FISCAL REGIME FOR VAT HOLDERS IN ITALY

Special fiscal regime for self-employed workers
Among all the Italian fiscal regimes the regime forfettario is undoubtedly the most advantageous for young workers who intend to undertake their own job activity as self-employed. At this time, this fiscal option is the only regime that establishes facilitations for self-employed workers in Italy. These kind of workers are holders of VAT numbers and are expected, under National laws, to pay their own social security quotas as well as taxes on their earnings. Therefore, starting a business on one’s own can be quite costly and worrying for the younger population. This kind of taxation regime was first introduced by Law 190/2014, then amended with Law 208/2015, and the last modifications were then introduced with Law 145/2018. Before the last amendment, various different requisites were necessary in order to be able to access this regime. Following the Law of 2018, all companies and professionals with an income not exceeding the sum of € 65.000, can come under the forfettario regime. This income limit was also confirmed for year 2020.
Taxation for this regime is 15% on the workers’ income, but the first five years when starting a new business activity the percentage is reduced to 5% with the aim of helping self-employed workers to manage expenses, taxes and still have an income as they start out. Each worker will need to check the ATECO code for the kind of business because the Tax Office has set a percentage for each code, that must be used to calculate the amount of income that will be subject to tax. Social security amounts will be deducted from the final amount that will be subject to taxes. The final figure will be the income subject to taxation multiplied by 15%: being the tax due for that specific year.

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