Flat-rate regime, ordinary regime or SRL: how the same profit is taxed

Giulia, an IT consultant in Padua, is about to leave her salaried job and expects taxable income of 40,000 € in her first full year. One friend tells her the flat-rate regime would cost her 6,000 €, another that ordinary income tax would take 10,400 €, a third that an SRL would only pay 9,600 €. All three figures are right. None of them, on its own, answers her question.

Three entities, not three rates

The question "flat-rate, ordinary or SRL?" blends two separate choices. The first is about form: working on your own account as a natural person, whether as a sole trader or as a professional, or setting up a company. The second is about the tax regime a natural person applies to their own takings.

The flat-rate and ordinary regimes both belong to the same individual, who reports income of their own and pays tax of their own. An SRL, a limited liability company, is a different taxpayer from its shareholder: the Agency's page on corporate income tax, IRES, lists resident limited companies among those liable to it.

The most important consequence is this: in a sole trader's business the profit is already the owner's income, whereas in an SRL the profit stays with the company. To reach the shareholder it needs a further step, pay or a distribution, taxed in its own way, which this course does not quantify.

The flat-rate regime: one tax on an estimated income

The Agency presents the flat-rate regime, the forfettario, as a favourable scheme for individuals carrying on a business, a craft or a profession. A company therefore cannot use it: choosing the flat-rate regime already means choosing to operate as an individual.

Income is not computed by deducting real costs from takings. Takings are multiplied by a profitability coefficient set for each activity in annex 2 of law 145 of 2018. Those coefficients are published in a table that has not been read on a served page, so this course gives none of them.

Compulsory social security contributions actually paid are then deducted from that income. A single 15 % tax is applied to the result, replacing IRPEF and the regional and municipal surcharges. The substitute tax calculator asks for the coefficient and the contributions as inputs, precisely because it does not know them.

For a new business the tax drops to 5 % for the first five years, on three conditions: no artistic, professional or business activity in the previous three years; an activity that does not merely continue earlier work as an employee or freelancer; and, when taking over someone else's business, that business's takings within the entry threshold.

Who can get in, and when you are out

Entry is measured on the previous year, with two conditions to meet together: takings, scaled to a full year, of no more than 85,000 €, adding up every activity when there are several ATECO codes; and spending on employees, casual work and collaborators of no more than 20,000 € gross.

Someone starting from scratch has no previous year to measure. The Agency's page lets them in anyway, provided that when opening the VAT number they state that they expect to meet the conditions. The second module finds that statement again in the start-of-business form.

Some situations exclude people even when they respect the thresholds. For someone leaving a salaried job two matter most: employment income above 35,000 € in the previous year for 2025 and 2026, unless the job has ended; and working mainly for the current employer, or for one from the two previous years.

A third exclusion bears directly on the choice in this course. Nobody can use the flat-rate regime while controlling, directly or indirectly, an SRL whose activities can be traced back to the ones carried on individually. Running a flat-rate business alongside a controlled SRL in the same trade, then, normally does not work.

There are two ways out. If a condition lapses or an exclusion is triggered, the regime ends from the following year. If takings go above 100,000 €, however, it ends in the very year the threshold is crossed, and VAT becomes due from the transactions that take the business over the line.

The ordinary regime: IRPEF in bands

Outside the flat-rate regime an individual pays IRPEF. Gross tax is obtained by applying the band rates to total income, after deductible expenses, among which the Agency's page names social security contributions. Tax credits, such as the one for self-employment income, are then subtracted.

For 2026 there are three bands: 23 % up to 28,000 €, 33 % from 28,000 € to 50,000 €, and 43 % above. The Agency's table still shows 35 % for the middle band, but the notice below it explains that the 2026 Budget Law cut it to 33 %, which the calculator uses.

Regional and municipal surcharges come on top of IRPEF, whereas the flat-rate regime folds them into its single tax. Their rates vary by region and by municipality, so this module's comparison leaves them out; the catalogue has a separate calculator for the municipal surcharge.

Unlike flat-rate income, ordinary-regime income starts from the business's real costs. That is what makes the comparison delicate: an activity with heavy genuine expenses can have a much lower taxable amount under the ordinary regime than the flat-rate coefficient would assign to it.

The SRL: IRES on the company's profit

An SRL pays IRES on its own income, at 24 % according to the Agency's page. For the 2025 tax period only, the 2025 Budget Law introduced a lower rate subject to strict conditions on retained profits, investment and hiring; the course on the SRL's corporate tax covers it.

The rate is flat whatever the profit. That is what makes an SRL look attractive on paper once profit passes the points where IRPEF climbs to 33 % and then 43 %. But IRES taxes the company, not the shareholder: comparing it with IRPEF is fair only as long as the profit stays inside the company.

Besides IRES an SRL also owes IRAP, the regional tax on productive activities. Two official pages currently give different rates for it, and this course picks neither. The comparison below leaves it out, and it should be remembered as an extra cost for the SRL.

Then comes getting the profit to the shareholder. If Giulia sets up an SRL, the company's income is not hers: to use it she has to receive it as pay or as a profit distribution, each taxed in its own way. Any comparison that stops at IRES describes how the company is taxed, not how Giulia is.

One taxable amount, three taxes

To see what the rates alone do, fix a taxable amount and work out the three taxes. The table uses only the calculators' constants: 15 % and 5 % for the flat-rate regime, the 2026 bands for gross IRPEF, 24 % for IRES. No estimated figure has been added.

IRPEF on 40,000 € is built in two steps: 28,000 € at 23 % gives 6,440 €, and the next 12,000 € at 33 % gives 3,960 €, for 10,400 € in all. On 60,000 €, add the full second band, 22,000 € at 33 % or 7,260 €, plus 10,000 € at 43 %, 4,300 €: 18,000 €.

The table's limit is that in real life the taxable amount is not the same in all three cases. Under the flat-rate regime it depends on the coefficient, not on real costs; under the ordinary regime on costs actually incurred; in an SRL on the company's accounting profit, after any pay it gives its shareholder-director.

Several items cannot appear without a source that has been read: IRPEF tax credits, surcharges, the SRL's IRAP, tax on distributed profit and, for everyone, INPS contributions, which vary with the scheme and the legal form. The table isolates the effect of the rates, and nothing more.

Read that way, the table still says something solid. As long as the conditions are met, the flat-rate regime taxes the same amount less than IRPEF and less than IRES. Gross IRPEF starts at 23 % already and pulls further away from 15 % as income moves into the 33 % and 43 % bands.

The questions that decide

• Will expected takings stay comfortably below 85,000 €, with room for a good year?
• Are the activity's real costs high or low compared with what the flat-rate coefficient assumes?
• Will you need staff or collaborators costing more than 20,000 € gross a year?
• Will the work go mainly to a former employer, or sit alongside a controlled SRL in the same sector?
• Is the profit needed to live on, and so bound to leave the business, or will it stay invested?

The first four questions tell you whether the flat-rate regime is available. The last one says a lot about the SRL: profit kept in the company to grow is taxed at IRES, while profit the shareholder draws every year goes through a second step. If you must live off the business at once, redo the comparison with that step.

There are also reasons that are not about tax, such as separating personal assets from business ones or bringing in partners. This course does not cover them; it mentions them because a decision made by looking only at the tax column risks being made for the wrong reason.