Italy is moving to broaden the reach of its fiscal reconciliation efforts, introducing new incentives to bring a wider array of small business owners and freelancers into a structured tax agreement. In a strategic shift aimed at reducing litigation and increasing tax predictability, the Italian government is refining the rules of the biennial preventive agreement for the 2026 and 2027 tax years.
The centerpiece of this shift is the conversion of the Decreto Fiscale n. 38/2026, a legislative move designed to make the “concordato preventivo” (preventive agreement) more attractive to taxpayers who were previously sidelined due to low reliability ratings. By adjusting the calculations for those with lower Synthetic Reliability Indices (ISA), the state is effectively extending an olive branch to “unreliable” VAT holders, offering them a path to fiscal stability that was previously cost-prohibitive.
This legislative adjustment comes at a critical time for Italy’s self-employed sector. The move reflects a broader economic policy of shifting from a purely punitive approach to tax non-compliance toward a collaborative model. By lowering the barriers to entry for the 2026-2027 agreement, the government hopes to secure a more consistent revenue stream while providing business owners with the certainty that they will not face aggressive audits for the duration of the pact.
The proposal has already gained significant momentum in the legislative process. The Senate recently granted its first approval with a vote of confidence, and the bill is now proceeding to the Chamber of Deputies for final authorization. Once enacted, these changes will fundamentally alter the cost-benefit analysis for millions of Italian partite IVA (VAT holders) who have struggled to meet the strict reliability criteria of previous fiscal cycles.
Extending the Window: New Deadlines for Adhesion
One of the most immediate practical changes introduced by the conversion of Decree-Law No. 38/2026 is the extension of the timeline for taxpayers to join the agreement. The deadline for adhesion has been pushed back to October 31, 2026. Because this date falls on a Saturday, the deadline is automatically deferred to November 2, 2026, providing taxpayers and their accountants additional time to evaluate the proposals offered by the tax authorities.
This extension is more than a mere administrative convenience; it is a tactical necessity. The complexity of calculating the “concorded income” requires a deep dive into financial records and a careful comparison against the state’s proposed figures. By extending the window, the government is acknowledging the administrative burden placed on small business owners and their consultants, ensuring that the decision to enter the pact is based on accurate data rather than a rushed deadline.
Breaking the “Unreliable” Barrier: The Role of ISA Scores
To understand why this update is revolutionary for many Italian freelancers, one must understand the Indici Sintetici di Affidabilità (ISA), or Synthetic Reliability Indices. The ISA is a tool used by the Agenzia delle Entrate (Italian Revenue Agency) to assess whether a taxpayer’s declared income is consistent with the average for their specific business sector. Taxpayers with high ISA scores are deemed “reliable” and typically receive more favorable terms in tax agreements.
Historically, those with low ISA scores—the “unreliable” group—found the preventive agreement unattractive. The state’s proposals for these individuals often involved significant increases in declared income to “correct” perceived under-reporting, making the pact feel more like a penalty than a benefit. However, a new amendment slated for Article 7-bis of the conversion law changes this dynamic.
The amendment introduces specific limits on how much the “concorded income” can be increased, even for those with the lowest ISA scores. By capping these increases with new percentage limits, the government is making the 2026/2027 agreement financially viable for a demographic that previously had every incentive to avoid it. This shift transforms the agreement from a tool for the “already compliant” into a genuine recovery mechanism for those looking to regularize their fiscal position without facing ruinous income hikes.
Why the “Fiscal Pact” Matters for Global Markets
From a macroeconomic perspective, the Italian government’s approach to the 2026/2027 preventive agreement is an exercise in risk management. For the state, the primary benefit is the reduction of “tax gaps”—the difference between taxes owed and taxes collected. By securing a two-year agreement on income, the Treasury can forecast revenues with much higher precision.
For the entrepreneur, the value lies in the cessation of uncertainty. A preventive agreement acts as a shield; once signed, the taxpayer is generally protected from audits regarding the income declared under the pact for the duration of the agreement. In a business environment where tax litigation can drag on for years and drain capital, this “peace of mind” has a tangible economic value, allowing business owners to reinvest in growth rather than legal defense.
This strategy also aligns with broader European trends toward “cooperative compliance,” where tax authorities work with taxpayers to resolve discrepancies before they escalate into formal disputes. By expanding the 2026/2027 pact to include those with low ISA scores, Italy is attempting to bring a significant portion of the “shadow economy” into the formal fold through incentive rather than intimidation.
Key Takeaways for VAT Holders
- Extended Deadline: The window to join the 2026/2027 agreement now closes on October 31, 2026 (effectively November 2, 2026).
- ISA Relief: New limits on income increases are being introduced for taxpayers with low Synthetic Reliability Indices, making the pact viable for “unreliable” VAT holders.
- Legislative Status: The changes are part of the conversion of Decree-Law No. 38/2026 and have already passed the Senate with confidence; final approval from the Chamber is pending.
- Primary Benefit: Participants gain two years of fiscal certainty and protection from specific audits in exchange for an agreed-upon income level.
What Happens Next?
The immediate next step is the final vote in the Chamber of Deputies. Once the conversion law is officially promulgated, the Italian Revenue Agency will begin issuing the specific proposals for the 2026/2027 biennial period. Taxpayers should expect to receive these proposals via their digital tax portals, detailing the suggested “concorded income” based on their specific ISA profile.
Business owners are encouraged to consult with their certified accountants (commercialisti) to compare the government’s proposal against their actual projected earnings for the next two years. The decision to adhere to the pact should be based on a calculated projection of future income versus the cost of the agreed tax level, especially under the new, more lenient rules for low-ISA holders.
We invite our readers to share their perspectives on these fiscal shifts in the comments below. Do you believe incentive-based tax pacts are more effective than traditional auditing? Share this article with your professional network to keep them informed on evolving European tax policies.