Italy considers raising flat tax threshold to 100,000 euros

The Italian government is evaluating a proposal to increase the revenue threshold for the flat tax regime for VAT-registered individuals from 85,000 to 100,000 euros. This measure is a key point of discussion within the upcoming financial maneuver, with the Lega party pushing for the expansion.

To comply with European Union regulations, which set an 85,000 euro limit for VAT exemptions, the government is considering a dual-track approach. Under this hypothesis, professionals earning between 85,000 and 100,000 euros could maintain the 15 percent substitute tax (or 5 percent for new businesses) but would be required to apply VAT on their invoices. Once revenue reaches 100,000 euros, the individual would exit the preferential regime entirely.

Challenges to the reform include the need for fiscal coverage and potential economic impacts. Previous increases in the threshold have resulted in higher-than-expected revenue losses. Additionally, there are concerns regarding the 2027 deadline, after which the income limit for combining employment or pension income with small business activities could revert to 30,000 euros, potentially penalizing those with dual income sources.