Flat-rate scheme
How the regime works, and when it costs you money.
OpenSelf-employment · Partita IVA
Opening a VAT number in Italy
Opening a VAT number in Turin, a partita IVA, takes a form and a few minutes. The three decisions you make while filling it in (activity code, tax regime, social security fund) are what you will live with for years, and two of them are awkward to change later.
01 · First decision
Decision one: the ATECO code
The ATECO code describes what you do. It looks like a statistical formality and it is not: it determines the profitability coefficient used in the flat-rate regime, it decides which social security fund you belong to, and for some activities it triggers registration with the Chamber of Commerce or a licence requirement.
Choosing a code that vaguely fits, then discovering that it puts you in the wrong fund or the wrong coefficient, is the most common and most expensive error. Corrections are possible but not retroactive.
If you genuinely carry on more than one activity, the revenue is split and each part takes its own coefficient. That is legitimate and sometimes advantageous, unlike picking a single favourable code that does not describe what you actually do.
02 · Second decision
Decision two: flat-rate regime or ordinary
The regime forfettario applies up to 85,000 euro of revenue actually received in the year. Instead of deducting your costs one by one, you apply a fixed profitability coefficient set by law for your activity, and the rest is treated as costs whether you incurred them or not. On the resulting figure you pay a substitute tax of 15%, reduced to 5% for the first five tax periods when the conditions for a genuinely new activity are met.
That substitute tax replaces income tax and its regional and municipal surcharges. For someone resident in Turin this is a real saving, because those surcharges are set locally and are not small.
- It suits people whose real costs are lower than the coefficient assumes: consultants, translators, developers, most service providers.
- It penalises anyone with heavy real costs, significant equipment to buy, or VAT to reclaim on purchases.
- Personal deductions are lost. With no income tax there is nothing for mortgage interest, medical expenses or dependants to offset. If the VAT number is your only income, those simply disappear.
- With private clients not charging VAT is a genuine price advantage; with business clients, who reclaim it anyway, it is neutral.
Thresholds, rates and coefficients are set by law and have been revised more than once. The figures above are those in force at the time of writing and are verified against the year that actually applies to you before anything is filed.
04 · Nationality and permits
If you are not Italian
EU citizens can register a VAT number in Italy on the same terms as Italians, once resident. Non-EU citizens need a residence permit that allows self-employment: a permit issued for subordinate employment does not automatically cover it, and converting one is a separate procedure with its own timing.
A second point worth raising early: if you keep clients or income in another country, the interaction between the two tax systems (and between the two social security systems) has to be looked at before you invoice, not after.
Working from Turin for a company abroad is common and perfectly manageable, but it is not the simple case. The page on tax residency sets out what changes once Italy considers you resident.
05 · The obligations
What happens after opening a VAT number in Turin
The regime is simplified, not exempt. These are the obligations that remain.
Electronic invoicing
Compulsory, flat-rate regime included. The transmission channel is configured once and then it is routine.
Stamp duty
Applies to invoices issued without VAT above a small threshold, and is paid quarterly online.
The second year
Balance for year one and advance for year two fall together. Anyone who has not set money aside notices in June.
Crossing the threshold
Above 85,000 you leave the regime from the following year; above 100,000 you leave immediately and must charge VAT from that moment, including on invoices already issued.
Frequently asked
The questions that keep coming up
I have a job and want to freelance on the side. Can I?
Usually yes, with two checks. Your employment income in the previous year must not exceed the statutory limit (35,000 euro at the time of writing) for the flat-rate regime to apply, and you cannot invoice mainly to your own employer or to anyone connected to them.
Your employment contract may also require you to notify them, which is a separate question from the tax one.
Can I deduct my laptop, my phone, my car?
Not in the flat-rate regime. No cost is deducted item by item: the coefficient is assumed to cover them.
The only figure subtracted is the compulsory social security contributions actually paid during the year.
Should I open now or wait until January?
It depends on whether you already have work to invoice. Opening late in the year has two effects: the revenue threshold is scaled to the days of activity, and the reduced rate consumes a whole tax period regardless.
If there is nothing to invoice yet, waiting is usually more efficient.
How long does it take?
The VAT number itself is issued quickly. For businesses requiring Chamber of Commerce registration the combined procedure takes a little longer.
Some activities also need a notification to the Comune di Torino before you can start, which is worth checking in advance rather than discovering afterwards.
From the blog
Articles that go deeper into this page
Opening a VAT number in Turin: the steps and the real timings
The VAT number itself arrives quickly. What takes time are the choices before the application and the steps after it: the Registro Imprese, INPS and, where needed, a SCIA to the Comune. Here is the right order and how long each stage takes.
Read the articleOpening a VAT number mid-year: what really changes
The €85,000 threshold is scaled to the days of activity, and the 5% rate uses up a whole tax year regardless. These are the two things that surprise people who open in September convinced they have a full year ahead of them.
Read the article
Let's talk
The form takes minutes. The decisions inside it last years
Bring your expected turnover, your real costs and the kind of clients you will invoice. With those three things the choices become arithmetic rather than guesswork.
Decision three: the social security fund
This is the part people underestimate. Contributions are calculated before the tax and usually cost more than it.
The second-year problem
It is the same for everyone and it surprises almost everyone.
- Year one is light: there is no prior year on which to base advances
- Year two brings the balance for year one and the advance for year two together
- That single payment is often close to double what was expected
- Setting aside a fixed share of every invoice, from the first one, is the only thing that prevents it
Work out your share