Italy flat-rate regime: what you really pay in year one

How it is calculated, in short

The income is not calculated by deducting real expenses: you multiply your receipts by your activity’s coefficient. 78% for professions, 40% for trade, bars and restaurants, 86% for construction and real-estate activities, 67% for many other activities.

On the income you pay contributions: in the Separate Management 26.07%; craftspeople and tradespeople a fixed contribution, plus a percentage on the part above the minimum. Then, on the income less the contributions paid in the year, the substitute tax: 15%, or 5% for the year you open and the four after, if you qualify.

The example, at steady state

A professional in the Separate Management collects €30,000 in a year. Income: 30,000 × 78% = €23,400. Contributions at 26.07%: €6,100.38. With the tax at 5% she pays €864.98 and has about €1,920 a month left; at 15% the tax rises to €2,594.94 and she has about €1,775 left.

This is the sum for an ordinary year. But the money does not go out when you collect it: it goes out at the tax deadlines. And the first round goes differently.

The first year: it seems all free

Advances are calculated on the previous year’s tax and contributions. In the first year there is no year before: in the Separate Management, usually, until June of the next year you pay nothing.

There is a second effect. Contributions are deducted from income in the year you really pay them. In the first year you have paid none, so the tax is calculated on the whole €23,400: at 5% that is €1,170, not €864.98.

Craftspeople and tradespeople, instead, pay the fixed contributions from the first year, in four installments: in May, August, November and February.

The second year: everything arrives together

As a rule by June 30 of the second year, or by July 30 with 0.40% extra, our professional pays the first year’s balance and the second year’s first advance. Dates can shift: in 2026, for flat-rate taxpayers, the first deadline was moved to July 20. The sum:

• balance of the first year’s tax: €1,170.00;
• balance of the first year’s contributions: €6,100.38;
• first advance of the tax, half of the previous year’s: €585.00;
• first advance of the contributions: the Separate Management advances are 80% of the previous year’s contributions, in two equal installments, so €2,440.15;
• in all €10,295.53, in one go. By November 30 comes the second advance: another €3,025.15.

How much to set aside, and why right away

In a normal year our professional pays €6,965.36 in contributions and tax: about €23 for every €100 collected. In the second year, between June and November, €13,320.68 goes out.

It is not an extra tax: it is the sums of two years overlapping, and then the rhythm settles. If you set aside your percentage from every receipt from day one, in a separate account, the money is there in June. The trouble starts when in the first year you spend that money, because nobody asks you for it.

If you think you will collect less in the second year, you can pay lower advances calculated on the expected income: but if you get it wrong on the low side, you pay the difference with penalties and interest. It is a choice to make with the accountant.

To check before opening

• the requirements for the 5%: no activity in the previous three years, and work that is not the simple continuation of what you were doing;
• the limits: €85,000 of receipts, and employee income of the previous year not above €35,000 (for 2025 and 2026; from 2027 it goes back to €30,000, unless extended);
• the ATECO code, which decides the coefficient, and where you will pay contributions: Separate Management, craftspeople and tradespeople or a professional fund;
• invoices: since 2024 they are electronic in the flat-rate regime too, and above €77.47 without VAT a €2 stamp duty is needed.