Before I start writing about taxes for freelancers, I need to give the usual disclaimers. I’m not an accountant. Everything that I write is from my personal experience and knowledge.
Tax laws change in Italy every year so this is meant just to give you a general idea, but you should speak to an accountant (commercialista) before you do anything.
I also suggest that you try to verify online everything your accountant tells you (as well as anything any Italian professional tells you) before you follow those advices. From my experience you can’t trust Italian professionals. As the proverb goes, “Ask 3 Italians a question, get 5 different answers”.
For self-employment you need to open a tax account called a Partita Iva.
You can do it on your own if you know how or through your accountant. I did it with my accountant and I strongly suggest you don’t try to handle your taxes in Italy by yourself.
Technically to open a partita iva, your receipt for your first permesso di soggiorno should be enough BUT – from my experience you won’t be able to apply any special tax regime on your tax account which means you will be assigned the standard regime (regime ordinario). Which is a bad thing. A very very bad thing.
To get a regime, I was told I needed to have my permesso di soggiorno and my resizdenza. Which takes many months to get.
So when I moved to Italy, I had to continue using my existing tax account in my country with my clients initially which exposed me to some taxation risks with the tax agency in my country since it increased my profile in my country during my first year in Italy.
The most common regime you will want for yourself is called regime forfettario. Under this regime you will pay much less taxes. In a nutshell, 5% as a new business for the first 5 years and 15% after that.
In addition, under this regime, not all of your income is taxable income. This is determined according to your profession by means of an ATECO code.
So you have to find your profession’s code to know what percentage of your income is taxable. The maximum is 78%.
You can find your code here: https://ateco.infocamere.it/ateq20/#!/home.
Type-in your profession (attivita) in Italian and which city (comune) you live in. If you’re a computer programmer write “programmatore software” and your code will be 62.01
You can also navigate all the professions by clicking “Naviga nell’elenco delle attivita”.
In addition to the tax, you must also contribute to your pension a mandatory percentage of your income. In 2023 that percentage is 26.23% of your taxable income. Your pension isn’t invested in the stock market. It just sits there until you retire. You will also be taxed on it once you retire and start receiving it. This is the same for any tax regime you’re on and I haven’t found a way to avoid it.
Under this regime you are not allowed to deduct any expense. But as a freelancer you probably don’t have much anyway.
Under this regime your maximum income is limited. As of 2023 the limit is 85,000 euros per year. If you go over it you’ll be put on the ordinary regime and you will have much less money in your pocket. Under the ordinary regime you will have to make around 120,000 euros to start making the same net income you had under regime forfettario with an 85,000 euros income.
The income limit is updated every year. In previous years it was around 55,000 – 65,000 euros.
There is another but here.
Because I was working on my country’s tax account in the first few months until I opened my Italian tax account, there was the matter of how much tax should I pay on my foreign invoices in Italy, as our bilateral tax agreement with Italy indicates that I need to pay my taxes if I work in Italy regardless of which tax account I use.
So my accountant asked the tax agency that question (Agenzia delle entrate) and they told her to put it under my regime forfettario but that I will not be considered a new business. Therefor I will have to pay the 15% tax from day one. Bummer.
Your taxes will have to be payed around August/September and it’s made in a few non-equal payments.
In your first year you will pay nothing. And in your second year you will pay double. You’ll pay the taxes and INPS for the previous year, and you will pay advances for the current year. So make sure to save that tax money aside. Make a simulation with your accountant so you’ll know what to expect.
After you pay, make sure to get the F24 file and the receipts for the payments from your accountant. You’ll need them when you renew your permesso di soggiorno.
Just to give you an idea of what life is like under the ordinary regime, the progressive regime’s tax brackets are as follow:
23% 0-15,000 euros
25% 15,001 – 28,000 euros
35% 28,001 – 50,000 euros
43% for anything about 50,000 euros
So if you make 20,000 euros per year, you will pay 23% for 15,000 euros plus 25% for 5,000 euros.
In addition to that you will have to pay your INPS as with the other regime.
Did I mention this standard regime was hell?
You can deduct expenses under this standard regime. I believe medical expenses and things you buy at the pharmacy are eligible for deduction if you pay with your credit card and they put your codice fiscale on your purchase. But you’ll have to ask your accountant if it matters to you.
It’s best you follow each year’s regime forfettario limit and make sure not to go above it even if you have to ask your client to pay you a little less or save some and pay it to you next year.
The year that counts is the year the money lands in your bank account. Not the year you issued your invoice on.
You also need to issue your invoices digitally online and transmit them to the tax agency (within 7 days I believe). Your accountant can explain how to do that.
There are other tax regimes in Italy but I am not familiar with them.
On this site you can calculate your net income for both regimes.
You will need to know your activity type as mentioned at the beginning of this post (the ATECO code). Just click the question mark next to “settore attivita” for help on what to choose according to your code.
As a freelancer, under “Regime pensionistico” choose the very catchy phrase: ” Professionisti non assicurati presso altre forme pensionistiche obbligatorie (INPS gestione separata)”
https://calcolopiva.it/