Flat Tax Benefit Extended for Employees & Pensioners, Income Limit Raised to €35,000 – Potential for Further Increase Stalled
Rome, Italy – Good news for Italian employees and pensioners utilizing the regime forfettario (flat tax) scheme: the current income limit for accessing the 15% flat tax rate will be confirmed at €35,000 for 2025 and possibly beyond. This re-proposal, building on a transitional rule already in effect since January of this year, aims to broaden access to the simplified taxation system for VAT numbers.
Currently, the fully operational limit stands at €30,000, and it remains unclear whether the €35,000 threshold will become a permanent fixture. Details are pending the official text of the Budget Bill and its final approval by year-end. Though, the rule will apply to both new applicants and existing flat-tax holders undergoing annual compliance checks for permanence.
Those with a VAT number who earn income from employment or similar sources (including pensions) up to €35,000 in 2025 will be eligible to continue utilizing the 15% flat tax. Exceeding this limit will trigger a return to the ordinary tax regime.
Despite advocacy from the League party for an increase to €100,000, plans to raise the maximum income ceiling for the flat tax have been put on hold. The idea of increasing the threshold from the previously expected €85,000 does not appear in the 2026 budget.
This setback is attributed to new European Union regulatory frameworks. As of January 2025,a new cross-border exemption regime allows Member States to offer a flat-rate regime of up to €85,000 for domestic sales and €100,000 for intra-EU transactions.Crucially, individual states no longer have the option to request derogations from these EU limits – a provision that previously allowed Italy to raise the maximum income threshold. This change represents a “relevant block to each extension request” beyond the €85,000 base, according to reports.
No statements regarding a higher income limit were made during the presentation of the 2026 Budget Law, leaving the topic “off the radar” for now.
Readers interested in staying informed about Italian tax and employment benefits can sign up for a free daily email newsletter or join the Tax Details Facebook group for discussion and expert insights.
