The single biggest lever for a new solo business in Italy is the regime forfettario. Stay under the revenue cap and your effective tax rate can drop to just 5% for the first five years of trading. This is what setting up actually involves in 2026.
1. Sole trader or SRL: choosing your structure
Two paths dominate for a new business here, and they diverge sharply on liability and tax treatment.
- Ditta individuale (sole proprietorship). No minimum capital required, and it's the default choice for freelancers and small operators, but liability is unlimited and personal.
- SRL (with the simplified SRLS variant). A limited liability company with minimum capital ranging from €1 to €10,000 depending on which version you form. The flat-rate tax regime described below generally isn't open to SRLs, which makes this structure more of a step you take once the business has outgrown sole-trader status.
2. Getting registered: Partita IVA and the SRL paperwork
Almost everyone here starts by opening a Partita IVA, Italy's combined VAT and business tax number, applied for through the Agenzia delle Entrate using Form AA9/11 for individuals or AA7/10 for companies. Opening one carries no government fee, though most people bring in a commercialista to handle the filing correctly, which typically runs a few hundred euros. Part of the process is choosing an ATECO code that classifies your line of business.
Setting up an SRL adds several more steps: an Atto Costitutivo and Statuto (incorporation documents) signed in front of a notary, followed by registration with the Registro delle Imprese at your local Chamber of Commerce, work a commercialista usually coordinates on your behalf. Once that's done, you're issued a REA number and the company exists as a legal entity.
3. INPS, and INAIL if you're hiring
Every self-employed person and every company registers with INPS, the national social security institute, to handle pensions and contributions. Planning to bring on employees means registering with INAIL as well, which covers workplace accident insurance. Neither registration itself carries a fee, but the ongoing contributions add up: freelancers under INPS's Gestione Separata (those without their own professional pension fund) pay around 26.07% of net income.
4. Licenses that go beyond the Partita IVA
There's no single, blanket business license covering all of Italy. What applies to you comes down to your ATECO code and industry, and regulated professions have their own authorization requirements layered on top of standard registration. Your local Chamber of Commerce or the relevant professional association can tell you what your specific field needs.
5. Tax in Italy, from forfettario to IRES
Freelancers and sole traders under €85,000 in annual revenue can opt into the regime forfettario, a flat-rate scheme charging 5% for the first five years and 15% after that. There's no deduction for actual business expenses under this scheme, since the tax applies to a notional taxable base rather than real profit, and going over €100,000 in revenue during the year knocks you out of the regime immediately.
Outside the forfettario, sole traders fall under IRPEF, Italy's progressive personal income tax, which was reformed down to three brackets with a top rate of 43% kicking in at €50,000 of income. IRAP, a regional tax on production value, no longer touches individuals, freelancers, sole proprietorships, or partnerships at all; it's now a corporate-only tax.
SRLs are taxed under IRES, the corporate income tax, at a flat 24%, with IRAP added on top at roughly 3.9%, calculated against net production value rather than straight profit.
VAT sits at 22% standard, dropping to 10% for food, tourism, and hotel accommodation, with a further reduced rate carved out for essential goods.
6. Staying on the right side of Italian compliance
Electronic invoicing (fattura elettronica), routed through the Sistema di Interscambio (SdI), is mandatory for nearly every VAT-registered business, SRLs and most sole traders included. VAT filings land monthly or quarterly depending on your turnover and activity type. The annual income tax return (Modello Redditi) is due by October 31, and under the ordinary regime, estimated tax payments (acconti) are split 40% by June 30 and 60% by November 30.
Italy business costs at a glance
| Item | Cost |
|---|---|
| Partita IVA (sole trader/freelancer) | Free (government fee) |
| SRL minimum capital | €1 to €10,000 |
| Regime forfettario (first 5 years) | 5% flat tax |
| Regime forfettario (after 5 years) | 15% flat tax |
| Regime forfettario revenue cap | €85,000/year |
| IRPEF (ordinary regime, top bracket from €50,000) | 43% |
| Corporate tax (IRES), SRL | 24% |
| Regional tax (IRAP), SRL only | ~3.9% |
| VAT, standard rate | 22% |
Frequently asked questions
What is the regime forfettario in Italy?
A flat-rate tax scheme for freelancers and sole traders under €85,000 in annual revenue: 5% tax for your first five years, 15% after that, with no deductions since the rate applies to a notional taxable base.
How much does it cost to open a Partita IVA in Italy?
There's no government fee, though most people use a commercialista to handle the filing, typically a few hundred euros.
How much capital do I need to start an SRL in Italy?
Anywhere from €1 to €10,000 depending on the version, SRL or the simplified SRLS variant.
What's the corporate tax rate for an SRL in Italy?
IRES at a flat 24%, plus IRAP at roughly 3.9% on net production value, for a combined burden around 28%.
Do freelancers in Italy pay IRAP?
No. Individuals, freelancers, sole proprietorships, and partnerships are exempt from IRAP; it now applies only to corporate entities.
Fees and rates above are drawn from the Agenzia delle Entrate and INPS as of 2026, and they shift over time, so verify before you file. None of this is legal or tax advice. Talk to an Italy-qualified commercialista or lawyer about your specific situation.