How to set up as an independent contractor in Italy

Do you dream of running your own business from a charming Roman cafe? What about a scenic Tuscan vineyard? Or a rustic villa with a view of the Mediterranean?

Well, as an independent contractor in Italy, it’s all possible. This historic country has a vibrant culture and a strong entrepreneurial spirit. The capital, Rome, is one of the world’s top 50 destinations for remote work.

Before you can start your self-employment journey here, though, you’ll need to understand how to:

• Register your business in Italy

• Avoid misclassification as an employee

• Create compliant contracts that protect you

• Invoice and collect payments from around the world

In this guide, we’ll cover all these things. We’ll also help you navigate your tax obligations as a self-employed worker, discussing some of the risks and liabilities to be aware of. So order another cappuccino, and make yourself comfortable.

What is an independent contractor, according to Italian law?

Independent contractors are workers who provide paid services to another party. They’re classified differently from employees and aren’t always entitled to the same benefits. Independent contractors are also responsible for arranging their own taxes and social contributions.

See also: Why businesses hire contractors vs. international employees

Under Article 2222 of the Italian Civil Code (Codice Civile), you’re considered an independent contractor (i.e., a self-employed individual) if you “carry out your business independently.” This means that you:

• Determine your own work schedule

• Perform work for other companies

• Set your own rates

• Delegate or subcontract work

• Set your own working hours

• Work without direction or supervision

It’s important to be correctly classified to avoid penalties and fines. We’ll talk about this in more detail later.

In Italy, self-employed workers fall into one of two categories, depending on their business activity:

• Sole proprietors (impresa individuales): Generally, this category includes artisans (such as hairdressers, electricians, chefs, and mechanics) and traders (such as retailers and street vendors)

• Freelancers (ditta individuales): This category refers to the so-called “liberal professions,” such as doctors, accountants, and engineers. It shouldn’t be confused with the general English use of the term “freelancer.” Freelancers can be further subdivided into registered professionals (i.e. doctors and lawyers) and professionals without registration (i.e. graphic designers and content writers).

Sole proprietors and freelancers have different registration and social insurance obligations, which we discuss throughout the article.

What are the benefits of being an independent contractor in Italy?

As an independent contractor in Italy, you can:

• Explore the local area and absorb the culture. Spend your downtime exploring new parts of the country, learning about the country’s rich heritage, and eating delicious Italian cuisine. 

• Travel to other countries in Europe. Being in Europe makes it easy to hop on a plane or train to explore nearby countries, even for just a weekend. In a matter of hours, you could be exploring the Spanish coast or hiking through the Swiss Alps. 

• Access tax benefits. In Italy, you can claim tax credits of up to €1,265 if your revenue is less than €50,000. It’s also possible to claim deductions for certain business expenses (more on this later). 

• Work in a laid-back culture*. Generally speaking, Italy is known for embracing a positive work-life balance. Full-time employees spend 69% of their day — 16.5 hours – on personal care and leisure. That's 1.5 hours more than the OECD average, making it the country that boasts the most leisure time.

*Note that the exact work culture you experience as an independent contractor in Italy can vary depending on the type of work you’re doing and where you live.

How to become an independent contractor in Italy

Here’s how to become a freelancer in Italy in five steps:

1. Register your business 

2. Identify payment methods 

3. Handle independent contractor taxes 

4. Review liability considerations 

5. Clarify your accounting requirements

Let’s look at each of them in more detail.

1. Register your business in Italy

To work as an independent contractor in Italy, you first need to choose a legal structure for your business. Some of the most popular models include:

• Sole proprietor/freelancer (impresa individuale/ditta individuale): A simple structure that’s ideal for independent, individual contractors. You have full control of the enterprise, although there’s no legal separation between you (the owner) and the business. This means you’re personally responsible for all its debts and liabilities.

• General partnership (società in nome collettivo, or S.n.l.): A straightforward partnership agreement. Again, there’s no legal separation between the individual and the business. You and your partners are personally responsible for any debts and liabilities. It’s possible to set up a limited partnership (società in accomandita semplice, or S.a.s.) to mitigate this risk.

• Limited liability company (società a responsabilità limitata, or S.r.l.): A formal, legal entity that is separate from you, the individual. All income and losses are attributed to the company as opposed to you personally.

There are pros and cons to each structure. Most independent contractors choose the sole proprietor/freelancer model as it’s fairly simple to set up and operate.

For sole proprietors

To register your business as a sole proprietor, you must first acquire:

• A Telemaco login

• A digital signature

• A certified electronic email address (PEC)

You then fill out the Single Business Communication (Comunicazione Unica) form, which ensures you’re registered with all the necessary bodies. These bodies include:

• The Business Register (Registro Imprese)

• The National Institute for Social Security (INPS)

• The National Institute for Insurance against Accidents at Work (INAIL) (if applicable)

You will also automatically be registered for VAT and receive a VAT number.

