Simplified LLC vs VAT Number in 2026: the truth about real costs
In Italy there are two distinct conversations about business legal forms. The first, the one at the bar, says: "open an LLC and sleep peacefully". The second, the one with the accountant at year-end, says: "you paid too much, you should have stayed in the flat-rate regime".
They're both right and wrong. The truth is more nuanced, and it's measured in three dimensions: how much you invoice, how much you want to reinvest, how much asset risk your activity entails. This 2026 guide puts numbers on the table. Without shortcuts.
The three real options for those starting today in Italy
| Aspect | Sole proprietor (flat-rate) | Sole proprietor (ordinary) | SRLS | Ordinary LLC |
|---|---|---|---|---|
| Minimum capital | €0 | €0 | €1 (max €9,999) | €10,000 |
| Notarial deed | No | No | Yes, but exempt from fees (standard deed) | Yes, with fees €600–1,500 |
| Personal liability | Unlimited | Unlimited | Limited to capital | Limited to capital |
| Income tax | 5% or 15% flat tax | IRPEF marginal 23–43% | IRES 24% + IRAP 3.9% | IRES 24% + IRAP 3.9% |
| VAT | Exempt (no charging) | Quarterly or monthly | Quarterly or monthly | Quarterly or monthly |
| Social contributions | INPS separate management 26.07% (or merchants IVS 24%) | Same | INPS on administrator + IVS if merchant/craftsman | Same |
| Revenue limits | €85,000/year | None | None | None |
| Annual accountant cost | €50–100/month | €80–150/month | €200–350/month | €250–400/month |
| Balance sheet in Chamber of Commerce | No | No | Yes, simplified | Yes, even micro-enterprises if within limits |
| Termination | Tax authority notification, 1 day | Same | Liquidation + cancellation from Business Register (3–12 months) | Liquidation (3–12 months) |
Sources: D.P.R. 633/1972 (VAT), TUIR (DPR 917/1986), law 145/2018 (flat-rate regime), art. 2463 and 2463-bis Civil Code, D.Lgs. 446/1997 (IRAP), Tax Manual Italian Revenue Agency 2026.
Four options, but the real decisions are played out between flat-rate regime and LLC (or SRLS). The sole proprietor in ordinary regime is usually a transitional stage, and partnerships are reserved for specific contexts (family business, associated professionals).
The flat-rate regime in 2026: the true champion of the first year
The flat-rate regime, regulated by Law 190/2014 and subsequent amendments, is the simplest and least burdensome legal-fiscal form in Italy for those starting out. It works like this:
- Threshold: €85,000 in revenues/fees in the previous year.
- Taxation: 15% substitute tax on income calculated by applying a profitability coefficient to turnover (varies from 40% to 86% per ATECO category).
- For new businesses: reduced rate of 5% for the first 5 years, provided you have not exercised similar activity in the three previous years.
- VAT exemption (no charging to clients, no deduction of costs).
- No IRAP, no IRES, no sector studies.
- No ordinary accounting (just receipt register/issued invoices).
Concrete example:
Marco, web developer, ATECO 62.01.00 (profitability coefficient 67%). Revenues 2026: €35,000.
- Taxable income: 35,000 × 67% = €23,450
- Substitute tax 5% (new activity): €1,172.50
- INPS contributions separate management: 23,450 × 26.07% = €6,113
- Total fiscal-contributive burden: €7,285, or 20.8% of turnover
Marco keeps in his pocket €27,715 net. Hard to do better with a more complex structure.
When the flat-rate doesn't work
Three situations where even with turnover below €85,000 the flat-rate is a trap:
- Real costs much higher than the standard coefficient. Example: an events agency (ATECO 82.30.00, coefficient 67%) but which bears 75% of real costs. The flat-rate taxes 67% of turnover, regardless of real costs. You end up paying taxes on income that doesn't really exist.
