Contracting in Italy
Comprehensive contracting arrangements for Italy, combining rich business heritage with dynamic innovation across multiple sectors.
Contracting in Italy with City Traders
Official Language
Italian
Major Business Cities
Milan, Rome, Turin, Bologna
Currency
Euro (€)
Tax Year
January to December
Key Industries
Fashion, Automotive, Technology, Tourism
Corporate Tax Rate
24% + IRAP (3.9%)
Introduction
Italy, located in southern Europe, is the third-largest economy in the eurozone and offers a diverse market for contractors with opportunities across traditional and emerging sectors. With a population of approximately 60 million, Italy combines rich cultural heritage with innovation in industries ranging from fashion and automotive to technology and tourism.
The Italian business landscape is characterized by regional specialization. Northern Italy, centered around Milan, is the industrial and financial heart of the country, while Rome serves as the administrative and political center. Other major business hubs include Turin, Bologna, Florence, and Naples, each with its own economic strengths and opportunities.
For contractors, Italy offers a unique combination of quality of life, strategic location in the Mediterranean, and access to diverse market sectors. However, navigating the Italian bureaucracy and tax system requires understanding local regulations and procedures, particularly the self-employment ('Partita IVA') system and social security requirements.
While Italian is the official language and essential for administrative procedures, English proficiency is increasing, particularly in multinational companies and the technology sector. Knowledge of Italian is a significant advantage for contractors looking to establish themselves in the local market.
Registry/Registration
EU/EEA citizens can freely live and work in Italy without a specific work permit, though they should register their residence with local authorities (Anagrafe) if staying for more than three months. This registration provides a certificate of residence (certificato di residenza).
Non-EU/EEA citizens typically need a specific visa and residence permit to work in Italy. For contractors, the relevant option is usually a self-employment visa (visto per lavoro autonomo), which falls under Italy's quota system and requires proof of financial resources, suitable accommodation, and often evidence of pre-arranged work or contracts.
All individuals working in Italy need to obtain a tax identification code (Codice Fiscale) from the Italian Revenue Agency (Agenzia delle Entrate). This alphanumeric code is required for virtually all official transactions in Italy.
Self-employed contractors must also:
- Apply for a VAT number (Partita IVA) through the Revenue Agency
- Register with the appropriate social security institution (typically INPS)
- Register with the Chamber of Commerce (Camera di Commercio) if conducting certain types of business activities
- Obtain a certified email address (PEC - Posta Elettronica Certificata) for official communications
- Acquire a digital signature device for signing official documents electronically
The registration process can be complex and time-consuming, particularly due to language barriers and the Italian bureaucratic system. Many contractors find it beneficial to engage professional assistance to navigate these requirements efficiently.
Income Tax
Italy has a progressive personal income tax system (IRPEF - Imposta sul Reddito delle Persone Fisiche) for individuals. However, self-employed contractors have two main tax regimes to choose from, each with distinct rules and implications.
Standard Regime - Progressive Tax Rates (2024):
| Annual Income (EUR) | Rate |
|---|---|
| Up to €15,000 | 23% |
| €15,001 - €28,000 | 25% |
| €28,001 - €50,000 | 35% |
| Over €50,000 | 43% |
Note: Additional regional and municipal surcharges (typically 1-3%) may apply, varying by location.
The simplified "Regime Forfettario" (flat-rate regime) is particularly popular among contractors due to its tax advantages:
- Available for annual revenue under €85,000
- Flat tax rate of 15% (reduced to 5% for new businesses in the first five years)
- Taxable income is determined by applying a coefficient to gross revenue (varying from 40% to 78% depending on the activity type)
- No VAT on invoices (but also no ability to recover VAT on purchases)
- Simplified accounting and record-keeping requirements
- Exemption from electronic invoicing (though this exemption is gradually being phased out)
For contractors operating through an Italian limited company (SRL - Società a Responsabilità Limitata), corporate income tax (IRES) applies at a rate of 24%, plus regional tax on productive activities (IRAP) at approximately 3.9%. Dividends distributed to shareholders are then subject to a withholding tax of 26%.
