When considering where to spend time as a digital nomad, looking at the tax rates offered in different countries is essential. This can help you choose the best place to conduct your business activities and determine whether the digital nomad visa for the country is a good fit for you. We will look at the Italy digital nomad visa and the tax rates that are available for remote workers in Italy.
As one of the most beautiful countries in the world, it is easy to see why Italy is a popular destination for people who can choose to work from anywhere.
The lovely climate, combined with a wealth of historical ruins and cultural marvels, means that Italy is a top-tier destination. There is so much to see in Italy, from the faded glory of Rome, once the centre of the Roman Empire that spanned half of the globe to the incredible artistic works and frescoes of Florence and the canals and waterways of Venice.
There is truly something for everyone, and that is without even mentioning the stunningly beautiful Vatican City, the centre of the Catholic Church, which is a city and a nation state in its own right, which is located in the centre of Rome. The Sistine Chapel there has a ceiling adorned by the works of Michaelangelo and is a must-see for anyone who has an eye for High Renaissance art.
This is before we even mention the cuisine, which is one of the most sought-after and highly regarded in the world. Italian staples include beloved dishes such as Pizza and Pasta and desserts such as Tiramisu and Panna Cotta so it is easy to see why digital nomads would like to spend some time eating like a local in Italy.
The Italian digital nomad visa allows remote workers to relocate to Italy for a year and also permits them to extend the length of the visa for up to a further two years. This depends upon the applicant meeting some stringent criteria in order to qualify for the visa in the first place.
The Italian digital nomad visa is one of the more difficult digital nomad visas to qualify for because it asks for professional qualifications and experience in working remotely. A university degree-level qualification or proven experience working in your chosen field for not less than five years is needed. You must also work in a field that allows you to complete your work remotely using a computer. This allows you to fulfil the “highly qualified” criteria.
The financial requirement for obtaining the visa is relatively low compared to many other European digital nomad visas, with the current limit being set at 25,000 euros per annum.
If digital nomads are resident in Italy for 183 days in a calendar year, or if the Italian Government determines that their primary social ties are there, they will be subject to Italian taxation. They will also have to charge Italian VAT rates on all of their worldwide business.
If they are considered to be tax resident in their country of origin, they are not likely to have any additional taxes in Italy on the same earnings. This is because of the numerous treaties that Italy has with other countries, which make specific reference to double taxation.
Where digital nomads are tax residents in Italy, they will be taxed on a scale of between 23% and 43%, depending on how much they make per year. Like many European countries, Italy has a progressive taxation scale, with people being asked to pay more if they make more money.
The taxation bands are as follows:
23% - Up to 15,000 euros pa
25% - 15,001 to 28,000 euros pa
35% - 28,001 to 50,000 euros pa
43% - 50,000 and above euros pa
There are some exceptions available, and it is possible for some digital nomads and people returning to Italy who were previously residents to apply for tax relief of up to 30% of their tax burden.
This is not something that is automatically applied and is something that interested parties must enquire about. The best way to pursue this would be through a financial adviser or accountant.
The USA has a different relationship to most countries with their residents and considers everyone who is a US citizen to be a tax resident in the USA.
There are some limited exceptions to this, but if you are a US citizen, you must file a US tax return every year, regardless of whether or not you currently live there.
It is possible that some American ex-pats will still have to be taxed doubly on the same income as a result of this.
The tax rate for digital nomads in Italy is not as favourable as many of the other options that are available around the world, and this is something to take into account when deciding whether to apply. The route to the visa is more complicated than most, with more bureaucratic hoops to jump through as well, so this is something to consider as well. Many will decide that it is worth paying slightly higher taxes for the chance to live in such a beautiful and historic country, but others may not.
Malta, which is just off the coast of Italy, has a far more preferential tax rate for digital nomads, with a 0% tax rate for the first year being offered to digital nomads, followed by 10% in each subsequent year.
Spain’s digital nomad visa offers a tax rate of 24% on any amount up to 600,000, which is an excellent rate for higher earners and is about half what someone would pay for a similar amount in the UK.
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