Taxation, half of the VAT number pays less tax through the flat tax

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Half of VAT taxpayers pay less tax due to the subsidy system. Of the self-employed, companies and professionals who filed their tax returns in 2023 (2022 tax year), 49.2% actually fall under the flat tax of the minimum flat rate system (now residual). Even if the balance of power remains the same: 85.2% of the approximately 42 million Irpef taxpayers derive their main income from employment or pensions, and only 6.5% from business activity or self-employment, which also includes flat-rate and favoured jobs. This was announced by the Ministry of Finance in the 2023 tax returns published on the afternoon of Tuesday, May 28, and the Tax Report Card (ISA) data submitted last year.

1.8 million taxpayers pay a flat tax

According to the Ministry of Finance, by 2022, about 3.8 million natural persons with a VAT number will file direct tax returns (Irpef or alternative system) (1.5% more than the previous year). VAT holders include entrepreneurs (30.4%), self-employed (14.3%), farmers (6%) and taxpayers in preferential tax systems (preferential tax system and flat rate system). The latter account for almost half of VAT holders (49.2%). Almost all members of the preferential tax system are composed of entities subject to the flat rate system, with a number of about 1.8 million (4.4% more than the previous year).

29.2% of income comes from subsidy programs

VAT number holders who comply with the preferential tax regime declare 29.2% of their income. Among natural persons with VAT numbers, entrepreneurs, who make up 30.4%, declare 35.5% of their income. Self-employed persons, who make up 14.3% of VAT number holders, declare 34.9% of their income.

The number of Germans on tax returns has slightly decreased

The number of subjects interested in ISAs for the 2022 tax year was 2,732,989, which is an increase (+13%) compared to 2021. The audience consisted of 53% natural persons, 18% partnerships and 29% companies and non-commercial entities.

Average reported income and wages increased by 3.19%. The service sector saw an increase of 8.05%. Average value added also increased by 2.01% compared to the previous tax period, while average business or self-employment income increased by 1.25%.