How to Set up as an Independent Contractor in Italy

Who is an independent contractor in Italy?

According to the Italian Civil Code, an independent contractor or self-employed person is a person who undertakes to perform work or service for remuneration without being under the principal party's control and supervision.

Disclaimer: Be aware that this article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action.

What are the general registration requirements for ditta individuale?

The Ditta Individuale, the sole proprietorship form, is a business or a natural person who professionally carries out an activity related to the production or exchange of goods and services. It is the most straightforward and least restrictive model of setting up a business.

Here are the steps you need to take:

• obtain a VAT number
• Register in the Commercial Register
• Send a declaration of commencement of activity to Inland Revenue office
• Register to INPS (the National Institue for Social Security) and INAIL (the National Institute for Insurance against Accidents at Work)

How to obtain a VAT number for ditta individuale?

You should start registering ditta individuale by obtaining the VAT number. The INLAND Revenue Office will assign this 11-digit code that will be used as your business identification.

Obtaining the VAT number is necessary for the next steps in the process of setting up the business and all the obligations triggered by it, such as authorizations, licenses, etc.

Register ditta individuale in the local Chamber of Commerce

Once you obtain your VAT number, you will have to register your business with the company register of the local Chamber of Commerce, where the business is located: the communication form to start the business will be completed.

Register with INPS & INAIL for Social Security and Insurance

Another requirement is the registration with the INPS (the National Institute for Social Security). This step is necessary to make the payment of pension and social security contributions. Registration with INAIL (National Institute for Insurance against Accidents at Work) is required to insure yourself against any industrial accident.

Advantages and Disadvantages of setting up a Dita Individuale

The main advantages of opening ditta individuale are low operating costs, no starting minimum capital, and easier accounting. On the opposite, the unlimited owner's liability is a disadvantage that can't be underestimated. The liability towards creditors, for instance, means that the owner of ditta individuale is liable for all the debts of the business with their personal assets.

Taxes for ditta individuale

Every permanent resident of Italy must pay an income tax on the income earned in Italy, as well as overseas, whether you are an employee or a self-employed professional.

An Italian resident is a person who spends more than 183 days a year in Italy and has been recorded by the Population Registry or whose life is based in Italy (residence or domicile).

If you are a foreign resident who works as an employee or self-employed professional, you will have to pay just taxes on your income earned in Italy.

You can find the forms for tax return on the website of the Italian Revenue Agency (Agenzia delle Entrate). Tax returns must be filed online by 2 October, but in exceptional cases, there is the possibility to fill annual returns in paper format between 2 May and 30 June. 

Regarding the income tax, it should be paid by 30 June of the subsequent year. A delayed payment within 30 days, by 30 July, can be accepted, but the taxpayer will have to bear a 0.4% surcharge. Additionally, keep in mind that income taxes have to be paid in advance. The prepaid income tax will be offset while filing your annual returns, knowing that the amount paid in advance is determined on your estimates of revenue, or based on your previous year returns.

Personal income tax rates in Italy

The personal income tax is progressive, depending on how much you earn:

• Annual income up to €15,000: 23%
• Annual income between €15,001 - €28,000 : 27%
• Annual income between €28 001 - €55 000: 38%
• Annual income between €55 001 - €75 000: 41%
• Annual income over €75 001: 43%

Self-employed individuals may apply a flat tax of 15% on business and professional gross income up to €65,000. In that case, they wouldn't be subject to the additional regional and municipal tax. Normally, there is also a regional tax of up to 3,33% and a municipal tax of 0,01%-0,9%. Each region and municipality decide its rates within the range set by the national law.

Ditta individuale requirements for non-Italians

European citizens from the Schengen area have the right to live and work in Italy.

For non-EU citizens, there are a few requirements to meet if you want to be self-employed in Italy. As a newly full-time foreign freelancer who wants to work in Italy, you will be likely to obtain a self-employed work visa for non-EU citizens.

Handcrafting, entrepreneurship, trade, and commerce are some field activities that can be completed based on the self-employment permit.

The self-employment VISA isn't enough; you also need the authorization to work and the proper certification depending on the type of work you will perform. These authorizations must be obtained before your VISA application.

Furthermore, the self-employment visa consists is specific to professions. The Italy Startup visa, for instance, is given to foreigners who want to start an innovative project or join an existing company for an executive role. The Italian Freelancer visa is dedicated to foreigners who wish to be self-employed, freelancers, and who don't have a company that will hire them.