Umbrella Company in Italy

Independent contracting in Italy isn’t always straightforward. You’ve got immigration issues, tax difficulties, and mountains of complex admin work. Even worse, missteps can cost you serious money, or even land you in legal trouble.

Before you consider taking a contract in Italy, you should be aware of what you’re getting into – and how you can make it simpler

Difficulties of Contracting in Italy

Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Italy.

If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.

Also, are you familiar with the intricacies of the tax system in Italy, as well as your own country’s laws on overseas earnings? If so, good on you!

However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Italy and your home country can seem like full-time work in itself.

How Umbrella Companies Work

Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.

They’re called Umbrella Companies (or, contractor management companies).

Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.

Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Italy. Even better, most are experts in Italian and expat tax law, meaning they’ll also help you optimise your earnings in Italy.

Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.

Why Use an Umbrella Company in Italy

Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.

When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.

While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Italy (which means avoiding fees, fines, or even worse penalties).

How We Can Help You

There’s a huge variety of Umbrella Companies with different specialities and advantages in Italy. How do you find the right one for your circumstances?

We work closely with Umbrella Companies all throughout Italy and match contractors with the right company for them. If you’ve already secured a contract in Italy, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).

A Contractor's Guide to Taxes in Italy

One of the most consistently challenging aspects of contracting in Italy is complying with the country’s tax system. As well as paying tax in Italy, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.

How do I calculate my taxable income in Italy

If you’re working in Italy under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Italy for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Italy, but contractors may not be offered this service because of their short stay with each employer.

Anybody who can’t pay their tax in Italy through PAYE is left with the prospect doing everything themselves.

Do you know much about Italian Tax Law? Does Italy have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Italy can range from 23 to 43 percent, and you need to be sure you are placed in the correct tax brackets.

Tax Filing in Italy


When Do You Need to Lodge Your Tax Return?30 June
Tax Filing Deadline7 July
Can you file it online?Yes, http://www.agenziaentrate.gov.it/wps/content/nsilib/nsi/servizi/servizitrasversali/altri/desktoptelematico/indice+desktop+telematico

How to File Taxes in Italy

Step 1: Obtain a PIN Online

Request a PIN here to access Fisconline. You will receive the first part (4 digits) of the PIN online. The second part of the PIN (6 digits) will be sent to you by post within 15 days.

You will be required to enter the following data:

  • Fiscal code (as shown on your Codice Fiscale or Italian tax code card)
  • Type of declaration e.g. 730
  • How to intend to file taxes e.g. Telematic Services (online), Revenue Office, or Post Office
  • Total income declared (in Euros, without decimal points)

Step 2: Access Fisconline

After obtaining a PIN, you can access Fisconline here. To log in, you need your Username (fiscal code), Password and PIN.

Step 3: Download the ‘Telematic Desktop’

The ‘Telematic Desktop’ is an application that allows you to view documents, enter data, and file taxes. You can download it from the Agenzia Entrate website here.

Step 4: File Taxes via the ‘Telematic Desktop’

Use the ‘Prepara file’ function under ‘Documenti’, to prepare data on your tax obligations. Comprehensive instructions can be found on the Agenzia Entrate website here.

It is recommended that you consult an Italian translator as the instructions and software are in Italian.

Tax Figures in Italy

CurrencyEuro (EUR)
Tax-free Threshold in ItalyNone
Income Tax Rates
Grossed Income Tax Rate (%)
0-15,000 23%
>15,000-28,000 27%
>28,000-55,000 38%
>55,000-75,000 41%
>75,000 43%
Notes

Regional and Municipal Taxes

  • Regional tax is due on the same taxable income. Rates depend on the region in which the individual is domiciled at 1 January, and are usually between 0.7 and 3.33%.
  • Municipal tax is due on the same taxable income. Rates depend on the municipality in which the individual is domiciled at 1 January, and are usually between 0 and 0.9%.

Tax Residency in Italy

When do you become a tax resident in Italy

You become a tax resident in Italy when:

  • You are registered in the Office of Records of the Resident Population for 183 days or more;
  • You stay in the territory of the state for 183 days or more; or
  • You have your centre of business or economic interests in Italy for 183 days or more.

Does the 183 day rule apply in Italy

Yes

Am I taxed on my global income in Italy

Residents are taxed on their worldwide income.

Non-residents are taxed on Italy-sourced income only.

Can you set up your own Limited Company in Italy

How long does it take to set up 6 days
How much does it costFixed: EUR905.87 (if capital < EUR516,456.90) – EUR1,112.46 (if capital > EUR516,456.90); Variable: 0.6%-1.4% of start-up capital (notary fees) + EUR16 per 100 pages (stamp fee) and EUR25 per book (registration fee)
Is it easy? Starting a Business Rank: 66/190 (Source: World Bank)

Tax Calculator in Italy

If you are a contractor and want a calculation on your tax and net retention in Italy, we can supply it to you free of charge.

Using an Umbrella Company for Income Tax in Italy

Contractors in Italy are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. An Italian umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).

The companies are experts in Italian taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Italian tax office or tax department directly including processing your tax refund if you are eligible.

How We Can Help You with Tax in Italy

We work with numerous umbrella companies in Italy, many of whom are experts in tax and immigration laws. If you have any questions about tax in Italy, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Italian work permit.

Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Italy but without the overhead of directly dealing with the Italian tax authorities. Get in touch with us today for some reliable advice on tax in Italy!

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