RickMichael

Greetings all.
I am in England. My wife is getting rid of me. I want to start a new chapter somewhere else before the final Brexit curtain hits. I am looking really at Italy (Liguria or Piedmont, or maybe Tuscany) vs Spain (Girona province or Santander). Italy probably appeals to me more because of the alleged % vegetarian and that I'm an 8th Italian. However I am concerned that the chance of success in Italy is lower. It's time for me to start language learning so that I can move in time and speak hopefully a pidgin level.

I have struggled but cannot find clear up-to-date information about the tax and soc security situation for self-employed in Italy. I'm aware that I first have to prove to the local bureau that I'm not replicating another business in town, but that shouldn't be too hard since I work internationally as a simulation designer. If I managed to earn 30-40000 Euros in a year, from what I gather, as someone selling services not goods, that means I have to register as a corporation and pay corporation tax 24%?! And meet the same accounting standards as a company with a turnover of millions. As well as then paying income tax and 33% social security?! Googling it you just get a ton of warnings -- like wow Italy is hopeless for being self-employed due to its tax regime.
I would like to hear from someone that is self-employed and can talk about the level of nightmare they have to deal with and how heavy the taxation ends up being.

The other thing I should say is that I intend to get a cheap property and do it up. It could be ruined, hopefully I will keep earning enough money to pay workmen from time to time. But I won't be left with enough money to buy outright, I will need to get a mortgage from the outset. Is that something that I'd be able to do within six months of living and renting in Italy, being self-employed? At what point do they admit that I'm a resident and not charge me taxes as if I'm a foreign property investor? Is it a thing that it tends to be expats that do this and Italians prefer newer houses? Is the bureaucratic side of permission to rebuild something, insuperable? So yeah … again anyone who knows about that sort of thing, I would like to hear.

I'm a bit worried too about internet connection because people say it can take a ridiculously long time to set up and my work requires it.

Fortune favours the brave. Thanks for any help.

Geordieborn

I think there are a few on here who are sefl-employed here in Italy, hopefully they will provide specific help. This tax site may be of general use to you. I do not work, but have read various information and seen the tax rates here, they are high! However, depending on how you live, it can be a cheap place to live, it's certainly aa lovely place
Internet here has improved rapidly over the last few years, but can still be poor in rural areas. I've never heard of anyone having to wait long to have a service installed. Check how good the mobile data access is whilst looking for property, at least then you can have back up access to the net. A lot of places (rural) have wireless ADSL and most seem to be very good.

modicasa

As a self employed person, if you earn over 30.000 a year ou will have to open a partita IVA (VAT number) but you dont have to be a ltd company. You can be a personal company - ditta individuale - which is more like being self employed in the UK, other than you will pay more tax and your NI (INPS) contributions will be higher. However the tax rates are much higher than the UK - 23% is the base rate. Onthe plus side you can claim back more than you can in the UK. - This could change with the new government but its looking doubtful.
If you aim for a low income in your first year while you learn the ropes it would help!

GeorgeYoung

I'm self-employed but am registered on a special tax scheme which caps your earnings and simplifies your accounting but means you only pay around 5% tax (in addition to the c. 30% INPS), meaning my total tax burden is c. 33% of my gross income. Which is broadly similar to where I was on the UK, possibly a little higher.
However, in excess of that (low) threshold, you have to apply VAT to your invoices (which you have to pay to the Agenzia every quarter), your accounting is more complex and the tax rates are pretty steep. I've read that you can reasonably expected to have to hand over 50-60% of your gross income, although that does vary significantly according to what you are able to offset in expenses - and in Italy these aren't just business expenses. Things like prescription charges are tax-deductible. Modicasa will know better than me but I believe there are quite generous deductions available for house refurbishment, albeit with a maximum total amount.

modicasa

I pay over 70% in all and dont earn anything like a fortune, but at least the studio dei settori is going, so that should help.
As far as tax relief on refurbs and the like - dont plan anything. its likely the incentives will disappear this year as the new govt needs all the money it can get for election promises.

