Thinking about moving to Italy > start freelance business
Jan 7th 2020, 3:56 pm
#1
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Thinking about moving to Italy > start freelance business
Hi everyone,
I hope you don't mind me jumping out of the gates immediately , as my first post.
I'm a EU citizen and I am researching Italy as a possibility for my next couple of years as a freelancer (I'm not depending on a location, so I can basically move anywhere)
I've been reading about Italy's Growth Decree with some very interesting tax breaks for expats (as defined in the Growth Decree : mondaq [dot] com/italy/x/825606/tax+authorities/Italy+as+the+new+tax+Eldorado+for+private+individu als) - for example: In Calabria only 10% of my income would be taxed, which (on paper at least) sounds even better than the deal I would be getting in Portugal.
Two questions:
- Has anyone of you already done what I'm trying to do and benefitted from the Growth Decree
- I'm desperately looking for an (affordable) accountant / tax lawyer that can help me investigate the viability of my setup and later on guide me through the actual paperwork.
Thank you
I hope you don't mind me jumping out of the gates immediately , as my first post.
I'm a EU citizen and I am researching Italy as a possibility for my next couple of years as a freelancer (I'm not depending on a location, so I can basically move anywhere)
I've been reading about Italy's Growth Decree with some very interesting tax breaks for expats (as defined in the Growth Decree : mondaq [dot] com/italy/x/825606/tax+authorities/Italy+as+the+new+tax+Eldorado+for+private+individu als) - for example: In Calabria only 10% of my income would be taxed, which (on paper at least) sounds even better than the deal I would be getting in Portugal.
Two questions:
- Has anyone of you already done what I'm trying to do and benefitted from the Growth Decree
- I'm desperately looking for an (affordable) accountant / tax lawyer that can help me investigate the viability of my setup and later on guide me through the actual paperwork.
Thank you
Jan 10th 2020, 7:14 am
#2
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Joined: Aug 2015
Posts: 404
Re: Thinking about moving to Italy > start freelance business
I can't answer either of your questions directly but when it comes to working as a freelancer in Italy, it's not always that easy.
I would recommend you look at the Regime Forfettario which is designed for freelance people. Essentially, it allows you to earn up to a maximum amount (I think between €45,000 & €60,000 per year, depending on your profession) and to deduct a fixed ("forfettario") sum of around 20% from your income by way of expenses. So if, like me, you have very few business expenses, then this is quite attractive. You still have to pay INPS contributions at an eye-watering rate of around 31% (on your total income less the c. 20% expenses) and then 15% income tax (on your total income less expenses, less the INPS paid in the previous year) so your total tax burden is around 30-35% of gross income, depending on exactly how much you earn.
Another benefit of this scheme is that you don't have to apply VAT to your invoices, which makes accounting much more straightforward and means you don't have to make quarterly VAT declarations. This should help to keep down your annual accountancy fees (which should be well under €1,000 if my experience in the northern province of Trento is anything to go by).
If you are planning to do this, I would recommend applying for a codice fiscale asap because this is required for virtually everything in Italy, from renting a house to signing up for a mobile phone. Obtaining such a code doesn't oblige you to do anything, however (i.e. it doesn't make you automatically liable to pay tax in Italy).
Hope that helps, have fun planning!
I would recommend you look at the Regime Forfettario which is designed for freelance people. Essentially, it allows you to earn up to a maximum amount (I think between €45,000 & €60,000 per year, depending on your profession) and to deduct a fixed ("forfettario") sum of around 20% from your income by way of expenses. So if, like me, you have very few business expenses, then this is quite attractive. You still have to pay INPS contributions at an eye-watering rate of around 31% (on your total income less the c. 20% expenses) and then 15% income tax (on your total income less expenses, less the INPS paid in the previous year) so your total tax burden is around 30-35% of gross income, depending on exactly how much you earn.
Another benefit of this scheme is that you don't have to apply VAT to your invoices, which makes accounting much more straightforward and means you don't have to make quarterly VAT declarations. This should help to keep down your annual accountancy fees (which should be well under €1,000 if my experience in the northern province of Trento is anything to go by).
