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WORKING IN ITALY

Remote workers: What are your visa options when moving to Italy?

Italy does not (yet) have a special 'digital nomad' visa - so what other options are available to freelancers and remote workers? Here's what you need to know if you're planning a move.

Remote workers: What are your visa options when moving to Italy?
Living the remote-working dream in Italy will involve a bit of paperwork. So where should you start? Photo by David Espina on Unsplash

Italy has announced that a new visa option for ‘digital nomads’ or remote workers is on the way for non-EU nationals wanting to move to the country.

Though the government is yet to give details of how the application process will work, it’s hoped that the new visa will mean a far easier route to a new life in Italy for the growing number of people who can work from anywhere with just a laptop and an internet connection.

READ ALSO: What do we know so far about Italy’s digital nomad visa?

The idea of swapping a spare bedroom office in colder climes for a new life in Italy is proving especially tempting in combination with the country’s growing number of discount home purchase or rental schemes aimed at repopulating remote, rural villages.

While it is possible for many non-EU nationals to spend up to 90 days in Italy without any visa at all, those wishing to work legally while here must apply for a visa and work permit

And the current visa options available are not always viable for self-employed freelancers and remote workers, immigration law experts say, due to the strict quotas and requirements involved.

Here’s a breakdown of the other visa options available at the moment for those hoping to make the move to Italy.

Self-employment visa

The self-employment visa, or visto per lavoro autonomo, is the permit that most non-EU freelancers would probably expect to apply for when seeking to move to Italy for work.

Successful applications, however, are rare.

So rare, in fact, that Costanza Petreni, a senior immigration consultant at the immigration firm Mazzeschi, says she actively discourages clients from taking this route.

READ ALSO: Working remotely from Italy: What are the rules for foreigners?

“We have so many clients asking for this type of application, because in the absence of a digital nomad visa there’s almost no other option. But what we tell them is it’s extremely hard and uncertain,” Petreni says.

The visas are released in annual quotas, via Italy’s decreto flussi, on a first come, first served basis. For the last few years, including in 2022, only 500 have been made available each year.

Petreni says one of the main issues they face, however, is less a lack of available permits than the absence of clear guidance from consulates as to exactly what documentation they need.

A common obstacle, for example, is that the consulate will require the applicant to be registered with the relevant professional body or guild for their profession – but won’t specify which one they have in mind.

READ ALSO: How many people does Italy grant work permits to every year?

If you work remotely, can you just move your life and laptop to Italy?
Just 500 self-employment visas were released by Italy in 2022. Photo by Persnickety Prints on Unsplash

In Italy, membership of such bodies is standard, but in most other countries, it tends to be only very established professions that even have their own guilds or royal societies – making this a significant stumbling block for many applicants.

“Even for photographers, they’d say, well, you need to register with the relevant body; but there isn’t one, that’s the problem,” says Petreni.

She says the process can sometimes be a little easier for those who are already in Italy on, say, a study visa.

That’s partly because those who are already present in Italy and applying to convert their existing residency permit into a work permit come under a different quota, with more spaces available (7,000 in 2022).

It’s also because once you’re in Italy, it’s your local prefecture, rather than an Italian consulate, that handles the application process – and in Petreni’s experience, dealing with the prefecture can be simpler.

“In theory, the requirements are the same whether you convert your permit or whether you do a one-time visa application for self-employment. But the authorities checking are different.”

One key difference, she notes, is that prefectures will generally be able to tell you whether they have any spaces left in their quota and whether it’s worth filing an application as a result, whereas consulates typically won’t share this information (“I don’t know if they know”).

READ ALSO:

She warns, however, against assuming that entering the country on a study visa and then converting to a self-employment visa is a silver bullet, as success is by no means guaranteed.

“If I were proposing this to a client, I would have to be very careful in managing expectations, so that after one year of a study permit they don’t become very cross that they didn’t convert it,” Petreni says.

How to work remotely in Italy.
Moving to Italy on a study visa may smooth the path for those hoping to apply to work there as a freelancer. Photo by Hannah Wei on Unsplash.

Intra-company visa

If the barriers to obtaining a self-employment visa are so prohibitively high, what other options are out there?

