Digital nomads in Italy: visas and tax incentives for remote workers

Digital nomads in Italy: visas and tax incentives for remote workers

Tue 13 Apr 2021 9:33 AM

Don’t miss: Digital nomads in Italy: visas and tax incentives for remote workers

While the world of travel post-Covid 19 may look a bit different, most countries are beginning to reopen their borders. With the pandemic, the number of workers who do not have to go to the office every day has increased exponentially and competition has started among countries to attract digital nomads. For example, Greece offers tax relief at a rate of 50 per cent. Spain and Dubai offer ad hoc visas, as does Estonia. Italy too also has incentives to attract digital nomads.

In the last year, job advertisements of this type have multiplied. All you need is a computer and a good Wi-Fi connection because hires do not require a physical presence in the office or the proximity of the employee. A side effect of Covid in Italy, according to a study by the Smart Working Observatory of the Politecnico di Milano, is that agile workers increased from 570,000 in 2019 to 6.5 million during the spring 2020 lockdown. An estimated five million people will continue to work permanently on a remote basis in coming years. 

In just a few months, the digital nomad population has expanded from freelance creatives and entrepreneurs to include marketing and communication professionals, graphic designers, public speaking coaches, life coaches, computer scientists and programmers: in short, everyone who is able to work online. Today, millions of people around the world may freely choose where to settle, independent of geography. Countries aim to attract these workers and their incomes. 

Why Italy is attracting digital nomads

As of January 1, 2020, a new tax break was already in place to provide those who have lived outside Italy for two years and who transfer their tax residence to our country with a 70 per cent tax-free income for five years, approaching 90 per cent for those who decide to live in central-southern regions.

Many digital nomads pick Italy every year for many reasons. For all visitors, the country is singular in its classic beauty with every region, city and village boasting unique charm. Those who remain on a long-term basis can enjoy all the scenic and cultural delights, plus modern conveniences to ensure a comfortable stay. From the rolling vineyards of Tuscany to the coastal shores of Sorrento and Amalfi, Italy has no shortage of magnificent landscapes. Essentially, this laid-back, fun-loving Mediterranean country has something for everyone.

Legal advice for digital nomads in Italy

Going beyond tourism to live in Italy permanently (or for an extended amount of time) requires dealing with some red tape. With the proper legal support, there are ways to minimize taxes and acquire residency. So, before you hop on the next plane to Rome or Florence with your laptop and charger, keep in mind a few basic points.

First, you’ll need to determine if you’re allowed to stay, live and work in Italy. Without the proper visa, you won’t be allowed into the country. Depending on your citizenship, you might be required to obtain a visa to live in Italy longer than a few months. Even if you come from a country where you don’t need a visa to travel to Italy as a tourist, there is no way to extend your tourist status beyond 90 days every 180 days period. That means that you will have to leave the EU at the end of the 90 days you spend in the European Union Schengen Area.

Can I come as a tourist and apply locally for a work visa? Or can I at least extend my tourist status? The short answer to both questions is no. In fact, Italy is a member of the European Union (EU) and the Schengen Area. If you are an EU citizen, you’ll just need to register your stay at the local municipal office if you’ve been there more than three months. Non-EU travelers can obtain a Schengen Visa for travel periods of 90 days within 180 days. 

If you are planning to be an independent worker, don’t make the mistake of entering Italy as a tourist under the assumption that you can ask and obtain a work permit to stay or extend your status by moving out of the EU for a few days and then coming back. You cannot. Unless you are in a family or count as an emergency case, the tourist visa status cannot be converted into a more permanent immigration status and cannot be converted into a work permit to stay while you are in Italy. If you enter Italy as a tourist, you must travel back to your home country to apply for the correct work visa from the Italian consulate.

Visas for digital nomads

The self-employment visa, or visto per lavoro autonomo, is the best visa for digital nomads. This application is complicated and the application must be planned in advance. You will likely need a legal proxy to help you with the collection of the documents before filing the application with the Italian consulate in your country of residency.

What about taxation?

Italy offers attractive tax incentives to freelancers who move their life and work to Italy. The bottom line is that, if you are a digital nomad and you work remotely, if your clients remain in the US or in your home country, and even if you already pay your income taxes to your home government, you are expected to (at least) file your taxes also in your country of residence (i.e. your legal domicile). The good news is that there are excellent incentives to do so.

The worldwide taxation principle is that you must report your worldwide income and therefore file your taxes in the country where you reside, meaning the country in which you have your residenza (legal domicile), where you spend the majority of the year (more than 183 days) or where your personal interests (your family) are.

This does not mean that you pay taxes twice. Thanks to the “no double taxation” principle, taxes paid abroad for income produced abroad can be deducted from domestic taxation under certain circumstances. Most importantly, the new Italian tax incentive, which was created for freelance workers, rewards those who decide to set up their legal residency in Italy, offering them 70 per cent detaxation of the income generated while they reside in Italy. For example, if you earned 100,000 euro while you were legally residing in Italy, you will only calculate your taxes on 30,000 euro (where 70% of your income is exempt). This incentive is attracting a growing number of people to move their business to Italy and pay their income tax here. Tax reduction rises to 90 per cent for those who, on returning to Italy, move their residence too.

These incentives apply for five years and can be extended for another five years (with 50% detaxation on the income) if you have a child who is a minor or if you buy a real estate property within one year of moving to Italy.

Italy offers countless opportunities to people who decide to move here, but every case is different. To avoid disappointment, before hopping on the next plane to Rome or Florence with your laptop and charger, make sure you obtain specific legal advice to be sure that these incentives apply to your case too.

This content is intended to provide a general guide to the subject matter. Seek expert advice from a legal specialist about your specific circumstances.

Learn more about BE.LONG, the online service to make staying longer in Florence easier by Destination Florence and the City of Florence.

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