- Need to deduct VAT on investments. A photographer buying equipment for €15,000 (VAT 22% = €3,300) in flat-rate cannot deduct it. In ordinary regime yes.
- Business clients asking for invoice with VAT to deduct it. Some clients prefer working with ordinary VAT numbers for reciprocal tax reasons.
The SRLS: the middle option (and its limits)
The Simplified Limited Liability Company, introduced in 2012, was designed as a bridge between sole proprietorship and ordinary LLC. It has three strengths and three weaknesses.
Strengths
- Minimum capital €1 (up to €9,999.99). No financial barrier to entry.
- Free incorporation deed: the standard is approved by the Ministry of Justice, not modifiable, and the notary cannot charge fees (D.L. 1/2012).
- Limited liability to capital.
Weaknesses
- Rigid deed: the standard statute cannot be personalized. No pre-emption clauses, drag along, approval rights. For businesses planning investor entry, SRLS is insufficient.
- Market perception: banks, suppliers, large clients still perceive SRLS as "provisional" or undercapitalized. For B2B activities with enterprise clients, obtaining credit facility opening or credit insurance is harder.
- Same tax weight as ordinary LLC: IRES 24% + IRAP 3.9% + identical administrative burden. The "saving" of SRLS concentrates only in incorporation (a few hundred euros in notarial fees avoided once).
In practice, SRLS is an ordinary LLC with a lower entry pedestal. Once started, it costs exactly as much as an LLC. For this reason, many entrepreneurs, after choosing SRLS for the first year, after 18–24 months convert it to ordinary LLC via capital increase (simple procedure, costs €800–1,500).
Comparative simulation 2026: three revenue scenarios
The most honest way to choose is to look at the numbers at different revenue levels. Common assumptions: new business, B2B consulting activity (ATECO 70.22, flat-rate coefficient 78%), no employees, no IRAP for flat-rate individual activity.
Scenario A — Revenue €30,000, real costs €5,000
| Item | Flat-rate 5% | SRLS (administrator salary €18,000) |
|---|---|---|
| Revenue | 30,000 | 30,000 |
| Deductible real costs | n.a. | 5,000 |
| Taxable income | 30,000 × 78% = 23,400 | 30,000 − 5,000 − 18,000 = 7,000 |
| Substitute tax 5% or IRES + IRAP | 23,400 × 5% = 1,170 | 7,000 × 27.9% = 1,953 |
| IRPEF on administrator salary (23% bracket) | 0 | 18,000 × 23% − deductions = 3,200 |
| INPS contributions administrator (separate management 26.07%) | 23,400 × 26.07% = 6,100 | 18,000 × 26.07% = 4,693 |
| Accountant (flat-rate vs SRLS) | 720 | 3,000 |
| Total burden | 7,990 | 12,846 |
| Net to Marco | 22,010 | 17,154 |
At €30,000, flat-rate wins by almost €5,000/year. No comparison.
Scenario B — Revenue €70,000, real costs €15,000
| Item | Flat-rate 15% (after 5th year or 2024 revenues > reduced threshold) | SRLS (administrator salary €40,000) |
|---|---|---|
| Revenue | 70,000 | 70,000 |
| Deductible costs | n.a. | 15,000 |
| Taxable income | 70,000 × 78% = 54,600 | 70,000 − 15,000 − 40,000 = 15,000 |
| Substitute tax 15% or IRES + IRAP | 54,600 × 15% = 8,190 | 15,000 × 27.9% = 4,185 |
| IRPEF on administrator salary | 0 | 40,000 → ≈ 10,200 |
| INPS contributions | 54,600 × 26.07% = 14,234 | 40,000 × 26.07% = 10,428 |
| Accountant | 900 | 3,600 |
| Total burden | 23,324 | 28,413 |
| Net | 31,676 (flat-rate) | 26,587 (salary) + 10,815 (LLC profit post-tax) = 37,402 if distributed or reinvested without distributing |
At this level SRLS begins to compete — especially if profit is reinvested (and not distributed as dividend, which would undergo additional 26% taxation).