If you are planning to do this, I would recommend applying for a codice fiscale asap because this is required for virtually everything in Italy, from renting a house to signing up for a mobile phone. Obtaining such a code doesn't oblige you to do anything, however (i.e. it doesn't make you automatically liable to pay tax in Italy).
Hope that helps, have fun planning!
Jan 10th 2020, 11:39 am
#3
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Posts: 2,512
Re: Thinking about moving to Italy > start freelance business
how old are you?
Jan 10th 2020, 7:04 pm
#4
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Joined: Nov 2011
Location: Central Italy
Posts: 3,654
Re: Thinking about moving to Italy > start freelance business
I can't answer either of your questions directly but when it comes to working as a freelancer in Italy, it's not always that easy.
I would recommend you look at the Regime Forfettario which is designed for freelance people. Essentially, it allows you to earn up to a maximum amount (I think between €45,000 & €60,000 per year, depending on your profession) and to deduct a fixed ("forfettario") sum of around 20% from your income by way of expenses. So if, like me, you have very few business expenses, then this is quite attractive. You still have to pay INPS contributions at an eye-watering rate of around 31% (on your total income less the c. 20% expenses) and then 15% income tax (on your total income less expenses, less the INPS paid in the previous year) so your total tax burden is around 30-35% of gross income, depending on exactly how much you earn.
Another benefit of this scheme is that you don't have to apply VAT to your invoices, which makes accounting much more straightforward and means you don't have to make quarterly VAT declarations. This should help to keep down your annual accountancy fees (which should be well under €1,000 if my experience in the northern province of Trento is anything to go by).
If you are planning to do this, I would recommend applying for a codice fiscale asap because this is required for virtually everything in Italy, from renting a house to signing up for a mobile phone. Obtaining such a code doesn't oblige you to do anything, however (i.e. it doesn't make you automatically liable to pay tax in Italy).
Hope that helps, have fun planning!
I would recommend you look at the Regime Forfettario which is designed for freelance people. Essentially, it allows you to earn up to a maximum amount (I think between €45,000 & €60,000 per year, depending on your profession) and to deduct a fixed ("forfettario") sum of around 20% from your income by way of expenses. So if, like me, you have very few business expenses, then this is quite attractive. You still have to pay INPS contributions at an eye-watering rate of around 31% (on your total income less the c. 20% expenses) and then 15% income tax (on your total income less expenses, less the INPS paid in the previous year) so your total tax burden is around 30-35% of gross income, depending on exactly how much you earn.
Another benefit of this scheme is that you don't have to apply VAT to your invoices, which makes accounting much more straightforward and means you don't have to make quarterly VAT declarations. This should help to keep down your annual accountancy fees (which should be well under €1,000 if my experience in the northern province of Trento is anything to go by).
If you are planning to do this, I would recommend applying for a codice fiscale asap because this is required for virtually everything in Italy, from renting a house to signing up for a mobile phone. Obtaining such a code doesn't oblige you to do anything, however (i.e. it doesn't make you automatically liable to pay tax in Italy).
Hope that helps, have fun planning!
Jan 13th 2020, 8:44 am
#5
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Joined: Aug 2015
Posts: 404
Re: Thinking about moving to Italy > start freelance business
A couple of other things that come to mind: I think there is a minimum INPS charge of around €4k, regardless of your actual profit, so bear this in mind if your income is relatively low.
Secondly, if you are only going to be doing small amounts of work, you could look into the "prestazioni occasionali" option, which allows you to perform up to €5k of services with little or no tax charged. However, I'm not that familiar with this scheme so I will allow someone else to explain this in more detail.
Secondly, if you are only going to be doing small amounts of work, you could look into the "prestazioni occasionali" option, which allows you to perform up to €5k of services with little or no tax charged. However, I'm not that familiar with this scheme so I will allow someone else to explain this in more detail.
Jan 15th 2020, 8:33 pm
#7
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Joined: Jan 2020
Posts: 27
Re: Thinking about moving to Italy > start freelance business
I can't answer either of your questions directly but when it comes to working as a freelancer in Italy, it's not always that easy.