For freelancers

If you are classed as a freelancer (i.e., a liberal professional), you don’t need to register with the Business Register. However, you must register with your professional body (if applicable).

You must also register for VAT with the Italian Revenue Agency (Agenzia delle Entrate) using the AA9/12 form.

When you register for VAT, you’re asked to choose a tax regime. We’ll discuss the implications of this in the taxation section of the article.

2. Identify the payment methods you’ll use

As an independent contractor, it’s up to you to handle your invoices and payment collection. Unfortunately, this means billing each client individually and collecting payment through their preferred payment method — which can be inefficient and time-consuming.

Some of the most common ways to collect payments include:

• Bank transfers

• Direct deposits

• Paper checks

• Money orders

• Virtual wallets

• Digital transfer services like PayPal and Wise

These methods all have their own pros and cons. For instance, bank and digital transfers can be pretty quick but sometimes come with hefty service fees. And if you have clients in other countries outside of Italy, the payment collection process can be even more complicated.

Using a trusted HR solution like Remote removes all this confusion and streamlines the payment process. Our platform is a simple, secure, and reliable way to get paid quickly in euros — and with no hidden fees.

Head to our Freelancer Hub to find out how we can help you submit invoices, handle international payments, and more.

3. Handle independent contractor taxes in Italy

As an independent contractor, you’re responsible for paying your own taxes and social contributions. Like most countries, Italy has a progressive income tax rate that indicates how much you will owe.

A progressive income tax rate means that there’s a higher tax rate on higher taxable incomes than on lower ones. For example, if you make over €50,000 yearly, you’re taxed at 20%. If you make less, you’re taxed at 15%.

If you’re a sole proprietor, you pay personal income tax on your business profits. This means you don’t have to fill out a separate tax return.

In Italy, you’re subject to several taxes, including:

• National income tax. A state tax of between 23% and 43% of your taxable income.

• Regional income tax. A local tax that varies depending on where you live. On average, it is around 2.3% of your income.

• Municipal income tax. Another local tax that also varies depending on where you live. On average, it is around 0.5% of your income.

On a more positive note, you can claim tax credits of up to €1,265 in Italy if your revenue is less than €50,000. It’s also possible to claim deductions for certain business expenses for your business premises, such as utility bills and rent.

You must estimate and pay your taxes in advance across two payments, due June 30 and November 30. You must also file your tax return (Redditi PF) by November 30 each year, with particular attention paid to the LM section.

The Italian Revenue Agency will then assess your income, deductions, and allowances, as well as the tax you’ve paid. They’ll tell you if you are eligible for a tax refund or if you owe more. The final amount owed must be settled by June 30 of the following year.

The flat-rate tax in Italy

As previously mentioned, you’ll be asked to choose a tax regime during the VAT registration process. If you earn (or estimate that you’re going to earn) less than €85,000 yearly, you can opt for the government’s flat tax regime rather than the standard regime.

Under this regime, you’ll be taxed at a standard rate of 5% for the first five years, followed by 15% each year thereafter. You’ll also be exempt from charging and paying VAT.

There are other criteria you must meet to be eligible for the flat-rate tax. For example, you:

• Must not have accrued annual expenses of more than €20,000, including any employee or subcontractor payments

• Must not be enrolled in any other special VAT schemes

• Must derive at least 75% of your revenue in Italy

Side note: If you enroll in the flat tax scheme and then start earning more than €85,000, you will revert to the standard tax regime.

The rules around the flat-rate tax scheme are complex, and it can have unforeseen implications for your business. Therefore, it’s a good idea to speak with a tax professional before opting for this regime.

Social insurance contributions in Italy

In Italy, your social security contributions depend on your business activities. If you’re a sole proprietor (e.g., an artisan or trader), you need to contribute directly to the INPS’s Traders and Craftsmen Management scheme.

If your annual revenue is under €17,504, you pay a fixed contribution of around €4,200. If you earn more than this, you still pay the fixed contribution of €4,200, plus around 24% of your additional income.

For freelancers, the obligations are slightly different.

If you’re a registered professional (such as a doctor or lawyer), you must contribute to your professional body at its prescribed rates. If you’re a professional who doesn’t require registration (such as a photographer or a marketer), you’ll contribute to the INPS’s Separate Management scheme at a rate of around 26%.

VAT information for independent contractors in Italy

In Italy, all businesses must charge and pay VAT (unless they are exempt under the flat-rate tax scheme). You must calculate and pay your VAT every month (or, in some cases, every quarter) using the online F24 form.

The standard VAT rate in Italy is 22%. However, some goods and services are subject to lower rates of 10%, 5%, and 4%, while others are VAT-exempt entirely.

