Italy borders France, Switzerland, Austria and Slovenia. It also consists of Sicily and Sardinia the two largest Islands in the Mediterranean Sea along with many other smaller Islands. San Marino and the Vatican City are enclaves within Italy. Italy also has its own enclave in Switzerland called Campione d’Italia.
It is the fifth most populous country in Europe and has the world’s forth largest gold reserves and the sixth highest government budget in the world. It was ranked eighth in the world in 2005 for quality of life by the Economist Intelligence Unit’s survey.
Rome is the capital of Italy and has long been the religious centre of Western civilisation. Italy is known for its fine architecture, good food and fashion with Milan being one of the centres for world fashion. Italy is the world’s largest wine producer overtaking France in 2011. Italy is subdivided into twenty regions some of which are able to enact their own legislation, the country is further divided into one hundred and ten provinces.
In 1957 Italy was a founding member of the European Economic Community which would become the European Union in 1993. It is also a member of G7, G8, G20, NATO, OECD, WTO, the Council of Europe and the United Nations so is a big force in Europe.
Italy has not been as popular as some European countries for contracting due to its closed market on temporary labour and taxation and work permit regulations. However, the country has a lot to offer particularly to persons in IT, telecoms or Oil & Gas industries and Chesterfield are on hand to help you with your contract and have the expertise to guide you through the minefield that can be Italy’s system.
EU citizens do not require a visa to enter Italy, regardless of how long they plan to stay. If you are not an EU citizen then you will require a visa for a stay of longer than ninety days. If you are from a non-Schengen country such as the USA then you are required to complete a declaration of presence. You can get these from the airport, if you do not get this from the airport you can also request this from the local police station. If you do not submit a declaration of presence within eight days it is punishable by expulsion from Italy.
Anyone planning to stay in Italy for more than ninety days is considered resident. You will require a permit or certificate of registration. There are three different types.
- Permesso di Soggiorno. This is a permit to stay. It is required by all non-EU citizens. This does have an expiry date which varies and is renewable.
- Permesso di Soggiorno per Soggiornanti di Lungo Periodo. If you have lived for more than five years in Italy and have a minimum income then you can upgrade your permit to this one which does not have an expiry date.
- Certificato di Residenza. This is the Certificate of Registration. This is required by all EU citizens.
There are no restrictions for work on EU/EEA countries or Switzerland although if you are from Bulgaria or Romania you should check first before entering as they do still have some restrictions depending on the industry you may require a work permit. All other countries do require a work permit and arranging work permits in Italy involves a great deal of paperwork which changes regularly to reflect market conditions and government policy. Work permits are only granted where the job cannot be filled by an Italian or an EU citizen and must be sponsored by an Italian company, you or an agency cannot apply directly. Work permits are granted regionally and so the process can differ significantly depending on where you are going to work in Italy. Work permits usually take between two and four months to process.
Getting to grips with the taxation system in a different country can be very daunting, but do not worry Chesterfield is here to assist.
Tax residents in Italy are subject to tax on their worldwide income. If you are not classed as resident in Italy you will be taxed on Italian source income only. You are considered resident for income purposes if you live in Italy, your main business or professional activities are there or if you are registered as resident.
Chesterfield offer a number of packages and schemes which will affect the income tax that you will have to pay. Examples of this are;
- Umbrella Company. This is where Chesterfield do all the invoicing and paperwork for you, you merely need to supply us with a timesheet every month and the rest is taken care of. – please see below for further details regarding our Umbrellas.
- Corporate Structure. This is where a company is established which will invoice the contract provider or agency for the contractors work done and then pay the contractor either by dividend or salary. – please see below for further details regarding our corporate structures
Income tax rates are progressive in Italy and are calculated as follows;
23% on income up to €15,000
27% on income up to €28,000
38% on income up to €55,000
41% on income up to €75,000
43% on all income over €75,000
Please note that there is usually an additional regional tax and these can range from 0.9% to 1.73%. There can also be an additional municipal tax of up to 0.9%.
When working in Italy you must pay social security. The social security system is controlled by the government with various departments being administered by separate public institutions. There are collective labour agreements which can have additional cover for pension and health funds. How much social security you pay differs depending on your wage, your qualifications and the activity sector, but this generally ranges from 9% to 10% with the employer paying 30% to 35%. Self-employed individuals must enrol with the Istituto Nazionale della Previdenza Sociale (INPS) unless their profession has specific pension plans. The rates to be paid to the INPS for self-employed individuals generally range between 18% to 27.72%.
These contributions cover you in the event of the following;
- Illness and maternity leave
- Unemployment benefit
- Mobility benefit
- Family allowances
If you are legally working in Italy and paying your social security then you are entitled to the same benefits as Italian workers.
If you are sent to work in Italy it is possible to continue for a time to make social security payments in your home country. However, after working in Italy for two years EU nationals must contribute to the Italian social security.
Italy has one of the most complex employment laws in Europe with more than four hundred national collective agreements in force. However, it has recently had a reform of its employment law in an effort to shake up the job market. There are new regulations concerning flexible contracts, dismissals, resignations or mutual terminations and the introduction of a brand new unemployment social benefit system.
The new laws on flexible contracts effect international contractors in particular as now if working on a project you require a specifically identified ‘final result’, your duties cannot be low skilled or repetitive ones, you can only be terminated before completion of the project if there is professional unsuitability for project at hand and you cannot be hired to perform a job on a project that is similar to ones that are already being done by a regular employee unless this is a high skilled working activity. If any of the above are failed to comply with then the contractor on the project shall be a permanent employee. Individual contractors have to be classified as either ‘Project Workers’ or ‘Permanent employees’ depending on whether they meet the conditions above.
You need to have a residency certificate to open an account in Italy. If you do not have this then you can approach a branch in your home country and have them liaise for you to get this open.
The some of the largest banks in Italy are, Unicredito, Banca Intesa, Banca di Roma and BNL although there are various smaller banks also. The official currency is the Euro. All Italian intermediaries adhere to the Fondo Nazionale di Garanzia which offers protection on all deposits up to €20,000.
Banks in Italy will only exchange currencies for their own customers. ATM’s in Italy are known as Bancomat.
Chesterfield can assist in getting a bank account abroad also if this is required.
We have a number of different Umbrella companies to choose from depending on your own personal circumstances. The umbrella company essentially acts as an employer. There are various advantages to this including being able to offset certain expenses such as travel and meals. The umbrella company provides payroll services by billing the agency on behalf of the contractor and then distributing the salary back to the contractor.
Chesterfield are able to incorporate companies in a number of jurisdictions in order to suit your needs. It is more expensive to set up and maintain than our umbrella or self-employed schemes, but can have its advantages. For instance once the contract provider or agency has been invoiced for the work and this has been paid into the company bank account the contractor has a choice as to whether they would like to collect their money as dividends or as salary. If they were to choose dividends then in Italy most dividends are taxed at only 20% withholding tax, but it is important to note that if the dividend is paid from an unlisted company that is resident in what Italian authorities perceive as a tax haven then the dividend will be taxed as ordinary income.
Chesterfield and contracting in Italy
Chesterfield has years of experience with contractors working in other countries and a variety of schemes and solutions in order to make life easier. You will be given a dedicated member of staff who is responsible for all your administration and contact, allowing them to be more in tune with all your needs and assist you in every way possible.
Email a friend