One alternative that Petreni will sometimes suggest to clients is the Intra-Company Transfer (ICT) work permit.

This entails setting up an Italian branch of a foreign-headquartered company, which she says can work for clients who have “even a small company in the US or UK”.

In this case, the worker would be applying for a visa not as a freelancer but as the employee of a foreign company that has posted them to Italy. The visa has a five-year duration (as opposed to the self-employment visa, which is valid for an initial period of two years).

One of the advantages of this visa, says Petreni, is that it’s outside of the decreto flussi, and therefore not subject to quota limits.

READ ALSO: EXPLAINED: How to get an Italian work visa

“This is an option we have proposed, and it has worked in many cases,” she says.

“The problem is that it’s quite hard financially, and tax-wise, so it’s not for everyone… you need to put quite a bit of money in the Italian branch and have it running, so you have your yearly taxes, and you need to show that the parent company is reliable.”

“We will suggest having €20,000, €25,000 for an intra-company at least, just to show that it’s in good standing order.”

'Not just extra paperwork': What it's like moving to Italy after Brexit

An ICT work permit might be a viable option for some remote workers looking to move to Italy. Photo by ALBERTO PIZZOLI / AFP

The EU Blue Card

The EU Blue card, introduced via an EU directive, is another option Mazzeschi sometimes proposes to potential clients.

Those coming to Italy on the card must earn a minimum salary of €24,789.93 and have a three-year university degree at minimum.

This scheme allows an Italian company to locally hire highly qualified non-EU nationals, and again operates outside of the decreto flussi quota system.

READ ALSO: ‘Not just extra paperwork’: What it’s like moving to Italy after Brexit

In this case, instead of setting up an Italian branch of a foreign company, the applicant registers a company under Italian law. Checks on the company will be stricter than they are for an intra-company office. 

“They want to see that the Italian company has the funds to hire a non-EU employee,” says Petreni. “For that option, we suggest at least €50,000 share capital for the Italian company.”

“It’s usually someone who already has a company running abroad, and then they decide whether to do the intra-company or the EU Blue Card. But for self-employees, the most-used option would be the intra-company, when they can do it.”

What type of visa will you need to move to Italy?

The EU Blue Card could be the best option for some would-be Italian residents. Photo: Filippo Monteforte/AFP

Petreni says that people considering applying for the EU Blue Card often want to know whether it allows the holder to move around freely and work anywhere within the EU once they arrive.

It’s not quite that simple, she says – in the beginning you can only work from the country where the company you’re working for is based –  but holding the card can facilitate the worker’s move to a different EU country.

In the case of Italy, someone who has worked in another country in the European Union for eighteen months can move to Italy and apply for an EU Blue Card permit to work for an Italian company within one month of arriving.

Final tips

To the average freelancer just wanting some mobility, these two latter options might sound somewhat daunting.

For those who want to attempt a self-employment visa application in spite of the challenges involved, Petreni has some advice: contact your consulate to get as much information as possible before starting the application process.

“See if they have very specific requirements, because the information is not clear and it can be discordant for self-employment options, so it’s very important get in touch and see how the consulate is and what kind of answer they can give.”

“Self-employment is a bit of a jungle, it’s crazy,” says Petreni.

Find more information on the Italian Foreign Ministry’s visa website here.

Please note that The Local is unable to advise on individual cases. For more information on visa applications, consult the Italian embassy or consulate in your country or an immigration law professional.

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WORKING IN ITALY

EXPLAINED: The pros and cons of Italy’s five percent flat tax for freelancers

Italy offers favourable tax rates to those who decide to work for themselves - but is it ever that simple? We weigh up the pros and cons of the flat-rate tax for new freelancers.

EXPLAINED: The pros and cons of Italy's five percent flat tax for freelancers

It’s an aspiration for many – move to Italy and work remotely, generating an income from wherever you like with just a laptop and a phone.

Or perhaps you have an entrepreneurial flair and want to try out a small business idea that will enable you to realise your living-in-Italy dreams.

Whichever way you decide to go freelance in Italy, you’ll need to carefully consider your paperwork and the best tax strategy for your circumstances. (Find out more about going self-employed in Italy here.)