I would recommend you look at the Regime Forfettario which is designed for freelance people. Essentially, it allows you to earn up to a maximum amount (I think between €45,000 & €60,000 per year, depending on your profession) and to deduct a fixed ("forfettario") sum of around 20% from your income by way of expenses. So if, like me, you have very few business expenses, then this is quite attractive. You still have to pay INPS contributions at an eye-watering rate of around 31% (on your total income less the c. 20% expenses) and then 15% income tax (on your total income less expenses, less the INPS paid in the previous year) so your total tax burden is around 30-35% of gross income, depending on exactly how much you earn.
Another benefit of this scheme is that you don't have to apply VAT to your invoices, which makes accounting much more straightforward and means you don't have to make quarterly VAT declarations. This should help to keep down your annual accountancy fees (which should be well under €1,000 if my experience in the northern province of Trento is anything to go by).
If you are planning to do this, I would recommend applying for a codice fiscale asap because this is required for virtually everything in Italy, from renting a house to signing up for a mobile phone. Obtaining such a code doesn't oblige you to do anything, however (i.e. it doesn't make you automatically liable to pay tax in Italy).
Hope that helps, have fun planning!
I would recommend you look at the Regime Forfettario which is designed for freelance people. Essentially, it allows you to earn up to a maximum amount (I think between €45,000 & €60,000 per year, depending on your profession) and to deduct a fixed ("forfettario") sum of around 20% from your income by way of expenses. So if, like me, you have very few business expenses, then this is quite attractive. You still have to pay INPS contributions at an eye-watering rate of around 31% (on your total income less the c. 20% expenses) and then 15% income tax (on your total income less expenses, less the INPS paid in the previous year) so your total tax burden is around 30-35% of gross income, depending on exactly how much you earn.
Another benefit of this scheme is that you don't have to apply VAT to your invoices, which makes accounting much more straightforward and means you don't have to make quarterly VAT declarations. This should help to keep down your annual accountancy fees (which should be well under €1,000 if my experience in the northern province of Trento is anything to go by).
If you are planning to do this, I would recommend applying for a codice fiscale asap because this is required for virtually everything in Italy, from renting a house to signing up for a mobile phone. Obtaining such a code doesn't oblige you to do anything, however (i.e. it doesn't make you automatically liable to pay tax in Italy).
Hope that helps, have fun planning!
Jan 16th 2020, 6:23 am
#8
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Joined: Aug 2015
Posts: 404
Re: Thinking about moving to Italy > start freelance business
The OP's point about social security is right, Italy's contributions are very, very high compared to many other countries.
Especially when you consider that in your first year, with payments on account, your overall tax bill can be almost doubled.
Jan 24th 2020, 1:36 pm
#9
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Joined: Aug 2019
Location: France atm
Posts: 747
Re: Thinking about moving to Italy > start freelance business
Move to Calabria?
Advice:
Don't do it.
Advice:
Don't do it.
Jan 25th 2020, 11:44 am
#11
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Joined: Jan 2020
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Re: Thinking about moving to Italy > start freelance business
I can't answer either of your questions directly but when it comes to working as a freelancer in Italy, it's not always that easy.
I would recommend you look at the Regime Forfettario which is designed for freelance people. Essentially, it allows you to earn up to a maximum amount (I think between €45,000 & €60,000 per year, depending on your profession) and to deduct a fixed ("forfettario") sum of around 20% from your income by way of expenses. So if, like me, you have very few business expenses, then this is quite attractive. You still have to pay INPS contributions at an eye-watering rate of around 31% (on your total income less the c. 20% expenses) and then 15% income tax (on your total income less expenses, less the INPS paid in the previous year) so your total tax burden is around 30-35% of gross income, depending on exactly how much you earn.
Another benefit of this scheme is that you don't have to apply VAT to your invoices, which makes accounting much more straightforward and means you don't have to make quarterly VAT declarations. This should help to keep down your annual accountancy fees (which should be well under €1,000 if my experience in the northern province of Trento is anything to go by).
If you are planning to do this, I would recommend applying for a codice fiscale asap because this is required for virtually everything in Italy, from renting a house to signing up for a mobile phone. Obtaining such a code doesn't oblige you to do anything, however (i.e. it doesn't make you automatically liable to pay tax in Italy).
Hope that helps, have fun planning!
