This guest post is written by one of FlexTax’s qualified tax consultants to clarify all doubts about the topic of the moment in the tax field: the flat tax. 

About  FlexTax: FlexTax is the online accountant service that follows every aspect of accounting management for self-employed workers under the flat-rate and simplified ordinary regimes, from the opening of the VAT number to the tax return.

❓ There is a lot of talk about Flat tax these days, can you tell us what it is?

This is a precise type of taxation that differs from the others in that it applies a single flat tax rate, hence the name “flat tax”.

It therefore represents a tax measure with precise rules to follow. 

For the past few years, a form of flat tax has been brought to self-employed workers.

In fact, a fixed rate is applied to these at the tax base (income on which taxes are paid), which is currently 15 percent.

For more information, see this guide for a deeper look: Flat tax 2023 

❓ Let’s get straight to the point, what should we expect with the Flat tax 2023?

Definitely it will be a pathway and not everything will be introduced right away.

The first step will involve a change in the flat tax regime for self-employed workers. As mentioned they already have a form of flat tax, and a change will be made to the maximum income threshold allowed to fall under this regime, also known as “facilitated.” 

Currently, to fall under this tax frame, the first requirement is to have a maximum annual income of 65,000 euros. There are then several other limits to be met that I will not list now, but you can read about them here.

❓ And will the annual income limit change in relation to Flat Tax? 

That’s right, there has been talk for years about expanding the threshold to 100,000 euros in annual income.

The new Budget Law, being drafted these days, is moving in that direction, however, it seems to be more feasible to raise the threshold to 85,000 euros.

So in concrete terms, the first step is aimed at self-employed workers under the flat-rate scheme, who will see a shift in the maximum income threshold from 65,000 euros to 85,000 euros.

❓ Will the 15% tax rate always remain?

On this there are several assumptions, the most common being that the same rate remains, however there are those who argue that the amount between 65,000 and 85,000 may be subject to a different rate.

❓ What does the incremental flat tax consist of?

This type of taxation will affect taxpayers who pay Irpef. In this case, if the taxable income in 2023 is higher than the highest declared in the previous three tax years (2022, 2021, 2020), the flat rate will be applied only and exclusively to the amount of increase.

If in 2023 the taxable income is 20,000 euros, while in 2022 it is 15,000, in 2021 it is 10,000, and in 2020 it is 18,000 euros, we take the income of 2020 (i.e., the highest of the three) subtract it from that of 2023 and on what remains we apply the fixed rate of the incremental flat tax, which is 15 percent.

To be specified, annual income must not exceed 40,000.

❓ When will the flat tax be active?

Right now the new budget bill is being discussed and will have to pass the European Commission’s scrutiny, easily there will be several changes to be made before it is finally approved and made active.

So it will be over the course of 2023, but as I said earlier it will not be all at once, but it will be a path where the first step is the modification of the flat tax that is already there.

❓ How can we stay updated and understand exactly how one’s tax situation will change?

I recommend keeping an eye on this article to see news in general about the flat tax: Flat tax latest news.

If you then want a more precise assessment tailored to your situation I recommend signing up for free to our service at flextax.co.uk, after signing up you will receive a tax call where you can explain your case and receive free ad hoc advice.

I specify that the service is intended for workers under the flat-rate and simplified ordinary VAT regime.

❓ So can a self-employed worker sign up for your service for free and receive assistance?

That’s right the free account allows you to use the FlexSuite management platform with all its features and can be used for as long as you want without expiration of a few days or credit card entry.

Through the platform one can receive tax assistance, use the billing management system for both paper and electronic invoices. 

Use all the tax simulation tools to know how much tax you are going to pay and more.

It differs from the paid account only on the more technical and important aspects related to accounting management, such as tax returns, some administrative management aspects, and unlimited tax calls. 

To learn more, we recommend doing the free registration at flextax.co.uk and receive the explanation of the service in addition to the tax advice already mentioned.