One increasingly popular route is to work under the ‘regime forfettario’: an attractive flat-rate tax scheme for individuals and small businesses, introduced in 2015.

The idea was to create a financially desirable and more straightforward way to work for yourself, cutting down on Italian red tape as well as your tax bill.

READ ALSO: ‘Smart working’? Here’s what you need to know about going self-employed in Italy

This flat-rate tax scheme simplifies accounting and so, theoretically, frees you up to do more of your job and less of balancing the books. That means no counting receipts for how many pens you bought or calculating how many miles you drove to meetings to off-set your taxes.

The scheme hasn’t changed much in 2022 following this year’s Legge di Bilancio’ (Budget Law), rolling on most its requirements from last year.

Whether it’s right for you, however, will depend on various factors.

Let’s start with its advantages:

You pay less in taxes

This is the main attraction in lights – you keep more of what you earn and the taxman gets a smaller slice of your hard-earned pie.

In broad terms and depending on your situation, you could pay somewhere between just five and 15 percent tax on your earnings, regardless of what your working overheads are.

Tax rates are considerably lower under the regime forfettario. (Photo by Markus Spiske on Unsplash)

Compared to the standard personal income rates as an employee, known as ‘IRPEF’ (Imposta sui Redditi delle Persone Fisiche), as detailed by the Agenzia delle Entrate (Italy’s Inland Revenue Agency), this is an alluring tax rate.

The range of taxes you’d pay if you worked for a company fall between 23 percent to 43 percent of your gross earnings.

READ ALSO: Remote workers: What are your visa options when moving to Italy?

That difference in tax percentages is exactly what the government intended with this regime; to attract more individuals and small businesses to start their own commercial activity.

The lowest five percent tax rate is for new business activity and lasts for five years.

That means if you’re starting up as a freelancer in Italy, you’re granted this temptingly low flat-rate tax on your turnover as long as your self-employment isn’t an extension of a business you carried out previously.

After that, it goes up to 15 percent, which is still comparatively low to the standard Irpef income brackets.

Your job may be eligible for further beneficial tax rates

The tax you pay isn’t a simple blanket sum of five percent (or fifteen percent) of what you earn. Rather, it depends on the work you do. Taxable income will change depending on whether you’re working as a self-employed teacher or if you’re working in hospitality, for instance.

You determine your taxable income by applying what accountants call a ‘profitability coefficient’. 

Different professions have different tax considerations under this regime. Photo by Jason Goodman on Unsplash.

In simple terms, each professional group has a different ‘ATECO’ code (income code) and a corresponding percentage of what they earn that can be taxed.

READ ALSO: Q&A: What do we know so far about Italy’s digital nomad visa?

The table below is an abbreviated version of the existing ATECO codes. A teacher must pay tax on 78 percent of their gross earnings, but computer engineers have it better at 67 percent.

For a teacher, therefore, that means you’d pay 5 percent on 78 percent of your earnings. In other words, if you earned €30,000 per year, 78 percent of that is taxable.

If you run an e-commerce business, for example, only 40 percent of your earnings are subject to tax.

For a full list of ATECO codes, see here.

Example of some ATECO codes for working as self-employed in Italy. Photo: Accounting Bolla

However, in reality you’d be paying even less tax than that as your ‘INPS’ (‘Istituto nazionale della previdenza sociale’) contributions are deducted first.

These are social welfare contributions to cover you for events such as sick leave, pensions and maternity benefits and this tax regime doesn’t reduce the amount of contributions you pay.

For 2022, the calculation of INPS contributions in the flat-rate scheme varies according to the type of work activity you do. To get a vague idea of how much this will come to, the usual rate is 25.72 percent – it’s advised you speak to an accountant (commercialista) to find out how much you’d need to pay.

Then, your tax is calculated on your earnings minus this amount, meaning you pay even less in taxation.

It’s flexible and light on paperwork

Anything that cuts down on Italian bureaucracy is an undisputed advantage and this freelance regime offers exactly that.

To access the scheme, you need to obtain a ‘partita IVA’ (VAT number) and select ‘Regime Forfettario’ as your method of paying tax.

