VAT-registered businesses: half of those on the flat-rate scheme have turnover of less than 20,000 euros

The picture changes if we take a broader view. Based on data from the Italian Revenue Agency, the Court of Auditors reports that, among the tax returns submitted in 2025, there are 81,000 flat-rate taxpayers with income or remuneration exceeding 80,000 euros , but within the maximum threshold of 85,000 (raised as such from 2023). These are the taxpayers who, come autumn, begin to monitor their invoices to avoid breaching the ceiling and being excluded from the flat-rate tax scheme from the following year (in cases where the €100,000 threshold is exceeded – which we imagine to be extremely rare – exclusion is immediate).

Whilst taxpayers with turnover close to 85,000 euros are those who make the most of the tax savings offered by the flat-rate scheme, a significant proportion of the benefits also goes to some of the 276,000 participants (14 per cent of the total) with a turnover of between 50,000 and 80,000 euros. These include self-employed individuals and professionals who would have been excluded from the preferential scheme had the threshold not been raised from 65,000 to 85,000 euros. It is precisely this phenomenon that has meant the cost of the increase to the State has been higher than originally forecast. The auditors note: ‘The main factor behind the negative variance can be identified in the high concentration of taxpayers already in the flat-rate scheme with revenues and earnings in the bracket immediately below the old threshold of 65,000 euros (between 55,000 and 65,000 euros), who were able to benefit from the increase in the threshold without changing their tax regime’.

Even without specific analysis, it is reasonable to assume that a large proportion of the loss of tax revenue resulting from the flat-rate scheme – estimated at 3.4 billion for 2025 in the Annual Report on Tax Expenditures – stems from these high-income taxpayers, compared with a substitute tax amounting to 3.79 billion according to the Tax Statistics on 2025 Tax Returns.

This shortcoming was criticised once again recently by the EU, in the Council Recommendation adopted on 3 June, which states that flat taxes ‘make the tax system extremely complex, reduce its progressivity and erode the tax base’.

The Court of Auditors itself, however, points out that – on this issue – we still know far too little. This is because there are no ‘systematic ex-post comparative analyses between the tax revenue actually collected and that which would have been generated in the absence of the flat-rate scheme’. In practice, it is impossible to know whether the flat tax has brought taxable income to light or whether it has prompted specific behaviour among taxpayers. Consider, in addition to the aforementioned under-invoicing, the choice to operate on an individual basis rather than as a partnership – an option that is, all things considered, straightforward for professionals. It would be interesting, for example, to see how many of the nearly 155,000 solicitors, 70,000 architects and 43,000 surveyors under the flat-rate scheme – to name but a few – operate under the single-client basis or almost exclusively with a single practice, rather than with a wide-ranging client base.

In addition to many other professionals, the Court of Auditors’ analysis of the 20 sectors with the highest number of flat-rate taxpayers also highlights – amongst others – 56,000 barbers andhairdressers, and 20,500 beauticians. These are business owners who deal directly with end consumers and, as they are not required to charge VAT, benefit from a competitive advantage over competitors operating under the standard regime. They can lower their prices without losing out, or they can keep them unchanged and still earn a higher net profit. This aspect, too, warrants further investigation.