Partita IVA and Starting a Business in Italy as a Foreigner: Forms, Taxes, Risks

What a partita IVA is and why you need one

A partita IVA is an individual VAT taxpayer number in Italy, issued to anyone who carries out independent business or professional activity on an ongoing basis. In simple terms, it is your "business code": without it you cannot legally issue invoices (fattura), work as a self-employed freelancer, consultant, tradesperson, trader, or company owner. If you earn money occasionally and irregularly, a one-off prestazione occasionale may sometimes be enough without opening a number, but as soon as the activity becomes regular, a partita IVA is mandatory.

It is important not to confuse three different things that foreigners often mix up. The codice fiscale is the tax identification code for an individual; even people who do not run a business have one, and it is needed for everyday things such as renting a home, opening a bank account, or seeing a doctor. The partita IVA is the number specifically for business activity. And registration in the Business Register (Registro delle Imprese at the Camera di Commercio) is a separate step, required for commercial and craft activities but not always for "pure" professionals.

Opening a partita IVA as a self-employed individual is itself free of charge: the application is filed with the Agenzia delle Entrate. But this is only the first visible step. Behind it lie the choice of tax regime, registration with the pension fund, and often registration with the Chamber of Commerce as well. That is why a proper start almost always begins not with paperwork, but with a conversation with a commercialista.

Choosing a form: ditta individuale, SRL or SRLS

Your legal form determines your liability, your taxes, the cost of upkeep, and the image you present to clients. For a foreigner starting out, there are realistically three main options to consider.

Ditta individuale (sole proprietorship)

The ditta individuale is the simplest and cheapest form. You run the business as a private individual, registration is fast, bookkeeping is minimal, and the profit is yours immediately. The main downside is unlimited personal liability: you answer for the business's debts with your entire personal estate. This form is ideal for freelancers, tradespeople, small traders, and consultants who are just testing an idea and do not carry significant risk or large debts to suppliers.

A separate subtype is the libero professionista (independent professional): a lawyer, translator, IT consultant, designer. Such people often do not register with the Camera di Commercio at all — they simply open a partita IVA and pay into the gestione separata INPS.

SRL (limited liability company)

The Società a responsabilità limitata is a full legal-entity company. Its key advantage is limited liability: the company answers for its debts with its own capital, not with your personal assets (except in cases of fraud or personal guarantees). An SRL looks more solid to banks, investors, and large business partners, allows several members, and scales more easily. The downsides are a higher setup cost (notary, articles of association), mandatory double-entry bookkeeping, separate corporate taxation (IRES and IRAP), and higher annual running costs.

SRLS (simplified SRL)

The SRL semplificata is a lighter version of the SRL, created for young businesses. Share capital can be symbolic (from 1 euro up to almost 10,000 euros), and notary costs at formation are significantly lower thanks to a standard model articles of association. It is a popular choice for startups and partners without much capital. But the "simplification" concerns only registration: day-to-day bookkeeping, contributions, and taxes are the same as for a regular SRL, and the standard articles cannot be freely amended.

Tax regimes: forfettario versus ordinario

For self-employed individuals (ditta individuale, libero professionista) in Italy there are two main tax regimes. Choosing correctly between them is arguably the most important decision at the start, because it directly determines your net income.

Regime forfettario (flat-rate, preferential)

This is a simplified preferential regime for small businesses. Its main advantage is a single flat tax instead of the ordinary progressive IRPEF scale. The rate is 15%, and for a new business, under certain conditions, just 5% for the first five years. The tax is calculated not on your whole turnover but on income reduced by a fixed profitability coefficient (coefficiente di redditività) that depends on your type of activity (your ATECO code).

The main conditions for entering forfettario:

• annual turnover does not exceed 85,000 euros;
• expenses for employees do not exceed the set limit (around 20,000 euros a year);
• you do not hold controlling stakes in certain companies carrying out similar activity;
• you comply with the rules on income received from a previous employer.

The upsides of the regime: no VAT is charged or paid (you do not add IVA to your invoices and do not file VAT returns), simplified bookkeeping, fewer obligations. The downsides: you cannot deduct real business expenses (apart from contributions), and if your actual costs are high, the fixed coefficient can work against you.

Regime ordinario (standard regime)

The standard regime applies the progressive IRPEF scale, with rates rising with income (roughly from 23% at the lower brackets up to 43% at the top), plus regional and municipal surcharges. Here you do charge VAT on invoices and file periodic returns, but you can deduct real, documented expenses — rent, equipment, materials, services.

Ordinario is more advantageous when your turnover exceeds the forfettario limit, when you have significant real expenses, or when your business partners need invoices with deductible VAT. For companies (SRL, SRLS), the standard regime is the default.

INPS contributions and gestione separata

Many beginners count only the tax and forget about social security contributions — yet these often weigh just as much. In Italy, all self-employed people pay contributions to INPS (the National Social Security Institute), and these are what build your future pension record and social protections.

The contribution scheme depends on the type of activity:

• Craftspeople and traders (artigiani e commercianti) pay contributions to the corresponding special INPS fund. Here a mandatory minimum contribution (contributo minimo) applies — a fixed sum of a few thousand euros a year that must be paid even with low or zero income, plus a percentage on income above the minimum threshold.
• Independent professionals without their own fund pay into the gestione separata INPS. Here the rate is a percentage of actual income (roughly around 26–27%), with no strict fixed minimum. This is convenient at the start: no income means no contribution.
• Professions with their own funds (lawyers, engineers, architects, doctors, and so on) pay into their own professional fund (cassa) under its own rules, not into INPS.

Those in regime forfettario who belong to the craftspeople or traders category may be entitled to a possible 35% discount on contributions — but it must be requested separately. It is important to understand that in certain regimes contributions are deducted from the taxable base, meaning they reduce the amount on which tax is calculated.

