Thinking About Moving to Italy to Freelance? Start With the Partita IVA
When I moved to Italy, I didn’t think about freelancing or much about what my life would look like beyond what I expected to be my sabbatical year as an au pair. The move to Florence was such a last minute decision (and by last minute I mean, within 48 hours of my initial thought of ‘what if I moved to Italy?‘ I found a host family and started packing kind of last minute decision). I started pulling out my candidacy for job applications, believing that my radical decision, though crazy, would serve for something.
It did. I believe that sabbatical years (or months, as mine turned out to be) should be something that companies value when looking at job applications. Within those months I learned a new language, learned to dance tango (and even competed) and made new connections. But I couldn’t be an au pair for the rest of my life, and freelancing seemed like a viable option.
Please note: I am not a tax consultant nor professional on this subject. This blog post is meant to give a quick understanding about setting up a freelance business in Italy from my own experience and knowledge, and I will edit any errors that I may potentially make.
So what is a Partita IVA?
A Partita IVA, also known as Partita Individuale di Identificazione Fiscale, is an essential identification number issued by the Italian tax authorities to individuals and businesses conducting economic activities in Italy. It is equivalent or similar to a VAT number or tax identification number in other countries.
What do I need to open a Partita IVA?
To obtain a Partita IVA in Italy, here are the key elements that are typically required:
Personal Information: You will need to provide your personal details, including your full name, date of birth, nationality, and current address.
Activity Description: A detailed description of what kind of activity your business will undertake.
Tax Code: You should already have a Codice Fiscale, which is a tax identification number assigned to individuals in Italy. This code is necessary for the Partita IVA application, and for many other services such as getting a phone number, applying for university, transportation, and so much more.
Legal Status: Depending on your situation, you may need to provide additional documentation. For example, if you are a non-resident, you need to submit proof of legal establishment or authorization to operate in Italy.
Registration Form: The appropriate registration form that should be completed and submitted to the Agenzia delle Entrate (which is Italy’s tax office).
But wait… what kind of Partita IVA do I need and where do I start?
It is possible to open a Partita IVA on your own, but if Italian is not your native language and if you happen to be a United States citizen, I would recommend hiring a commercialista (and a U.S. tax consultant if you are American) to help you out with paperwork and advise you on your options. Investing from the get go in making sure that your business is set up correctly is money you will save down the line.
Note that if you are a freelancer with a tax identification number from another country, after 6 months working within Italy, you should consider opening up a Partita IVA in Italy to avoid any potential double taxation.
When I was setting up my Partita IVA, I was given the choice between two types: Forfettaria and Regime Contributivo.
Forfettaria: individuals who have this kind can benefit from a flat tax rate of 5% on their taxable income for a total of 5 years (that should be consecutive tax periods). Afterwards, it becomes 15%. If you contribute to the Italian INPS (pension contributions), add around 25% of your income to that. Attention though, the annual revenue limit for this kind of activity is set at 65,000€. This type of Partita IVA is great for freelancers that work alone and don’t plan on hiring employees. This was the route that I took.
Regime Contributivo: With this Partita IVA, you can expect higher overall tax payments ranging from 24% to 43%, in addition to mandatory pension contributions. This type of Partita IVA is typically required for professionals such as doctors, psychologists, etc.
There are other options if you intend on opening a restaurant or if you plan on having an agricultural business. The choice in what kind of Partita IVA works for you should be talked about with your commercialista, who will be able to guide you in the process and help you choose.
