UK Sole Trader Moving to Italy
#1
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UK Sole Trader Moving to Italy
Hi, I've had a look around and can't find a definitive answer, which is worrying, so thought I'd post here.
I left my job last month and started my own business as a sole trader. I am a UK-born copywriter and social media manager so work completely remotely.
My girlfriend who is also English has just got a job in Italy, and we are moving in October for an initial 8 months.
I'm wondering what I need to do with my newly formed business? And what I need to think about in terms of tax, residential status and all of that stuff?
I assumed since I was working remotely I could just go over and leave my business as is, i.e. registered in the UK paying UK taxes, but looking online has left me confused and a bit scared, and with Brexit happening at the end of the year, I really don't know what to do, so here I am!
Many thanks, James.
I left my job last month and started my own business as a sole trader. I am a UK-born copywriter and social media manager so work completely remotely.
My girlfriend who is also English has just got a job in Italy, and we are moving in October for an initial 8 months.
I'm wondering what I need to do with my newly formed business? And what I need to think about in terms of tax, residential status and all of that stuff?
I assumed since I was working remotely I could just go over and leave my business as is, i.e. registered in the UK paying UK taxes, but looking online has left me confused and a bit scared, and with Brexit happening at the end of the year, I really don't know what to do, so here I am!
Many thanks, James.
#2
Re: UK Sole Trader Moving to Italy
You pay taxes where you work, otherwise everyone would incorporate their business in somewhere Lichtenstein and pay no income tax.
In what sense is your business "registered" in the UK? Do you just mean "registered for taxes", or have you formed a limited company?
In what sense is your business "registered" in the UK? Do you just mean "registered for taxes", or have you formed a limited company?
#3
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Re: UK Sole Trader Moving to Italy
Good point! Big time noob here so apologies for asking stupid questions.
I have registered as a sole trader but can quite easily form a ltd company if that would be a better option?
I have registered as a sole trader but can quite easily form a ltd company if that would be a better option?
#4
Re: UK Sole Trader Moving to Italy
Which is better is a personal question for you to discuss with your accountant, but if you're leaving to live in Italy it is likely that if you had a company registered in the UK it would become dormant. ..... Or you could bill using your UK company, then pay yourself a salary in Italy, but that would make things a good bit more complicated, as your company would be liable for corporation tax in the UK, and you'd still have to pay income tax in Italy on the salary your company pays you. If nothing else you have the cost of forming a limited company in the UK and the cost of preparing an annual tax return.
#5
Re: UK Sole Trader Moving to Italy
If you are moving in October your priority will have to be sorting out residency before the end of the transistion in December and also exchange your driving license . Italian officialdom is complex and frequently slow moving and if there is a second wave of Covid this will further complicate things . Do either of you speak italian ?
#6
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Re: UK Sole Trader Moving to Italy
If you are moving in October your priority will have to be sorting out residency before the end of the transistion in December and also exchange your driving license . Italian officialdom is complex and frequently slow moving and if there is a second wave of Covid this will further complicate things . Do either of you speak italian ?
We are asking the person who gave her the job to assist us when we get there. She doesn't envisage any issues and she's helped a lot of people through the process before.
Hopefully it'll all be A okay!
#7
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Re: UK Sole Trader Moving to Italy
I don't think the question for tax is where you WORK, rather where you EARN the money. For example I live in Italy permanently, but my clients are all over the world. Most, but not all, of them pay me through a Hong Kong based company (in US Dollars) and most of that income in then transferred to a UK bank account or spent online. I keep asking the Italian authorities about paying tax, but they keep saying I must pay tax in the country where the money is earned <sigh>...
But you say in the original post that you're moving for an initial 8 months, which perhaps suggests that you're not quite sure if it will be permanent yet, and so you have a little time to decide what to do. Get professional advice of course, but I know that for the UK there's a whole series of questions that you have to answer to decide if you are tax resident there - and there's a good possibility that you still qualify to pay tax there for the time being. At least for this tax year. One easy criteria to follow (see https://www.gov.uk/tax-foreign-income/residence) is that if you are resident in the UK for more than 183 days in any one tax year. Sounds like you might be? So you'd pay tax until April 2021 in the UK. You could set up any Italian business to start from April 2021 and then from April to December 2021 you'd be liable for tax in Italy, which you'd actually do a tax return on in 2022 - so you have a bit of time (from the tax perspective - the right to work perspective is different and maybe you need to get that sorted before Brexit)
But you say in the original post that you're moving for an initial 8 months, which perhaps suggests that you're not quite sure if it will be permanent yet, and so you have a little time to decide what to do. Get professional advice of course, but I know that for the UK there's a whole series of questions that you have to answer to decide if you are tax resident there - and there's a good possibility that you still qualify to pay tax there for the time being. At least for this tax year. One easy criteria to follow (see https://www.gov.uk/tax-foreign-income/residence) is that if you are resident in the UK for more than 183 days in any one tax year. Sounds like you might be? So you'd pay tax until April 2021 in the UK. You could set up any Italian business to start from April 2021 and then from April to December 2021 you'd be liable for tax in Italy, which you'd actually do a tax return on in 2022 - so you have a bit of time (from the tax perspective - the right to work perspective is different and maybe you need to get that sorted before Brexit)
#8
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Re: UK Sole Trader Moving to Italy
Thank you this is an absolutely brilliant reply - very informative and helpful.
