Remote Working Opens New Doors To “Digital Nomads” For Immigration

Italy offers digital nomads enticing taxation opportunities. Following the pandemic, many workers don’t need to flock to their office each day. Picking up on this trend, a number of countries see the benefits of attracting these digital nomads. Greece currently offers tax relief at a rate of 50 per cent. Spain, Estonia and Dubai offer ad hoc visas, and Italy as joined in the competition with some fantastic incentives.

For many, the tools of their trade consist of a computer and a good Wi-Fi connection. According to a study by the Smart Working Observatory of the Politecnico di Milano, the number of flexible workers increased from 570,000 in 2019 to 6.5 million during the spring 2020 lockdown. And it is estimated that post-COVID, five million people will continue to work permanently on a remote basis.

Italy has opened its doors to this growing digital nomad community and their incomes with tax incentives and visa opportunities.

Appealing to everyone from freelance creatives and entrepreneurs to marketing and communication professionals, graphic designers, public speaking coaches, life coaches, computer scientists and programmers, Italy introduced a new tax break, effective from January 1, 2020.

Applicable to those who have lived outside Italy for two years and who transfer their tax residence to Italy, you could qualify for a 70 percent tax-free income for five years, and 90 percent for those who decide to live in central-southern regions. 

Italy is an appealing place to live, for a number of reasons. A beautiful country, each city and village offers its own unique charm. Living in Italy affords you the opportunity to enjoy all of the scenic, culinary and cultural delights. 

Living in Italy permanently, or for an extended amount of time, does come with some red tape. There are, however, ways to minimize taxes and acquire residency.

Visiting Italy

The first step is to determine if you’re allowed to stay, live and work in Italy. You need the proper visa, and depending on your citizenship, you might be required to obtain a visa to live in Italy for 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. 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.

Italy is a member of the European Union (EU) and the Schengen Area, and non-EU travelers can obtain a SchengenVisa for travel periods of 90 days within 180 days. If you are planning to be an independent worker, don’t enter the country as a tourist under the assumption that you can obtain a work permit to stay or extend your status by moving out of the EU for a few days and then returning. Unless it’s an emergency case, the tourist visa status cannot be converted into a more permanent immigration status. It also 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. 

Self-employment visas

The self-employment visa, or visto per lavoro autonomo, is the best visa for digital nomads. This application is complicated, and you will likely need an experienced immigration attorney to help you with the collection of the documents before applying with the Italian consulate in your country of residency. 

Taxation

Italy offers attractive tax incentives to freelancers who move their life and work to Italy. 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 file your taxes also in your country of residence (legal domicile), and there are excellent incentives to do so.

It is equally important to retain an international tax attorney or accountant for all tax information and advice in this article since I only practice US immigration law.

The worldwide taxation principle stipulates that you must report your worldwide income and therefore file your taxes in the country where you reside (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. Due 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 setup their legal residency in Italy, offering them 70% de-taxation of the income generated while they reside in Italy. If you earn 100,000 euro while legally living in Italy, you will only calculate your taxes on 30,000 euro – 70% of your income is exempt. The tax reduction rises to 90% 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% de-taxation on the income) if you have a minor or buy a real estate property within one year of moving to Italy.

Italy offers countless opportunities to people who decide to move there. It is essential to make sure you obtain the correct legal advice to ensure that these incentives apply to your case.