Freelance in Italy: Forfettario vs Semplificato - A Practical Guide for Expats

1. Introduction

If you’re relocating to Italy and planning to work as a freelancer, consultant, or small business owner, one of your first steps will be choosing the right regime fiscale (tax regime) when opening your Partita IVA.

• How much tax you pay.
• What bookkeping you must do.
• Whether you can deduct expensed or recover VAT.

1. Regime Forfettario (Flat-Rate Regime).
   
2. Regime Semplificato (Simplified Regime).

2. Forfettario regime (Flat-Rate): simple and smooth solution

🕵️ Key Features:

• Eligibility:
  • Only for individuals with a Partita IVA (not companies).
  • Annual revenue/fees up to €85,000.
  • Employee revenue  ≤ €30,000/year.
    
• Tax Rate:
  
  • Imposta sostitutiva of 15% on taxable income.
  • Reduced to 5% for the first five years if you meet startup conditions (e.g., new activity, no recent similar business).
• Income Calculation:
  
  • Apply a fixed coefficiente di redditività (profitability coefficient) to your total revenue, based on the type of your activity (and ATECO code).
  • Example: if your coefficient is 78%, only 78% of your revenue is considered taxable income — no need to track actual expenses.
• VAT Treatment:
  • No VAT charged to clients and no VAT recovery on purchases.
  • Invoices must include a legal note stating VAT exemption.
• Deductibility:
  • You can only deduct compulsory social security contributions.
  • No other business or personal expense deductions.
• Admin & Compliance:
  • No bookkeeping obligations beyond invoices.
  • No withholding tax (ritenuta d’acconto) on invoices.
  • Annual tax return only.

💡Best for: Low-cost, lower-turnover businesses seeking minimal paperwork and predictable taxes.

3. The Regime Semplificato (Simplified): deduction-friendly flexibility

🕵️ Key Features:

• Eligibility:
  • Professionals and sole traders not eligible for Forfettario, or who prefer analytical deductions.
  • Revenue limits: €500,000 for services, €800,000 for other activities (no limit for freelancers on certain activities).
• Tax Rate:
  • Standard progressive IRPEF brackets (23%-43%) plus regional and municipal surcharges.
• Income Calculation:
  • Based on actual cash principle: income minus deductible expenses paid during the year.
    
• VAT Treatment:
  • VAT must be charged, collected, and paid; you can deduct VAT on business purchases.
• Deductibility:
  • All legitimate business expenses (equipment, rent, marketing, etc.) are deductible.
  • You can also benefit from personal tax deductions (medical expenses, dependent allowances) if you owe IRPEF.
• Admin & Compliance:
  • Must keep VAT registers, income/expense records, and issue electronic invoices.
  • Must apply withholding tax (ritenuta d’acconto) where required.
  • More frequent filings (annual VAT return, quarterly VAT settlements, model 770 for withholdings).

💡Best for: Higher-income professionals or those with significant deductible expenses who can benefit from VAT recovery and Impatriati incentives.

🌎 Special Note for Expats:
The Regime Semplificato is compatible with the “Regime Impatriati” tax relief scheme, which can reduce your IRPEF on Italian-source income by up to 70%-90% for five years if you move your tax residence to Italy. This is not available with the Forfettario.

4. Side by side comparison

4. When to Choose Each Regime

👍 You can choose Forfettario (Flat-Rate) if:

• Your income is well below €85,000.
• You have low expenses and don’t need to recover VAT.
• You want the simplest admin process possible.
• You’re starting a new business and qualify for the 5% rate.
  
  

👍 You can choose Sempificato (Simplified) if:

• Your income exceeds €85,000 or you expect rapid growth.
• You have substantial deductible costs.
• You work with clients who expect VAT invoices.
• You’re eligible for Regime Impatriati and want to maximize the benefit.

5. Practical Examples

👩‍💻 Anna, freelance translator: Earns €50k/year with minimal costs. Forfettario likely offers the lowest tax and admin burden.

 👨‍💻 James, marketing consultant: Earns €150k/year with high rent, travel, and software expenses. Semplificato allows expense deduction and Impatriati tax relief.

6. Final Tips for Expats:

• Always check if you meet residency and source of income requirements for your chosen regime.
• Consult your tax experts/ commercialista to optimize setup and handle filings. With Xolo you have all the support you need, in English
• Review your regime annually - you can switch if your income, expenses, or personal situation changes.

Any doubts on the right tax regime in Italy? Rely on Xolo!

As a freelancer in Italy, choosing the correct tax regime is an important decision that can impact your financial situation and your ability to grow your business. There are several tax regimes available to freelancers, each with its own advantages and disadvantages for your business.

In conclusion, selecting the best tax regime for freelancers in Italy requires careful consideration of the above factors and it can therefore be a daunting task.

That's where Xolo can help!

Xolo is an all-in-one platform that helps freelancers and self-employed individuals in dealing with their admin. Xolo is much more than an accounting service. Xolo is the trusted partner for every freelancer and free professional in a flat rate regime in Italy, with an all-in-one solution to manage invoicing, accounting, taxation and to finally make independent work simple.

How do we do it? Thanks to a mix of technology and qualified tax advice able to give back to every freelancer time and energy to dedicate to the development of their business and its projects!