RickMichael

THANK YOU very much for responses, I didn't get notifications properly for some reason.
modicasa is it safe to say your profit is a lot more than 30k gross? Because I have no way to survive if I pay 70% in total.
Last year I declared 24k pounds, I'm expected to pay 4k in the UK (and then child support is probably 3-4k, maybe it comes off gross I'm not even sure). If I had to pay 5% income tax and then 30% INPS that would be fine but I think that I break the threshold for that. I can't even find it any more but there were a slew of articles, it dated from early in Renzi premiership, describing that for goods-oriented businesses the threshold was something like 40000, for services something like 15000 (not kidding).
I would only have to charge IVA to EU/UK clients. In that respect it's true the UK is far more favourable to small businesses than .. just about anywhere? Most places the income threshold for VAT is pretty low compared to the UK. But I can't afford to stay here anyway.
I'm not looking to make a living as a property developer, I'm too busy with my own work.

nicktonight

Hi Rick, unless you can register on one of the low tax schemes a typical calculation would be as follows - very approximately
You say your will have 40,000 gross income - 8,000 expenses (you can deduct part of your rent, and a percentage of things like phone bills, car expenses, trips to UK, meal vouchers and anything your imagination can come up with provided you get an invoice with your VAT number on it)
That would leave 32000 net income. 27% of that goes to INPS which is actually your pension contribution (provided you stay in Italy for a certain number of years 3 or 5 I'm not sure). Your INPS contribution is deductible so you would end up paying tax on 23000. There is no personal allowance so you would pay €5600 income tax and another €600 local taxes
Hope that helps

GeorgeYoung

Your INPS is only deductible the year after you pay it. So in tax return 1 you wouldn't have anything to deduct but then in tax return 2 you could deduct the amount paid the previous year. Hope that's clear.

modicasa

In addition to National income tax you will also pay a regional and a provincial levy depending where you live. Bear in the mind that the tax man will make you pay what he thinks you earned, not what you actually banked, and they can come after you for years afterwards with demands for more money. If you have a credit for IVA you must pay pdq, if you hvae a debit it will take years before (if ever) you see a cheque. I dont earn a fortune by any means - well under 50K a year - but because I have to declare evey penny, I get whacked by the system which assumes you earn something under the table. It depends on your job and how regulated it is.

RickMichael

Further thanks, I appreciate it.
The following is the type of article I have seen, and they all date from Renzi's time so I'm guessing nothing ever changed? ie the threshold for a self-employed professional to be in the "low tax" or "simple tax" scheme is still 15000 Euros a year ?? That's what I can't seem to find any official information about.

intuitconsultancy.com/italy-controversial-new-self-employed-tax/

grr I'm not allowed to post URLs until I have at least 5 posts. Just imagine https : / / at the start

modicasa

The budget from the new government will be in October, and they promise alotof changes, so it may be best to wait and see.

RickMichael

I've just discovered some good news - for the first 4 years only 50% is taxable income and that now applies to self-employed moving their businesses to Italy. I knew before that it did not. Whether that affects INPS I'll have to ask the tax authorities somehow. But at any rate it changes the calculation favourably for the time being.

ey.com/gl/en/services/people-advisory-services/hc-alert--italy-introduces-special-tax-and-immigration-rules-to-attract-foreign-workers-and-investors

Supposing it doesn't affect INPS then whereas the UK just made my tax and NI bill on ~27k EUR be ~4k, Italy would make it getting on for 10k. If the 50% reduction applies to INPS then it's only more like 6k. Assuming that every time I ever have to charge someone VAT, they pay it! But we have to wait and see in October whether after 4 years I'll still afford to survive. Interesting. But a lot can happen in 4 years.

RickMichael

Thanks scenista for your message. I had not even thought about the commercialista fees. In UK tax return is so simple you can just fill it out yourself without any problems. I've also filed US taxes before and that was worse but still feasible. Realistically I do not think in Italy I can manage that, so I have to budget for commercialista as well.

RickMichael

So how come you are putting INPS down to 1/6 of gross?

nicktonight

I read the link that you gave Rick and this was a draft proposition for the 2017 - has it been made law yet or has the new populist alliance reproposed it?
Also the small print is rather drastic - you have to remain resident in Italy for 15 years otherwise I suppose you must refund the other 50%