'Smart working'? What you need to know about going self-employed in Italy

The lockdown-induced rise of 'smart working’, as remote work or working from home is referred to in Italy, has provided a fresh perspective on how workers and entrepreneurs can do business. A different and more flexible way of doing things has now established itself as the norm since work-from-home measures were first ordered around a year ago.

READ ALSO: Freelance or employee: Which is the best way to work in Italy?

The Italian government has recommended remote working where possible throughout the Covid-19 emergency, and it’s set to continue as the crisis measures roll on.

Some 90% of large businesses and 73% of medium enterprises switched to a remote system, according to Istat, the Italian statistics body. Over a third of small businesses also took up agile working in order to ensure business continuity, while movement continues to be restricted.

The country wasn’t prepared for the sudden shift to working from home, with many areas suffering internet connectivity issues or simply having no internet at all. However, the pandemic is dragging Italy into a digital future, accelerating the supply of fast internet services to meet the demand of this changed working environment.

High speed fibre will pass 202 million houses in the European Union and Britain by 2026, according to a joint report by consultancy firm IDATE and industry group FTTH Council Europe. Italy is one of the countries expected to experience significant growth with a predicted 218% rise of homes served by high speed internet.

With the number of freelancers or liberi professionisti in Italy increasing year-on-year and currently making up a quarter of the workforce, now could be the time to jump on the momentum and become your own boss in Italy.

READ ALSO: These are the thousands of job vacancies that Italy can't fill

It sounds idyllic to be able to make a living from your laptop while enjoying ‘la dolce vita’, but exactly what does it entail and how much bureaucracy is involved?

Here, we drill down the options for those looking to freelance in Italy, the advantages on offer and the drawbacks to watch out for.

As the process is complex and variable, it’s strongly advised you seek professional legal and accounting consultation before setting up your business plans.

Where you come from determines your route to gaining freelance status in Italy.

If you move to Italy from an EU country, you have the right to stay and work in Italy with a relatively straightforward process of achieving self-employment.

On the other hand, if you’re leaving a non-EU country, which of course now includes British citizens, it’s a longer and more tangled process. Getting authorisation to work and a visa for self-employment varies according to your country of origin.

As a rule of thumb, if an Italian would face limitations in setting up a business in a particular non-EU country, then it’s likely the citizen of that country will face the same restrictions if wanting to set up a business in Italy. The Italian Ministry of Foreign Affairs is a good source of information on reciprocity agreements.

Remote work is becoming much more common in Italy - but is it getting easier? Photo: Andreas Solaro/AFP

Non-EU nationals already living in Italy may need to convert their permit in order to be eligible for self-employment.

Accountant and tax advisor, Nicolò Bolla, who runs finance firm Accounting Bolla, advised that some residence permits allow you to freelance, whereas others, such as the ERV (Elective Residence Visa) for instance, don’t.

You can find out which visas can be converted and the relevant application on the www.interno.it website.

It’s important to have a strategy if you’re planning to freelance in Italy, according to Nicolò. He advised to get your papers straight and create a rigorous plan regarding immigration and tax.

As it takes months to go through the bureaucracy, even for an accounting professional, he recommended taking a long-term view of moving to Italy to freelance.

“If you fail to set up a proper immigration and business strategy, it could cost you time and money. Make your calculations before making any decisions,” he said.

If you’re coming from outside the EU, what visa and permit do you need?

To be self-employed in Italy, you need to apply for a self-employment visa before leaving your country. This applies to non-EU nationals and those exempt from the Schengen visa.

The process can be tricky and take months, so it’s best to ensure you account for long timescales before hopping on a flight.

READ ALSO: What type of visa will you need to move to Italy?

It’s also far from guaranteed, even if you’re ready to take on the bureaucracy. Tax advisor Nicolò warned that this visa has one of the highest rejected application rates.

What’s more, there is a cap on how many foreign national workers are allowed to come into Italy each year, which is determined by the so-called Inflow Decree, or ‘decreto flussi’. This only opens for a few months every year and it’s the only time non-EU nationals can apply for a work visa.

What you need to consider before choosing your type of self-employment

Different professions fall under different laws, regulations and taxation. Each type of employment or source of income has a code, known as a 'codice ATECO', which has to be communicated to the Revenue Agency (Agenzia delle Entrate).

Therefore if you’re working online as a teacher, you’ll have a different code and regulations than if you wanted to join the rising number of donkey farmers in the Alps.

To achieve the libero professionista status, you need to open a ‘ditta individuale’, which is effectively a sole trader company. When you do this, you will get a partita IVA, a mandatory tax number.

Without this code, you can’t legally make invoices or receive payments.

How do I open a ‘ditta individuale’?