Scenario C — Revenue €150,000, real costs €35,000
At €150,000 flat-rate is no longer applicable (threshold €85,000). SRLS vs ordinary sole proprietor comparison:
| Item | Ordinary sole proprietor | SRLS (administrator salary €60,000) |
|---|---|---|
| Revenue | 150,000 | 150,000 |
| Deductible costs | 35,000 | 35,000 |
| Taxable income for tax | 115,000 | 150,000 − 35,000 − 60,000 = 55,000 |
| IRPEF on taxable income | 115,000 → all brackets up to 43% ≈ 35,800 | 0 (company pays IRES not IRPEF) |
| IRES + IRAP on LLC income | 0 | 55,000 × 27.9% = 15,345 |
| IRPEF administrator salary | 0 | 60,000 → ≈ 19,500 |
| INPS contributions | 115,000 × 24% (merchant IVS) → 27,600 (with cap) | 60,000 × 26.07% = 15,642 |
| Accountant | 1,800 | 4,200 |
| Total burden | 65,200 | 54,687 |
| Net member | 49,800 | 24,858 (salary) + LLC profit post-tax 39,655 |
At €150,000, SRLS wins with significant margin if profit remains in company or serves to finance growth. If instead everything is distributed to member as dividend, double taxation (24% + 3.9% + 26% on dividend) erodes the advantage until bringing SRLS almost to parity with ordinary sole proprietor.
Hidden costs the accountant doesn't always mention
Three items often underestimated when choosing legal form:
- Cost of closing LLC: liquidating an inactive LLC requires 3–12 months and €1,500–3,500 between notary, accountant, publication fees. Opening is easy, closing is hard. Important decision if you doubt long-term viability.
- Administrator compensation deductible but bound: the administrator's salary of LLC is deductible for the company, but must be set in assembly, actually received with traceable transfer, declared in payroll, and proportionate to work performed. The Supreme Court (sentences 14999/2024 and subsequent) has established that undocumented or disproportionate compensation can be requalified as hidden profit distribution, with penalties up to 240% of evaded tax.
- Annual Chamber of Commerce fee: €120–200/year, owed even if company is inactive. For a "shell" LLC (registered but without activity), you still pay chamber fee, inactive tax return declaration, null balance sheet filing.
The 2026 decision in five questions
| Question | If you answer… | Direction |
|---|---|---|
| Projected revenue in 24 months below €70,000? | Yes | Flat-rate, unless high costs |
| Activity can cause damage to third parties (healthcare, construction, food, manual services)? | Yes | SRLS or LLC |
| Do you have personal assets > €100,000 to protect? | Yes | SRLS or LLC |
| Planning to reinvest more than 40% of profits? | Yes | LLC/SRLS |
| Want enterprise clients or public tenders? | Yes | Ordinary LLC (SRLS often excluded) |
How BoostPro AI helps in choosing
The «Legal Status» module of BoostPro AI asks 8 variables (projected revenue, ATECO sector, real costs, profit planning, personal assets, end client profile, risk of damage to third parties, foreign perspective) and simulates comprehensive fiscal-contributive pressure over 3 years for the 4 regimes (flat-rate, ordinary, SRLS, ordinary LLC). The output PDF includes 3 simulations compared, precise amounts, reasoning, and — most importantly — countermeasures if assumptions change.
For those also wanting a complete view of project financing, the incentives simulator verifies which of the 34 registered Italian instruments (Resto al Sud, Smart&Start, New Companies at Zero Rate, SME Guarantee Fund, tax credits) are compatible with the chosen legal form.
A final recommendation: before signing at the notary, spend an hour with a trusted accountant (€60–120) and one with a business attorney (€150–250). The combined cost is marginal compared to the consequences of a choice made based on your cousin's advice or the first Google result.