the compliance requirements during the two years needs careful checking.
Retroactive forfeiture is the heaviest consequence: you lose the benefits for the whole two years, and taxes are recalculated on actual income. That is why joining calls for a position in good order, not just an attractive proposal.
06 · Day-to-day management
What changes in everyday management
Joining does not make bookkeeping simpler: actual income still has to be worked out and declared.
- Bookkeeping stays ordinary or simplified according to your regime: nothing changes in the recording obligations.
- The tax return is filed showing both actual income and the agreed income, which becomes the taxable base.
- VAT is calculated on real transactions, with no link to the agreement.
- Advance payments are calculated on the agreed income, with a surcharge for the first year.
- Past losses and whether they can be used follow specific rules.
- Social security contributions are calculated on the agreed income, with the option of paying on actual income if it is higher, a choice that makes sense with your pension in mind.
Frequently asked
The questions that keep coming up
If I earn more than the agreed income, is the extra taxed?
No, and that is precisely the main benefit of the scheme: actual income above the agreed figure does not form part of the taxable base for income taxes.
It does still matter for VAT, which follows real transactions, and the effect on contributions needs weighing: there you can choose to pay on actual income so as not to penalise your pension position.
And if the year goes badly?
You still pay on the agreed income. It is the risk that mirrors the benefit, and it has to be accepted knowingly.
There are grounds for termination linked to exceptional events that reduce income beyond a significant threshold, but they are defined circumstances: an ordinary drop in business is not enough.
Can I join for one year only?
No, joining binds you for the full two years. You cannot join for the first year and leave for the second.
Leaving early happens only on the grounds for termination or forfeiture set by law, which are not the taxpayer's choice.
Does joining protect me from tax checks?
In part. For the agreed years, presumptive assessments are ruled out, which is real protection.
Checks on VAT, on undeclared revenue and on violations that lead to forfeiture remain possible. It is not a general shield, but a targeted limit on certain types of assessment.
Let's talk
The proposal has to be read alongside the figures you expect, not on its own
If the two years ahead look like growth, it almost always pays off. If they are uncertain or falling, the sums need redoing item by item.