As noted, the flat-rate tax scheme makes the accounting side simpler and setting up as a freelancer under this regime is much more straightforward than other routes.

READ ALSO: Doing business in Italy: The essential etiquette you need to know

You don’t need to keep purchase receipts or track what you’ve bought for the company to off-set your taxes. That’s the whole point of this scheme: it’s a flat-rate tax with less red tape.

Not having to add up your petrol expenses or inputting the cost of paper clips into a spreadsheet might be incentive enough to encourage you to start up your own business in Italy.

You also don’t need to charge VAT on invoices, so that means you don’t need to complete an annual VAT return. What’s more, you have a competitive edge in the market as you won’t need to add VAT for your clients.

But of course you’ll need to be aware that the VAT exemption goes both ways. So, just as you don’t charge VAT, you can’t claim back the VAT you spend on IT equipment, stationery or any other business-related costs.

This is just one flip-side that might make you consider whether, in the end, this regime is for you.

Let’s take a look at the disadvantages of the scheme.

You can’t off-set your taxes

VAT aside, if you have a lot of business overheads, this regime might not turn out to be as financially viable as you hoped.

home working

Consider how much your overheads come to in determining whether this tax scheme is right for you. Photo: Firmbee / Pixabay

Another tax scheme might be better suited to you if you have a lot of outgoings related to doing your job, which would allow you to deduct your expenses from the tax you pay.

However, if you work from home and only need a laptop and a phone, the regime forfettario is a good option.

There’s a limit on how much you can earn

You don’t qualify for the regime forfettario if you make more than €65,000 from self-employment in any given year. This can be generated from one activity or different income sources.

Therefore, if your business plans and projections look to exceed this level of earnings, you may be better looking at a different incentive on offer for earners above this threshold.

However, there is a workaround depending on where you get your income from. You can actually have a position of employment alongside freelancing, meaning that you can still earn €65,000 annually at the same time as getting a wage from an employer.

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

You can earn up to €30,000 per year as an employee, meaning you’re allowed to make €95,000 annually and still be on this regime – €65,000 of that would remain on the low flat-tax rate for your freelance work.

There’s a cap on previous earnings

You’re not eligible for this regime if you earned more than €30,000 in the previous year from employment. So, depending on your previous position and income, you may not be allowed to take advantage of the scheme.

There is an exception to this, though – if your employment ended in the previous year, you can still apply.

For more information on the criteria and exceptions, see Italy’s Inland Revenue (Agenzia delle Entrate) page in English.

You can’t freelance for your previous employer solely

You might feel it’s more financially advantageous to go freelance instead of being on the payroll of your employer.

However, this regime prohibits you from doing this if you have no other clients.

If you can drum up business from elsewhere though, you are allowed to work for your previous employer and charge them invoices instead of getting a paycheck.

Of course, they will no longer pay some of your INPS contributions if you choose this route and this will instead all fall to you.

It’s worth noting that you also can’t already have a business in the same professional field.

There are still some bureaucratic quirks

Even though Italy is making progress in moving to a digital environment, it’s not yet fully let go of its paper legacy. You have to attach a €2 stamp, called a ‘marca da bollo’, to every invoice that exceeds €77,47.

READ ALSO: Beat the queues: 19 bits of Italian bureaucracy you can do online

There is now the option to do this online instead, but it’s known to be time-consuming and onerous. Buying a stamp from a tabaccheria and attaching it to your invoice is probably quicker.

Whether this way of freelancing in Italy is right for you overall depends on your personal circumstances and speaking to a financial expert is advised.

Useful Italian vocabulary:

Agenzia delle Entrate – The Italian revenue agency/tax office.

Partita Iva – An Italian VAT number, required to set up as self-employed.

Codice ATECO – an income code, assigned to each type of professional with a Partita IVA, which determines how much of your income is taxable.

Marca da bollo – The Italian tax stamp you need to attach when submitting paperwork. These have varying prices depending on the type of document, and are available from tobacconists (tabacchi). 

IRPEF – ‘Imposta sui Redditi delle Persone Fisiche’, income tax paid by individuals.

INPS – ‘Istituto nazionale della previdenza sociale’, Italy’s social security and pensions agency.

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