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 aside 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, while 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, and discuss some of the other risks and liabilities you should be aware of. So order another cappuccino, and make yourself comfortable.

First, it’s important to clarify how Italy defines independent contractors.

What is an independent contractor according to Italian law?

Independent contractors are workers who provide paid services to another party. However, they are classified differently to employees, and are not 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 to be an independent contractor (i.e. self-employed) if you “carry out your business independently.” In simple terms, this means that you:

• Determine your own work schedule

• Are able to perform work for other companies

• Set your own rates

• Are able to delegate or subcontract work

• Set your own working hours

• Work without direction or supervision

It’s important to be correctly classified, as otherwise you could be subject to penalties and fines.

Note that, in Italy, self-employed workers are categorized depending on their business activity. Therefore, you will fall into one of the following two categories:

• 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 (and should not 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 will discuss throughout the article.

Business registration in Italy

To work as an independent contractor in Italy, you’ll 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 is ideal for independent, individual contractors. You have full control of the enterprise, although there is no legal separation between you (the owner) and the business; you are personally responsible for all its debts and liabilities.

• General partnership (società in nome collettivo, or S.n.l.): A straightforward partnership agreement. Again, there is 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, but most independent contractors choose the sole proprietor/freelancer model, as it is 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 must then fill out the Single Business Communication (Comunicazione Unica) form, which ensures you are registered with all the necessary bodies, including:

• 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 will be asked to choose a tax regime. We will discuss the implications of this in the taxation section of the article.

How do I get paid as an independent contractor in Italy?

As an independent contractor, it’s down 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 often come with hefty service fees. And if you have clients in other countries besides Italy, the payment collection process can be even more complicated. 

Alternatively, you can use a trusted solution like Remote. Our platform is a simple, secure, and reliable way to get paid quickly in euros — and with no hidden fees. Learn more about how our platform can help.

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.

If you are a sole proprietor, you pay personal income tax on your business profits. This means that you do not have to fill out a separate tax return.

In Italy, you are 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, if your revenue is less than €50,000. It’s also possible to claim deductions for certain business expenses, such as utility bills and rent for your business premises.

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, and will 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 the following year.

The flat rate tax in Italy

As previously mentioned, you will 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 will be taxed a standard rate of 5% for the first five years (followed by 15% each year thereafter), and will 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

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.

Note that, if you enroll on the flat tax scheme and you then start earning more than €85,000, you will revert to the standard tax regime.

Social insurance contributions in Italy

In Italy, your social security contributions depend on your business activities. If you are a sole proprietor (i.e. an artisan or trader), you need to make contributions directly to the INPS’s Traders and Craftsmen Management scheme. If your annual revenue is under €17,504, you will currently pay a fixed contribution of around €4,200; if you earn more than this, you will still pay the fixed contribution of €4,200, plus around 24% of your additional income.

For freelancers (i.e. liberal professionals), the obligations are slightly different. If you are a registered professional (such as a doctor or lawyer), you will need to make contributions to your professional body at its prescribed rates. If you are a professional that doesn’t require registration (such as a photographer or a marketer), you will make contributions 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%, although 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.

Liability considerations for independent contractors in Italy

As a sole proprietor or freelancer, you are personally liable for finance and tax debts, which means your private assets can be forcibly used to settle your business debts. Many independent contractors purchase liability insurance to help 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.

Accounting requirements for independent contractors in Italy

As a sole proprietor or freelancer, you do not 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 to employees in Italy. Many of the protections and benefits employees enjoy do not typically apply to contractors.

As a result, companies may deliberately misclassify you to circumvent their legal obligations, while at other times, it may happen accidentally. Whether it’s intentional or not, misclassification can result in penalties and fines for both you and your client.

As an independent contractor, you can work with your clients to ensure this doesn’t happen. Discuss your role and responsibilities with them, and review the working arrangement regularly.

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

4 ways Remote makes life easier for contractors and their clients

As you can see, there’s a lot to take on board when setting up as an independent contractor. 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 payments 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 many of 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.

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 from what you really want to be doing: helping your clients, delivering great work, and collecting invoices.

By using a stable, trusted platform like Remote, you can manage these obligations quickly and efficiently, allowing you to focus on your business goals. Specifically, 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

• Comply with 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.