Italy

Introduction

Italy is in southern central Europe, but is considered as Western Europe. It shares land borders with France, Switzerland, Austria and Slovenia and is bordered by the Mediterranean Ocean to the south. Italy also consists of the enclaved microstates of Vatican City and San Marino and is the third most populous state of the European Union.

Italy has a rich and interesting history with it most illustrious period being the Roman Empire in the first century whose dominance of Europe, North Africa and Asia is legendary. This left its mark over a large proportion of the world in particular with regards to Christianity and the Latin script. Italy has always been dependant on trade and commerce and is in part responsible for modern capitalism. The renaissance was another prominent part in Italian history starting in Italy and spreading to the rest of Europe leading to a period whereby culture flourished and Italy produced of large amount of the world’s most famous scholars.

Italy was one of the four main allied powers in World War I. To this day it has a powerful military and is considered a great power. Italy is both a founding and leading member of the European Union, a member of the UN, NATO, OECD, OSCE, WTO, G7, G20, Union for the Mediterranean, Council of Europe, Uniting for Consensus and the Schengen area amongst others.

After Italy abolished its monarchy and established its democratic republic this led to a prolonged economic boom which sealed Italy’s future as a highly developed country. Today Italy is considered as one of the world’s most culturally and economically advanced countries. It has the world’s 8th largest GDP, has the sixth largest national wealth and the third largest central bank gold reserve.

Italy has so much to offer with its rich and interesting culture as well as its strong economy. Italy is home to the world’s largest number of heritage sites and is the fifth most visited country in the world, which is not surprising giving that it has attractions such as Rome with its rich history and religious appeal, Venice and Florence with their romantic reputation and Milan for its culture and reputation as the fashion capital of the world. It certainly has a lot to offer someone looking to contract abroad in a location that can provide for both a sense of adventure and for a sense of safety and security at the same time. If you are interested in hearing more about the practicalities of freelancing abroad in a country such as Italy please do not hesitate to contact us to see what we can do to make your dreams come true.

Registry/Registration

Italy follows the European standard with regards to Visa’s, being that generally you can stay in Italy for up to ninety days without having to obtain a visa and as usual the categories are split into EU and non-EU immigrants. If you are from the EU then you should register with a police station where you intend to live within eight days of entering the country and you will be issued with a residence permit, this also allows you to legally work in Italy without a work permit.

For non-EU as usual it is more complicated and you will need to firstly assess what type of visa you will require from the following:-
  • Temporary residence permit. This allows you to live in Italy for up to three years.
  • Employment permit. This depends on the business you intend to engage in, Italy has a quota system and therefore if your professional background and job offer is of a specialised nature then you are more likely to meet the relevant criteria.
  • Entrepreneurial permit. This allows you to set up a small business.
  • Student visa.
  • Permanent Residence. You can obtain this after living in Italy for five years unless you are fast tracked through an investment scheme.

There are also several other types of visa available, but these are less common.

Income Tax

Italy is aware that being a freelancer you might be self-employed and paying income tax in Italy whilst also being subject to taxes abroad. In 2019 they brought in a special tax regime for individuals that are affected by this that earn less than EUR65,000 per annum, being that the tax rate will be 15% as opposed to the usual progressive rates. Obviously several factors need to be taken into account such as whether you are resident in Italy and therefore have to pay income tax on your worldwide earnings as opposed to just income earned in Italy and also any relevant double taxation agreements.

For those that opt not to go for the above standard rate then the income tax in Italy is currently as follows although there have been discussions to simplify this to just two standard rates:-

Up to €15,000 23%
€15,001–€28,000 27%
€28,001–€55,000 38%
€55,001-€75,000 41%
€75,001+ 43%

Social Security

For self-employed workers it is their responsibility to sign up for a mandatory scheme, the amount you pay depends on the area of work and generally is between 24% and 34.23% based on a minimum annual income of €15,710 and a maximum annual income of €77,717.

Again there are various factors to be taken into account such as whether or not as self-employed you are registered for VAT or if the scheme that you subscribe to includes a pension fund. In Italy there is also voluntary cover for contract and professional workers.

Italy also has bi-lateral agreements in place with countries such as the United States with regards to social security. Contributions paid into other EU countries can also be taken into account and count towards benefits in Italy.

Therefore it may initially seem that Italy has a complicated system and it may be off putting to some individuals, but it is designed to take a lot a factors into account and therefore if structured correctly can be beneficial to the contractor. Here at Chesterfield we are used to the aims of freelancers and as such have the background in order to be able to assist with this complex ground.

Employment Rules

Already we have seen that Italy does not conform to neat little boxes when it comes to defining work. The same is with its employment rules, in Italy there is a section for somewhat self-employed called para-subordinate and employer-coordinated freelance work comes under this. Employer –coordinated freelance work has been recently regulated by legislative decree which has defined more stringent criteria for this. So again by ensuring a more complex system to begin with they have managed to ensure that there is no confusion or blanket wrap further down the line and therefore simplifying matters in the future for both employers and employees.

With a definite shift being seen in the last twenty years to freelancing from more traditional types of work Italy has demonstrated that it can take a wide number of factors into account and adapt quickly to provide adequate protection to every type of employee.

Banks

Italy is home to some of the top rated international banks and these can be found almost anywhere around the country. Like the rest of the areas we have covered for Italy banking also takes into account the individual needs of expats and is geared to provide financial flexibility. Although online applications are available these often involve Italian documents and can be quite hard for a foreigner and so it might be easier to do this in person at the branch and it should be noted that not all banks will allow you to open an account online if you are still overseas.

In order to open an account you will require the following:-

  • Passport
  • Italian tax code
  • Certificate of your tax code
  • Employment contract (for residents only)
  • Proof of address

In modern times it is important to take into account how you will use your money and therefore if transferring abroad banks may have additional fees. There are various options open now with regards to international transfers and if need be we are happy to discuss these with you.

Corporate Structures

If you wish to contract in a European country then Italy is a good choice due to its recognition of the importance of freelance work and its encompassing guidelines with regards to all aspects concerning this field. Of course as Italy’s system is so adapting and encompassing it can seem somewhat daunting and therefore it is best to engage with a professional firm such as ourselves with knowledge of the system and ability to provide both Italian self-employed services and Italian employed payroll services. We can assist with all aspects of filing, accounting and taxation requirements.

Chesterfield and Contracting in Italy

The appeal of Italy is strong, with its culture stamped all over the globe and its top cities having their own unique characteristics and reputations to suit every type of person no matter their personal interests. Chesterfield have experience with contractors from all across the world with a variety of contracts in a range of different countries. Italy has initially one of the most complex systems with regards to contracting, but this is only because their understanding and of the area is more in depth than most countries and so they have adapted their system to encompass and encourage this. Therefore by engaging with a professional firm like ourselves you can be sure to get the most out of your professional time there.