A country with world-famous history, culture, and cuisine, Italy has been a magnet for freelancers. However, there is a more practical advantage to freelancing in Italy: it taxes independent foreign professionals. For those looking to live and work in Italy, a salary and tax calculator may show some promising numbers. Read on to learn about self-employment and taxes in Italy, special regimes for new residents, and the filing of tax returns in Italy for foreigners.
A brief overview of taxes for freelancers in Italy
There are several taxation options available, but regardless, all freelancers in Italy must get a tax identification number (codice fiscale), declare their income, and pay income tax (imposta sul reddito delle persone fisiche, IRPEF). In most cases, it is also mandatory to register for VAT (sales tax) in Italy.
Unlike many other countries, Italy allows foreigners on student and work visas to also earn money as freelancers provided that they officially register as such and pay taxes. This is a major benefit for expats, especially those who need to support their loved ones back home. (By the way, as an expat freelancer in Italy not only can you earn extra money but also save greatly on international transfers with Profee, an online money transfer service available in 60+ destinations globally).
When registering for self-employment, you may choose one of the following formats:
Freelancer (libero professionista) available to those working as consultants, independent IT contractors, journalists, etc.
Individual enterprise (ditta individuale), which also allows you to employ staff. In this case, however, your activities might be subject to corporate tax.
Settling in Italy? Learn how to get an Italian bank card.
Tax regimes
Another choice to make when punching numbers in an Italian tax calculator is the tax regime. As a freelancer in Italy, you can opt for the standard progressive system or the special tax regime (regime forfettario) that imposes a flat rate on income from self-employment.
Standard tax regime
Under the standard system, a sliding scale applies depending on the income size.
Standard income tax rates 2024
| Taxable income, € | Tax rate, % |
|---|---|
| 0-28,000 | 23 |
| 28,001-50,000 | 35 |
| over 50,001 | 43 |
Paying taxes in Italy under the standard system, freelancers can deduct some business-related expenses from their taxable income, such as on office space or materials.
In addition, those freelancing in Italy under the standard tax regime can take advantage of a tax credit scheme (lavoratori impatriati) designed for workers relocating to the country. It gives a 5-year grace period during which the Italian tax is calculated only on 50% of their income. In some regions, like Molise, Calabria, or Sicily among others, just 10% of income is taxable. This is a great option if you are location-independent and aim to earn money fast; plus, you can still use Profee there to transfer your saved money back home at top exchange rates.
Special tax regime
The scheme imposes a flat tax rate of 5% on income generated from freelancing in Italy for the first five years, which is then increased to 15%. Moreover, in Italy, for tax calculations each profession is assigned a special ATECO classification code which defines the share of income that is taxable.
Contrary to the standard regime of paying taxes in Italy, the special regime forfettario does not allow deduction of business-related expenses. There is also a ceiling of €85,000 per year on income derived from freelance activities (plus no more than €30,000 per year can be earned from employment if applicable).
VAT (sales tax) in Italy
If your self-employment activity implies continuity (for example, you provide consulting services to a client on a monthly basis), then you must get your VAT number (partita IVA and EORI if you work internationally) and charge your customers accordingly. The standard VAT rate in Italy is 22%, but some products and services are taxed at lower rates.
You must pay your VAT quarterly and submit the respective tax return annually, usually between 1 February and 30 April of the following year.
Tax deductions in Italy
Freelancing in Italy also implies certain standard deductions for taxation purposes. For example, there are tax credits for underage children and other dependents. Some types of expenses are taxed at a flat rate of 19%; these include but are not limited to medical and education expenses as well as mortgage or rental payments (conditions apply). In addition, those earning less than €50,000 from self-employment enjoy the tax credits listed in the table.
Tax credit amounts
| Income, EUR | Tax credit amount, EUR |
|---|---|
| 0-5,500 | 1,265 |
| 5,501-28,000 | 500 + 765 x (28,000 - gross income) / (28,000 - 5,500) |
| 28,001-50,000 | 500 x (50,000 - gross income) / (50,000 - 28,000) |
| over 50,000 | 0 |
Learn how to save money fast in Italy or elsewhere.
Tax return in Italy for foreigners
Regardless of which tax system you use, standard or special, as self-employed you are required to file your annual income tax return. This must be done by 30 November of the following year (that is, the deadline for 2023 tax year is 30 November 2024).
The tax itself, however, must be paid in the corresponding year in two payments:
40% paid by 30 June
60% paid by 30 November.
The basis is the previous year's tax amount, but for new entities, the sum is estimated.
The final amount is balanced out in the subsequent year's tax return.
Tax-related fines
If you do not follow the rules of paying taxes in Italy as a freelancer, there are financial penalties. For example, late submission of tax return incurs a fine of €250 and up to €1,000. A surcharge for paying less tax than required can be up to 240% of the tax liability. Failing to declare assets in non-cooperative jurisdictions such as Panama or Turkey also involves fines.
However, if you use your Italian tax calculator smartly and stick to the deadlines to avoid fines, the resulting net income can be much higher than in other European countries. And if you use Profee for your international money transfers, you save not only money but also time and effort. Visit our website or get the app from Google Play or the Apple Store to multiply the financial benefits available to you as an expat freelancing in Italy.
