It's an unintended consequence of the reduced (5-15% flat) taxes available via "regime forfettario"[1] which only applies to businesses with <65k income. Otherwise you have to pay much more (23%-43%) via the regular progressive tax brackets.
Somewhat similarly, in the USA there is a "welfare trap"[2] where earning more income would reduce other benefits (eg housing, food) enough to result in an effective >100% tax on income.