If you already reside in Italy, a trip to your local Chamber of Commerce or INPS office ‘Istituto nazionale della previdenza sociale’, the National Institute of Social Security, will allow you to enrol. This is a requirement by law.

You can also list your business with INPS online, but this is notoriously thorny and it’s recommended you get professional assistance with this.

If you’re not already in Italy and are doing this remotely from your non-EU country of origin, your first step is to obtain a Nulla Osta from your consulate. In this case, it serves as work authorisation to allow you to apply for the visa.

“If you manage to secure a self-employment visa, you are then granted entry to Italy”, stated Nicolò.

These are the steps:

1. Apply for a Nulla Osta (authorization to perform self-employed work) from the local Immigration Desk (Sportello Unico Immigrazione – SUI). You may need to hire a proxy in Italy to do this on your behalf.

2. Get the documentation relevant to your work activity in Italy.

3. Apply for the Self-Employment Visa at the Italian consulate of your country.

4. Enter Italy and apply for an Italian residence permit (permesso di soggiorno) to be allowed to live and work in Italy legally.

The documentation needed to apply for the visa changes according to your country and profession. It may include the following as an example:

• Italian Long-stay visa application form.

• Two passport-sized pictures.

• Valid passport with at least two blank visa pages, which must be valid for at least three months longer than the visa you will be issued.

• The Nulla Osta authorisation (original and photocopy).

• Proof of suitable accommodation, such as a purchase or rental agreement.

• Proof of income from the previous year, which must be higher than the minimum level required by law for exemption from healthcare contribution (€8,400).

• Certificate issued by the Chamber of Commerce in the area you will be working, recognising you have enough resources for the self-employed work you plan to do

If you’ve made it this far and have been awarded a self-employment visa, you can enter Italy.

Once you’re in the country, you have eight days to apply for a ‘permesso di soggiorno’ (a residence permit), which will be issued by your local Questura (the provincial police headquarters).

The visa is valid for two years initially and can be renewed.

What’s it like to freelance in Italy?

Zoe Adams Green, a British citizen living in Rome with her husband and toddler, has been freelancing as a technical translator in Italy since 2018.

She opened a partita IVA with a commercialista, an accountant. She admits this was relatively smooth as going self-employed wasn’t dependent on obtaining a self-employment visa. Britain was still part of the EU at that time and so Zoe could benefit from the EU’s freedom of movement and work.

However, no matter where you come from, she advised keeping your eyes open and checking the taxation fine print. Zoe believed she was eligible for a tax break for highly qualified professionals who were new to Italy.

“My husband and I were pretty sure I was eligible but my accountant wasn’t familiar with the scheme. So I contracted another commercialista who looked into it and confirmed I qualified for a tax reduction,” she said.

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Thanks to her persistence and diligence, she now only pays income tax on 50% of her earnings for the first five years of business. 

However, she is still liable for full INPS contributions, the payments that provide benefits in the event of illness, maternity or unemployment, for example. For the self-employed, this begins at a rate of 24% of income, so she admits it’s a “heavy tax burden overall”.

“There are other tax regimes which might better suit your circumstances, so it’s worth talking to a commercialista to consider your options,” Zoe said.

You could, in theory, claim a hefty tax deduction on your outgoings. “Petrol, rent, utility bills and other payments related to running your business can all be taken down from your taxes as a self-employed professional,” he added.

Nicolò confirmed there are tax breaks for various skilled professionals coming to Italy. “There are also overheads you can offset, depending on the freelance regime you choose”, he stated.

Where in Italy is best to set up as a freelancer?

If you’ve met all the requirements and secured the relevant self-employed visa, you need to consider the best spot to base yourself. You’ll need to weigh up rent prices, which fluctuate considerably from north to south and from city to countryside.

The impact of the pandemic saw a surge in demand for homes in the south, where properties are often cheaper. If you can cut your overhead costs such as rent, your profits will clearly rise, making it a more viable career choice.

However, it’s also a good idea to check that the internet speed in your area is up to scratch beforehand if your business is online.

READ ALSO: Foreigners rank Italy 'worst in Europe' for internet and paying without cash

Once the coronavirus restrictions are lifted, there are also many bars in the cities offering wifi connectivity thanks to the rise of freelance activity. This can also be a good way to curb the loneliness that is sometimes a drawback of working alone.

The idea of being your own boss in a country where you can reward yourself with a spritz in the sun just might be enough to push you through the tricky red tape.

If the spoils are great enough to justify the endeavour, it’s wise to seek professional help throughout the process. Even once you’re up and running, you’ll likely need advice with declaring taxes to ensure you are legal and compliant.

Get through all that and you’ve most definitely earned that spritz with a ‘bella vista’.