Tax Observatory › Direct taxes › Flat-rate scheme taxpayers close to the €85,000 and €100,000 thresholds: what happens at the end of 2026

Flat-rate scheme taxpayers close to the €85,000 and €100,000 thresholds: what happens at the end of 2026

Taxpayers under the regime forfettario (Italian flat-rate scheme) who collect more than €85,000 in 2026 remain in the scheme until 31 December and leave it from 2027; those who exceed €100,000 leave it immediately, with VAT due from the transaction that takes them over the limit and income for the whole year determined under the ordinary rules. What counts is collection, not invoicing.

A taxpayer under the *regime forfettario* (Italian flat-rate scheme) who collects more than €85,000 in 2026, but not more than €100,000, applies the scheme until 31 December and leaves it on 1 January 2027. Above €100,000 the scheme ceases in the same year: VAT is due from the transaction that takes revenues over the threshold, and income for the whole of 2026 is determined under the ordinary rules. In both cases what counts is the date of collection, not the date of the invoice.

The legislation and administrative guidance

The thresholds are laid down in point (a) of paragraph 54 and in paragraph 71 of Article 1 of Law No. 190 of 23 December 2014, as amended, with effect from 1 January 2023, by Article 1, paragraph 54, of Law No. 197 of 29 December 2022. Paragraph 54 requires that revenues or fees for the previous year, annualised, have not exceeded €85,000. Under paragraph 71, the scheme ceases from the following year if a requirement is no longer met or a ground for exclusion (causa ostativa) under paragraph 57 arises, and in the same year if the revenues or fees received exceed €100,000.

According to Circular No. 32/E of 5 December 2023, what counts is collection, for VAT and withholding tax (ritenuta d’acconto) purposes as well, and the €100,000 threshold is not annualised. For those already in the scheme, the cash basis applies to professionals and businesses alike (paragraph 64), including for invoices issued in previous years; the accrual basis is relevant only for those entering the scheme after keeping ordinary accounts. Where a taxpayer has several ATECO codes (activity classification codes), revenues and fees from all of them are added together (point (b) of paragraph 55).

With effect from 1 January 2027, paragraphs 54 to 89 are repealed (Articles 376 and 377 of Legislative Decree No. 117 of 19 June 2026) and the scheme continues under Articles 232 to 243 of the Consolidated Income Tax Act approved by that decree. Presidential Decree No. 633/1972 is replaced by the Consolidated VAT Act (Legislative Decree No. 10 of 19 January 2026).

Between €85,000 and €100,000: leaving the scheme from 2027

From 2027 the taxpayer must charge VAT to customers (rivalsa), keep the VAT and accounting registers, carry out the periodic VAT settlements and determine income under the ordinary rules. The adjustment of the deduction (rettifica della detrazione) is an open question. Article 234, paragraph 4, of Legislative Decree No. 117/2026 requires it to be made in the return for 2027, referring to Article 59 of the Consolidated VAT Act. However, the criterion set out in Circular No. 32/E (goods and services not yet sold or used, capital goods in use for less than four years) was laid down in Article 19-bis2, paragraph 3, of Presidential Decree No. 633/1972. That paragraph is repealed by Article 9 of Legislative Decree No. 186 of 4 December 2025 with effect from 1 January 2027 (Article 4, paragraph 12-octies, of Decree-Law No. 200 of 31 December 2025, converted into law by Law No. 26 of 27 February 2026), without prejudice to adjustments in progress at that date. Article 59 of the Consolidated VAT Act does not reproduce it. It has not been clarified whether the clause preserving adjustments in progress covers taxpayers who move to the ordinary regime on 1 January 2027 itself: in our view, an inventory as at 31 December 2026 should be drawn up in any event.

For artisans and traders benefiting from the 35 per cent contribution reduction (paragraph 77), the relief ends from the following year and cannot be claimed again (paragraph 82; from 2027, Article 241, paragraph 7, of Legislative Decree No. 117/2026); INPS (the Italian social security institute) must be notified that the requirements are no longer met. In our view, under the historical method (metodo storico) the 2027 IRPEF (personal income tax) payments on account are based on IRPEF for 2026, which does not include flat-rate income: the balance for 2027 and the first payment on account for 2028 should be planned together.

Above €100,000: immediate exit

If the invoice whose collection takes revenues over the limit has already been issued without VAT, it must be supplemented by a debit note (nota di variazione in aumento) under Article 26, paragraph 1, of Presidential Decree No. 633/1972, sent through the Exchange System (SdI). VAT is also charged on transactions carried out but not yet invoiced. Invoices issued before that collection remain without VAT even if paid later; for direct tax purposes, however, the amounts form part of ordinary income and, if paid after the threshold is exceeded, are subject to withholding tax (Circular No. 32/E, sections 3.1.1, 3.2 and 3.3).

From that same moment, the taxpayer must set up VAT registers and accounting records; transactions carried out since the beginning of the year must be entered in them by the deadline for filing the return. The adjustment of the deduction is made in the VAT return for 2026, to be filed in 2027, to which paragraph 3 of Article 19-bis2 still applies. For capital goods, the adjustment for the year is calculated in proportion to the months remaining after leaving the scheme, and the remaining fifths are adjusted in the following years; for services not yet used, the adjustment is based on the remaining months (Circular No. 32/E, section 3.1.2).

Income for the whole of 2026 is determined under the ordinary rules, with costs taken net of the input VAT recoverable through the adjustment of the deduction; the professional becomes a withholding agent (sostituto d’imposta) from the first payment made thereafter. Payments on account made under the historical method remain valid; the balance is calculated under the ordinary rules. In our view, artisans and traders should check their 2026 contributions with INPS, since paragraph 82 does not govern leaving the scheme during the year.

