Legal & Taxation: Key Questions & Answers

Legal residency vs. tax residency in Italy

Tax residence in Italy is acquired in the presence of one of the following criteria:

1. Be registered in the resident population registry for most of the tax period  
2. Have a domicile in Italy,
3. Have residency in Italy

The concepts of domicile and residence are alternative to  each  other. We can say that a person is domiciled in Italy, if he has fixed in Italy the center of his affaires in Italy, since it is not necessary the physical presence on Italian territory. Otherwise the concept of residence is broader, as it includes not only economic interests, but also socia and affective interests

Different taxation cases when legal and tax residency are in different countries/ double taxation agreements

When you acquire your tax residence in Italy,  all income everywhere obtained will be taxed in Italy. Otherwise, in the event that you do not have tax residence in Italy, only income obtained for activities carried out in Italian territory will be taxed in Italy. Therefore, if a non-resident, works remotely (abroad) as a freelancer for Italian clients will not be due taxes in Italy. This illustration is very generic, as the evaluation will not be able to ignore the concrete case.

Tax deductions for DN spending less and more then 6 months in Italy

If a non-resident contributes income taxed in Italy, he or she will be entitled to deduct certain expenses. These include deductions for compensation of employees,and deductions for self-employment income. In some cases, deductions for self-employment income will not be able to be benefited if special schemes are designed, such as the flat-rate scheme.

Taxation of DN / freelancers / remote workers (different cases) if resident or not resident in Italy

If you are resident in Italy, all income everywhere earned should be taxed in Italy. Otherwise, if the residence is abroad, only income earned in the territory of the Italian State will be taxed in Italy. In any case, for freelancers, there is the possibility of opting for the flat-rate scheme which allows a dry tax of 5% for the first 5 years, and then 15%. In addition, in the presence of certain requirements, you will be able to access the impatrite scheme which provides for an exemption of 70% of income. The exemption can be up to 90% if you transfer your residence to certain areas of southern Italy. In this case you would pay taxes only on 10% of your income.

Which is the best VISA to apply in Italy as a Nomad (for extra EU persons)

One way to get visa is to start your own business by requesting your VAT number. If it is a business activity, a guarantee will have to be presented which, in essence, concerns the ability to pay the minimum social security contributions. Otherwise, if the activity is a freelancer, then such a guarantee will not be necessary.

Can an Italian company bill a DN that has a P. IVA from another country? In that case both they don’t pay VAT?

Certain geese can be purchased services and products from a non-resident subject. In general, VAT in these cases is paid by the resident undertaking through the reverse charge. However, the VAT discipline is very complex, and how VAT is acquitted and billed will depend on how the transaction is structured.

Which are the requirements and the process to set up an Italian P. IVA for a foreigner?

It depends on the type of task as permissions or requirements may be required. Generally, to start a business individually it will be necessary to register with the Chamber of Commerce, request a VAT number, submit the start-up report and register for social  security. Otherwise for a freelancer you will need to apply for a VAT number and register for Social Security

Any particular Italian law that might be interesting to share for foreigners  Nomad / freelancers?

There are many rules that may be of interest to freelancers, starting with the possibility of benefiting from the flat-rate scheme or the scheme that is bogged down in reducing taxation to a minimum. In addition, the recent rules on innovative start-ups allow geese to start an innovative business to benefit from public funding, or to access crowdfunding.  

Community examples:

1. Couple / Boy is Italian, girl British. She wants to work remotely for 8 months if her company agrees. Any tax implications or visa needed?

It would be great to open a VAT NUMBER with flat-rate scheme, or evaluate for impatriati regime

2. Study visa for Italy, person wants to work 20 hours a week (maximum that is allowed during study visa) by freelancing for non-Italian clients. Is that permitted and are there tax implications for him?

Requests VAT number with flat-rate scheme.

Written by our tax expert Dottore Commercialista Raffaele Marino