Much appreciated!
Much appreciated!
#9
Re: UK Sole Trader Moving to Italy
I don't think the question for tax is where you WORK, rather where you EARN the money. For example I live in Italy permanently, but my clients are all over the world. Most, but not all, of them pay me through a Hong Kong based company (in US Dollars) and most of that income in then transferred to a UK bank account or spent online. I keep asking the Italian authorities about paying tax, but they keep saying I must pay tax in the country where the money is earned <sigh>... ...
#10
Re: UK Sole Trader Moving to Italy
I think that if the company is in Hong Kong then it wil pay local taxes but if the poster is receiving a wage from them he should be declaring that in Italy . I'm not an expert but the basic ground rules are that as an Italian resident you pay italian tax on your global income. A good idea is to consult a qualified professional for advice .
#11
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Re: UK Sole Trader Moving to Italy
The label and status of "sole trader" exists in the UK. Does it in other jurisdictions ? I would get advice from an accountant in the jurisdiction that you are moving to.
Last edited by scot47; Aug 20th 2020 at 7:44 am.
#12
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Re: UK Sole Trader Moving to Italy
The Italian authorities decide that you earn where you work - so if you sit on your terrace in Italy and work, then you earn in Italy - and your income is declared here. If you go to Hong Kong and work there then you earn there. However it all has to bedeclared on your tax form and IVIE and IVAFE paid in ITaly on your worldwide patrimony.
A sole trader in Italy is a libero professionista - and then depending on your age and income you can choose a flat rate tax or open a partita IVA and do it that way.
A sole trader in Italy is a libero professionista - and then depending on your age and income you can choose a flat rate tax or open a partita IVA and do it that way.
Last edited by modicasa; Aug 20th 2020 at 9:29 am.
#13
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Re: UK Sole Trader Moving to Italy
I don't think the question for tax is where you WORK, rather where you EARN the money. For example I live in Italy permanently, but my clients are all over the world. Most, but not all, of them pay me through a Hong Kong based company (in US Dollars) and most of that income in then transferred to a UK bank account or spent online. I keep asking the Italian authorities about paying tax, but they keep saying I must pay tax in the country where the money is earned <sigh>...
But you say in the original post that you're moving for an initial 8 months, which perhaps suggests that you're not quite sure if it will be permanent yet, and so you have a little time to decide what to do. Get professional advice of course, but I know that for the UK there's a whole series of questions that you have to answer to decide if you are tax resident there - and there's a good possibility that you still qualify to pay tax there for the time being. At least for this tax year. One easy criteria to follow (see https://www.gov.uk/tax-foreign-income/residence) is that if you are resident in the UK for more than 183 days in any one tax year. Sounds like you might be? So you'd pay tax until April 2021 in the UK. You could set up any Italian business to start from April 2021 and then from April to December 2021 you'd be liable for tax in Italy, which you'd actually do a tax return on in 2022 - so you have a bit of time (from the tax perspective - the right to work perspective is different and maybe you need to get that sorted before Brexit)
But you say in the original post that you're moving for an initial 8 months, which perhaps suggests that you're not quite sure if it will be permanent yet, and so you have a little time to decide what to do. Get professional advice of course, but I know that for the UK there's a whole series of questions that you have to answer to decide if you are tax resident there - and there's a good possibility that you still qualify to pay tax there for the time being. At least for this tax year. One easy criteria to follow (see https://www.gov.uk/tax-foreign-income/residence) is that if you are resident in the UK for more than 183 days in any one tax year. Sounds like you might be? So you'd pay tax until April 2021 in the UK. You could set up any Italian business to start from April 2021 and then from April to December 2021 you'd be liable for tax in Italy, which you'd actually do a tax return on in 2022 - so you have a bit of time (from the tax perspective - the right to work perspective is different and maybe you need to get that sorted before Brexit)
For the second part, if OP is in Italy whilst earning, then he will have to pay tax in Italy for that period under the split year rules. OP would probably take home more of his earnings that way.
My advice; get professional advice. We can always find the answer we want somewhere online but it may not necessarily be the right answer. You really do not want to get on the wrong side of tax authorities anywhere in the world.
#14
Re: UK Sole Trader Moving to Italy
You have a good point SanNico about looking for answers you want. UK contractors used to spend hours on the internet trying to prove that contracts were exempt from IR35.
I had a visit from Equitalia a few years ago and it came down to a mistake on the tax return. A bit scary.
I had a visit from Equitalia a few years ago and it came down to a mistake on the tax return. A bit scary.
#15
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Re: UK Sole Trader Moving to Italy
May I suggest first job anybody contemplating a move to Italy should do is obtain a Codice Fiscale. Then automatically every institution knows who and where you are.
ciao for now.
'o nonno
ciao for now.
'o nonno