Year-end cases

An invoice issued in December 2026 and collected in January 2027 does not count towards the 2026 thresholds. If the taxpayer is under the ordinary regime from 2027, the fee forms part of 2027 income (Article 238, paragraph 2, of Legislative Decree No. 117/2026) and remains without VAT, because the transaction is treated as carried out when the invoice is issued. If the taxpayer remains in the scheme, the amount collected counts towards the €100,000 limit for 2027. Those who registered for a VAT number in 2026 annualise their collections for the purposes of the €85,000 threshold, but not of the €100,000 threshold.

For 2026, the exclusion threshold for employment and similar income received in 2025 is €35,000 (Article 1, paragraph 12, of Law No. 207 of 30 December 2024, as amended by Article 1, paragraph 27, of Law No. 199 of 30 December 2025), instead of the €30,000 laid down in point (d-ter) of paragraph 57. The test does not apply if the employment relationship has ended; according to Circular No. 10/E of 4 April 2016 (section 2.3), however, it does apply if, in the same year, the taxpayer received a pension or started a new employment relationship still ongoing at 31 December. For 2027, once the derogation ends, 2026 income is compared with €30,000 (point (f) of Article 233, paragraph 1, of Legislative Decree No. 117/2026), unless the derogation is extended.

An example

A professional has collected €82,000 by 30 November 2026. In December, the professional issues invoice A for €6,000 and collects the amount: with collections of €88,000, they remain in the scheme for 2026 and leave it from 2027. On 20 December they issue invoice B for €15,000.

If B is collected on 12 January 2027, collections for 2026 remain at €88,000 and the €15,000 forms part of ordinary income for 2027, without VAT; in our view, a client acting as withholding agent must apply the 20 per cent withholding tax (from 2027, Article 38 of Legislative Decree No. 33 of 24 March 2025), as the fee is no longer flat-rate income; the client should be informed accordingly.

If B is collected on 28 December 2026, collections rise to €103,000 and the scheme ceases from that date. A debit note is required for VAT of €3,300 (22 per cent of €15,000), and income for the whole of 2026 is determined under the rules for self-employment income. If the client is a withholding agent, the payment of B should have been subject to the 20 per cent withholding tax under Article 25 of Presidential Decree No. 600/1973, amounting to €3,000, even though the invoice had been issued under the scheme (Circular No. 32/E, section 3.3). If the client has already paid the full amount, there is no administrative guidance on regularisation, and the solution should be agreed with the client.

In practice

• By mid-December, the taxpayer, together with the firm, reconstructs 2026 collections, including advance payments received from clients, by the date each amount was credited to the account, adding together all activities.
• Once €100,000 is exceeded, the ordinary obligations apply from the collection that takes revenues over the threshold.
• Those leaving the scheme from 2027 draw up, by 31 December 2026, an inventory of goods, services not yet used and capital goods, for any adjustment of the deduction.
• Those with employment or pension income check by December, on their payslip, the 2026 total against the €30,000 limit.
• Bank statements, invoices and schedules should be kept until the time limit for assessment has expired.

Frequently asked questions

I exceeded €85,000 in November 2026: must I charge VAT immediately?

No. If collections for 2026 do not exceed €100,000, the scheme applies until 31 December 2026; VAT applies to transactions carried out on or after 1 January 2027.

I issued an invoice in December but the client is paying in January: does it count in 2026?

No. For the thresholds, what counts is collection. The fee counts for 2027: it forms part of that year’s income, flat-rate or ordinary depending on the applicable regime, and, if you remain in the scheme, it counts towards the limits.

I have exceeded €100,000: must I reissue the invoices already issued?

The invoice whose collection took revenues over the threshold is supplemented by a debit note; transactions carried out from that moment and not yet invoiced are invoiced with VAT. Invoices issued earlier remain without VAT even if paid later; if the client is a withholding agent, however, withholding tax applies to the payment made after the threshold is exceeded.

Sources

Article 1, paragraphs 54, 55, 57, 61, 64, 67, 71, 72, 77 and 82, of Law No. 190 of 23 December 2014 (repealed with effect from 1 January 2027).

Article 1, paragraph 54, of Law No. 197 of 29 December 2022.

Article 1, paragraph 12, of Law No. 207 of 30 December 2024, as amended by Article 1, paragraph 27, of Law No. 199 of 30 December 2025.

Articles 232, 233, 234, 238, 241, 376 and 377 of Legislative Decree No. 117 of 19 June 2026 (Consolidated Income Tax Act), applicable from 1 January 2027.

Articles 6, 16, 19-bis2, 23, 24, 25 and 26 of Presidential Decree No. 633 of 26 October 1972 (repealed with effect from 1 January 2027); Articles 59, 170 and 171 of Legislative Decree No. 10 of 19 January 2026 (Consolidated VAT Act).

Article 9 of Legislative Decree No. 186 of 4 December 2025; Article 4, paragraph 12-octies, of Decree-Law No. 200 of 31 December 2025, converted into law by Law No. 26 of 27 February 2026.

Article 25 of Presidential Decree No. 600 of 29 September 1973 (repealed with effect from 1 January 2027; now Article 38 of Legislative Decree No. 33 of 24 March 2025); Article 21, paragraph 11, of Law No. 449 of 27 December 1997.

Agenzia delle Entrate (Italian Revenue Agency), Circular No. 10/E of 4 April 2016, Circular No. 9/E of 10 April 2019 and Circular No. 32/E of 5 December 2023; information sheet “Regime forfetario”.

INPS, Circular No. 35 of 19 February 2016.