WAY OF LIFE
Digital nomads in Italy: visas and tax incentives for remote workers
April 13, 2021 – 11:33 a.m.
While the world of travel after Covid 19 may look a little different, most countries are starting to reopen their borders. With the pandemic, the number of workers who don’t have to go to the office every day has grown exponentially and competition has started between countries to attract digital nomads. For example, Greece offers tax breaks at a rate of 50 percent. Spain and Dubai offer ad hoc visas, just like Estonia. Italy also has incentives to attract digital nomads.
Over the past year, job advertisements of this type have multiplied. All you need is a computer and a voucher WIFI connection because hiring does 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 Politecnico di Milano Smart Working Observatory, is that agile workers have increased by 570,000 in 2019 to 6.5 million during the spring 2020 lockdown. It is estimated that five million people will continue to work remotely permanently in the years to come.
Italy aims to attract the growing digital nomad community and its income through tax incentives and visa opportunities.
In just a few months, the digital nomadic population has grown from creatives and independent entrepreneurs to marketing and communications professionals, graphic designers, public speaking coaches, life coaches, computer scientists and programmers: in short, anyone who is able to work online. Today, millions of people around the world can freely choose their place of residence, regardless of geography. Countries aim to attract these workers and their incomes.
Why Italy attracts 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 a 70 percent income tax-free for five years, approaching 90% for those who decide to live in the south-central regions.
Many digital nomads choose Italy every year for many reasons. For all visitors, the country is unique in its classic beauty with each region, town and village uniquely charming. Those who stay long term can enjoy all the scenic and cultural delights, as well as modern conveniences to ensure a comfortable stay. From the rolling vineyards of Tuscany to the coastal coasts of Sorrento and Amalfi, Italy has no shortage of stunning scenery. Essentially, this laid back and fun 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 period) requires dealing with red tape. With the right legal support, there are ways to minimize taxes and acquire residence. So, before you take the next plane to Rome or Florence with your laptop and charger, keep a few basic points in mind.
First of all, you will need to determine if you are allowed to stay, live and work in Italy.. Without the correct visa, you will not be allowed to enter the country. Depending on your nationality, you may need to obtain a visa to live in Italy for more than a few months. Even if you come from a country where you do not 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. This means that you will have to leave the EU at the end of the 90 days that you spend in the Schengen area of the European Union.
Can I come as a tourist and apply for a work visa there? 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 of the Schengen area. If you are an EU citizen, you will only need to register your stay at the local municipal office if you have been there for more than three months. Non-European travelers can obtain a Schengen visa for travel periods of 90 days out of 180 days.
If you are considering becoming self-employed, don’t make the mistake of entering Italy as a tourist by assuming that you can apply for and get a work permit to stay or extend your status by leaving the EU for a few days and then coming back. You can not. Unless you are in a family or count as an emergency, the tourist visa status cannot be converted to a more permanent immigration status and cannot be converted to a work permit to stay while you are in Italy. If you are entering Italy as a tourist, you must return to your home country to apply for the correct work visa at the Italian consulate.
Visas for digital nomads
The self-employed worker visa, or visto per lavoro autonomo, is the best visa for digital nomads. This application is complicated and the application should be planned in advance. You will likely need a legal representative to help you collect the documents before filing the application with the Italian consulate in your country of residence.
Italy offers attractive tax incentives for self-employed people who move and work in Italy. The bottom line is that if you are a digital nomad and work remotely, if your clients stay in the United States or in your home country, and even if you are already paying your income taxes to your government d origin, you are supposed (unless) to file your taxes also in your country of residence (i.e. your legal domicile). The good news is that there are some great incentives to do so.
The principle of global taxation is that you must declare your worldwide income and therefore declare your taxes in the country where you reside, that is to say the country in which you have your Residenza (legal domicile), where you spend most of the year (more than 183 days) or where your personal interests (your family) are.
It doesn’t mean you pay taxes twice. Thanks to the principle of “no double taxation”, taxes paid abroad for income generated abroad can be deducted from domestic tax in certain circumstances. More importantly, the new Italian tax incentive, which was created for the self-employed, rewards those who decide to establish their legal residence in Italy, offering them a tax refund of 70 percent of the income generated during their stay in Italy. For example, if you earned 100,000 euros while you were legally resident in Italy, you will only calculate your taxes on 30,000 euros (where 70% of your income is exempt). This incentive is driving a growing number of people to move their business to Italy and pay their income tax here. The tax reduction rises to 90 percent for those who, upon returning to Italy, also move.
These incentives apply for five years and can be extended for an additional five years (with a 50% income tax exemption) if you have a minor child or if you buy real estate within a year of moving to Italy.
Italy offers countless opportunities for people who decide to settle here, but each case is different. To avoid disappointment, before you take the next plane to Rome or Florence with your laptop and charger, be sure to get specific legal advice to make sure these incentives also apply to you.
This content is intended to provide a general guide on the subject. Seek the advice of a legal expert on your particular situation.