I would recommend you look at the Regime Forfettario which is designed for freelance people. Essentially, it allows you to earn up to a maximum amount (I think between €45,000 & €60,000 per year, depending on your profession) and to deduct a fixed ("forfettario") sum of around 20% from your income by way of expenses. So if, like me, you have very few business expenses, then this is quite attractive. You still have to pay INPS contributions at an eye-watering rate of around 31% (on your total income less the c. 20% expenses) and then 15% income tax (on your total income less expenses, less the INPS paid in the previous year) so your total tax burden is around 30-35% of gross income, depending on exactly how much you earn.
Another benefit of this scheme is that you don't have to apply VAT to your invoices, which makes accounting much more straightforward and means you don't have to make quarterly VAT declarations. This should help to keep down your annual accountancy fees (which should be well under €1,000 if my experience in the northern province of Trento is anything to go by).
If you are planning to do this, I would recommend applying for a codice fiscale asap because this is required for virtually everything in Italy, from renting a house to signing up for a mobile phone. Obtaining such a code doesn't oblige you to do anything, however (i.e. it doesn't make you automatically liable to pay tax in Italy).
Hope that helps, have fun planning!
I got this very preliminary simulation from an italian accountant:
Takehome pay on 80k is approximately 56,500:
- income tax, assuming you move to Calabria for example, about 1,900 € equal to 10% of 80k at the rate of 23%;
- € 21,600 INPS (social security) > entire salary is taxed here ! at 27%
- income tax, assuming you move to Calabria for example, about 1,900 € equal to 10% of 80k at the rate of 23%;
- € 21,600 INPS (social security) > entire salary is taxed here ! at 27%
I wonder how you get to 31% for INPS while the accountant mentions 27% ?
Jan 25th 2020, 8:28 pm
#12
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Re: Thinking about moving to Italy > start freelance business
also - new info gathered : first year I pay no social security in Italy
Jan 25th 2020, 10:05 pm
#14
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Re: Thinking about moving to Italy > start freelance business
(in portugal 1st year is also exempt of soc sec)
Tax consultant / commercialisti firm emailing me back on a Saturday even. Sounding legit in their communication.
Is this the first time you have heard about this exemption for expats coming into Italy under the Growth Decree starting a self employed business ?
I've read it once before , I believe, in a blog but this is the first commercialisti that actually brings it up (again)
Just checked the references and credentials of the person from that firm and the resume is nothing short of impressive. Seems like the person knows what they are talking about.
edit:
I probably understood it wrong, and shouldnt have taken it so literally:
This is the exact mail I got - not sure what is meant by "correct starting from the second year since first year you do not pay social contribution"
I pay social contribution in june 2021 on the income of my FY2020, no ? So they probably mean "you dont pay your social contribution in 2020, but you ll pay them in 2021 anyhow"
Don't get it
"Please consider that calculation are correct starting from the second year since first year you do not pay social contribution
Ex.
FY2020
net income 78.000
taxable amount 30% 23.400 taxes 5.382 to be paid in June 2021
In June 2021 you pay also social contribution 27% X 78.000= 21.060 + tax and social contribution instalment for fy21"
Tax consultant / commercialisti firm emailing me back on a Saturday even. Sounding legit in their communication.
Is this the first time you have heard about this exemption for expats coming into Italy under the Growth Decree starting a self employed business ?
I've read it once before , I believe, in a blog but this is the first commercialisti that actually brings it up (again)
Just checked the references and credentials of the person from that firm and the resume is nothing short of impressive. Seems like the person knows what they are talking about.
edit:
I probably understood it wrong, and shouldnt have taken it so literally:
This is the exact mail I got - not sure what is meant by "correct starting from the second year since first year you do not pay social contribution"
I pay social contribution in june 2021 on the income of my FY2020, no ? So they probably mean "you dont pay your social contribution in 2020, but you ll pay them in 2021 anyhow"
Don't get it
"Please consider that calculation are correct starting from the second year since first year you do not pay social contribution
Ex.
FY2020
net income 78.000
taxable amount 30% 23.400 taxes 5.382 to be paid in June 2021
In June 2021 you pay also social contribution 27% X 78.000= 21.060 + tax and social contribution instalment for fy21"
Last edited by stormwatcher; Jan 25th 2020 at 11:28 pm.