You must keep all your VAT records, including client invoices and purchase orders.

With a global HR platform like Remote, you can easily store, manage, and track all your VAT records. And when it comes to submitting tax returns, you can access everything you need in a central location.

4. Review liability considerations for independent contractors in Italy

As a sole proprietor or freelancer, you’re personally liable for finance and tax debts. This means your private assets can be forcibly used to settle your business debts. Many independent contractors purchase liability insurance to mitigate this risk.

It’s also important to cover yourself when drafting and signing agreements with clients. Our legal experts can provide you with fully compliant contract templates for both Italian and international clients.

5. Clarify accounting requirements for independent contractors in Italy

Sole proprietors and freelancers don’t need to publish financial statements each year. However, you do need to keep records of your accounts, including all your client invoices and business purchases.

You can either manage these records yourself using an accounting or bookkeeping tool or hire a professional bookkeeper or accountant.

The dangers of contractor misclassification in Italy

As we’ve mentioned, independent contractors are classified differently from employees in Italy. Many of the protections and benefits employees enjoy don’t typically apply to contractors.

As a result, companies may deliberately misclassify you to avoid legal obligations that cost them more money. At other times, this may happen accidentally. But whether it’s intentional or not, misclassification can result in penalties and fines for both you and your clients.

The good news is that you can work with your clients to ensure this doesn’t happen. For example, you can discuss your role and responsibilities with them or regularly review your working arrangement to ensure it aligns with contractor requirements.

A platform like Remote can help you stay on top of classification. Our local experts will make sure you avoid misclassification, monitoring your working relationships in line with local government rules.

If your working relationship changes over time and you become more integrated into a client’s company, you can ask to become an employee.

How do I ask the company I’m working with to convert me to an employee in Italy?

Open a dialogue with your client and carefully discuss the risks and benefits of moving to an employer-employee relationship. In particular, be clear about how it can benefit both parties — not just you.

You can even suggest the help of a third-party solution, such as Remote, to ease the transition. Our global employment services help both parties stay compliant by taking care of key HR functions (like payroll management and benefits administration) in line with Italian law.

5 ways Remote makes life easier for contractors and their clients

There’s a lot to take on board when setting up as an independent contractor in Italy. Remote can help you with many of these challenges, allowing you to focus on growing your business and delivering to your clients. Here’s how:

1. International payments in countries around the world

Navigating all of your clients’ different invoicing, approvals, and payment systems can be complicated and time-consuming. And manual methods of invoicing and collecting payments can increase the risk of fees, errors, and delays.

Remote gives you access to a highly secure, streamlined dashboard that makes invoice management and international payments cost-effective and efficient. You can use our platform to get paid in euros hassle-free, without any hidden fees.

2. Localized in-app contracts and advice

When you draft agreements and contracts for your clients, you run the risk of non-compliance with local labor laws — especially when working with international clients. 

Remote offers localized contracts tailored to Italian laws, ensuring that you stay compliant. Our legal experts can also provide guidance on complex issues, such as local classification and intellectual property protections.

3. Invoicing automation

With Remote, you no longer need to rely on spreadsheets and other manual tools to invoice for payments. We remove the inaccuracies and delays caused by archaic processes and manual management.

Our platform lets you create invoices, submit them for approval, and subsequently get paid in your local currency without needing to switch to any other tool or software.

4. Tax management

Tax management is notoriously complex work. Remote helps you quickly and efficiently deal with tax management by compiling data about your income based on your invoices and payments received.

Our global HR experts will help you apply for relevant tax breaks, keep track of tax deadlines, and store all the documentation you need in a central location.

5. Improve your work-life balance

Remote centralizes all your invoicing and tax documentation, handles your admin, and helps you comply with local regulations.

What does this mean for you? It means you spend less time manually tracking and worrying about the logistics of working in Italy and more time enjoying the lifestyle the country provides. Plus, it frees up time and brain space for you to focus on doing what you do best: your job.

Ultimately, with Remote, you can deliver top-quality work for your clients because you’re not spending hours thinking about tax deadlines or compliance regulations.

Setting up as a contractor in Italy

Having the freedom and flexibility to work on your own terms is liberating. But your administrative responsibilities can distract you from what you really want to be doing: helping your clients, delivering great work, and getting paid.

Use a stable and trusted platform like Remote to manage these obligations quickly and efficiently, allowing you to focus on your business goals. We can help you:

• Avoid intermediary fees and delays with international client payments

• Draft compliant contracts for Italian and foreign clients

• Enhance your invoice management and avoid manual processes

• Follow local labor laws regarding work practices

Our platform makes it quick, simple, and seamless to get started as an independent contractor. Learn more about how our expertise can save you time and resources today.