VAT (IVA) and codici ATECO

IVA (Imposta sul Valore Aggiunto) is Italian VAT. The standard rate is 22%, with reduced rates (10%, 5%, 4%) for certain goods and services. Under regime ordinario, you add IVA to your invoices, collect it from clients, and periodically remit it to the state, deducting the VAT you paid to your own suppliers. Under regime forfettario, you neither charge VAT nor file VAT returns — this is one of the regime's key advantages for small business.

Practically all invoices in Italy are now issued electronically (fattura elettronica) through the state exchange system (Sistema di Interscambio, SDI). This is mandatory even under the preferential regime, so you need suitable software or a service — your commercialista usually sets this up for you.

Codici ATECO — the code for your activity

The codice ATECO is the official classifier of economic activity. You choose a code (or several) that precisely describes what you do: a separate code for a hairdresser, a separate one for an IT consultant, a separate one for retail clothing trade. This code is not a formality: it determines the profitability coefficient under forfettario, the size of your contributions, whether your activity is classified as craft or commercial, and sometimes whether specific permits or qualifications are required.

An incorrect ATECO code leads to wrong tax and contribution calculations, and changing the code later requires a separate procedure. So the code should be chosen carefully and in advance, matched to your real and planned activity.

Permission to be self-employed: the permesso for a foreigner

This is a critically important part specifically for foreigners, and it cannot be skipped. Not every permesso di soggiorno grants the right to run your own business or be self-employed. Before investing money and time, check your status.

• Long-term permits (permesso di soggiorno UE per soggiornanti di lungo periodo) and permits based on family reunification (ricongiungimento familiare) generally allow self-employment and entrepreneurship.
• Temporary protection for Ukrainian citizens in most cases grants the right to work and to be self-employed — but it is always worth confirming the current conditions at the questura and with a lawyer.
• An employment-based permit (lavoro subordinato) does not always automatically cover independent activity — a check or a permit conversion (conversione) is often required.
• A dedicated self-employment entry permit (permesso per lavoro autonomo) requires a separate procedure within the quota system (decreto flussi), obtaining a nulla osta, and proof of resources and housing.

For someone entering Italy from abroad specifically to start a business, the procedure is complex: you need to fall within the decreto flussi quota, prove sufficient financial resources and housing, and meet the requirements for the specific activity. For foreigners already legally residing in Italy with the appropriate status, the path is much simpler — often it is enough to confirm that the permit does not forbid self-employment.

Common startup mistakes

Most problems when starting a business in Italy do not come from complicated laws, but from predictable mistakes that are easy to avoid.

• Opening a partita IVA without checking your permit first. The most serious mistake a foreigner can make. First check your residence status, only then start the business.
• Choosing a regime blindly. Automatically picking forfettario for the 5% rate without noticing that large real expenses would make ordinario more advantageous — or the other way around.
• Forgetting about INPS contributions. Budgeting only for tax and not setting aside the contributo minimo, which has to be paid even without profit.
• The wrong ATECO code. Picking an approximate code "just to have something," then overpaying or running into problems with the activity category.
• Choosing an SRL where a ditta individuale would have been enough. Unnecessary notary and bookkeeping costs for no real reason.
• Not setting money aside for taxes. Spending all your income and having no reserve for the advance payments due the following year.
• Working without a commercialista. Trying to save money on an accountant usually ends in fines and overpayments larger than their fee would have been.

The role of the commercialista

The commercialista is not just a bookkeeper but a key figure in your business in Italy. They help you choose the right form and regime, select the ATECO code, open the partita IVA, register with INPS and, where needed, with the Camera di Commercio, set up electronic invoicing, and file your returns. For a foreigner, a good commercialista working together with an immigration lawyer is the most reliable way to start without costly mistakes.

Frequently asked questions

Can I open a partita IVA if I do not yet have a residence permit?

No. To carry out independent activity in Italy you need a status that allows it, as well as a codice fiscale. A foreigner without the appropriate permesso di soggiorno (or without the right to self-employment under an existing permit) cannot open a business. The question of legal residence and the right to work must be settled first, and only then can registration follow.

How long does it take to open a partita IVA?

The application itself to the Agenzia delle Entrate is processed quickly — the number is often assigned within one to a few business days. For commercial or craft activity, registration with the Camera di Commercio and notification to INPS are added, taking a few more days. In practice, the preparatory decisions (form, regime, code) take longer than the registration itself.

Which is more advantageous for a freelancer — forfettario or ordinario?

For most beginning freelancers with modest expenses and turnover up to 85,000 euros, regime forfettario is more advantageous thanks to the 15% rate (or 5% in the first years) and the absence of VAT. But if you have significant real expenses or expect turnover to grow quickly, calculate both options with your commercialista before choosing.

Do I have to pay INPS contributions if I have almost no income?

It depends on the category. Craftspeople and traders pay a fixed contributo minimo even with low income. Those under gestione separata pay a percentage of actual income — so with no income, the contribution is close to zero. This is one of the reasons why your activity category and ATECO code matter so much.

Do I need a commercialista, or can I manage on my own?

Formally, part of the process can be done on your own, but in practice this is risky for a foreigner. Mistakes in the regime, the code, or the returns cost more than an accountant's fee. The commercialista handles your reporting, tracks deadlines and advance payments, while a lawyer in parallel makes sure your residence permit stays consistent with your activity. Together they protect both your business and your legal status in Italy.

Starting a business in Italy as a foreigner is a sequence of careful decisions, not a single trip to the tax office. If you first check your right to the activity under your permesso, consciously choose your form and regime, correctly select an ATECO code, and budget for INPS contributions, the launch goes smoothly. The key is not to rush into registration before the full picture is clear.

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