Tax returns must be filed annually, typically by the end of November of the following year, and advance tax payments are required in June and November. Electronic filing is mandatory, usually requiring assistance from a registered tax professional (commercialista).
Social Security
Social security contributions are mandatory for all self-employed individuals in Italy and are managed by the National Social Security Institute (INPS). The specific contribution scheme depends on your professional category and business structure.
Most self-employed contractors fall under the "Gestione Separata" scheme (separate management), which requires contributions ranging from approximately 26% to 35% of annual income, depending on whether you have other pension coverage. These rates can change annually, so it's important to verify the current percentages.
For those operating under the Regime Forfettario, social security contributions are calculated based on the same percentage but applied to the full revenue rather than the taxable income determined by the coefficient. However, there is a 35% reduction in contributions for the first three years if certain conditions are met.
Specific professions such as architects, engineers, doctors, lawyers, and accountants may register with their own professional funds (Casse di Previdenza) instead of INPS, each with their own contribution rates and rules.
Social security contributions provide:
- Pension rights
- Healthcare coverage through the National Health Service (SSN - Servizio Sanitario Nazionale)
- Maternity/paternity benefits
- Sickness benefits (with certain limitations for self-employed)
- Disability benefits
Unlike employee contributions, which are withheld by employers, self-employed individuals must calculate and pay their own contributions, typically quarterly or annually through F24 payment forms.
Banking in Italy
Opening a bank account in Italy is essential for contractors to manage business transactions, pay taxes and social security contributions, and receive payments from clients. Major Italian banks include Intesa Sanpaolo, UniCredit, Banco BPM, and Banca Monte dei Paschi di Siena, along with international banks that have operations in Italy.
To open a business account, you'll typically need:
- Codice Fiscale (tax identification code)
- Partita IVA (VAT number) if registered as self-employed
- Valid passport or ID card
- Proof of address in Italy (utility bill, rental contract)
- Residence permit for non-EU citizens
- Business documentation (Chamber of Commerce registration, if applicable)
Most Italian banks charge monthly fees for business accounts (typically €10-30 per month), and some may require a minimum deposit. Online banking services are generally available but may have limited English language options.
For international contractors who work with clients outside Italy, it's important to consider currency exchange fees and international transfer costs. Some online banks like N26, Revolut, or Wise (formerly TransferWise) offer multi-currency accounts and more competitive exchange rates, though these may not always be recognized as full-fledged business accounts for Italian administrative purposes.
It's worth noting that Italian banking operates with a strong focus on anti-money laundering regulations, so transactions, particularly larger ones, may be subject to additional documentation requirements.
Business Structures
Italy offers several business structures suitable for contractors, each with different implications for liability, taxation, and administrative requirements:
Libero Professionista (Freelance Professional)
The simplest structure for independent professionals. Can operate under either the standard tax regime or the simplified Regime Forfettario. Offers minimal setup costs but provides no liability protection. Income is taxed at progressive personal income tax rates or flat rate, depending on the chosen regime.
Ditta Individuale (Sole Trader)
Similar to Libero Professionista but applicable for commercial activities rather than professional services. Requires registration with the Chamber of Commerce. The owner has unlimited personal liability for business debts.
SRL (Società a Responsabilità Limitata)
Italian equivalent of a Limited Liability Company. Requires minimum capital of €1 (formerly €10,000). Provides liability protection but involves more complex setup and ongoing administrative requirements. Subject to corporate income tax (IRES) at 24% plus regional tax (IRAP) at 3.9%.
SRL Semplificata (Simplified SRL)
A streamlined version of the SRL with reduced formation costs, designed for smaller businesses. Requires minimum capital of €1 and uses a standardized articles of association. Offers the same liability protection as standard SRL but with simplified formation procedures.
For most contractors starting out in Italy, the Libero Professionista structure under the Regime Forfettario is often the most advantageous due to its simplified administrative requirements and favorable tax treatment. However, as income increases or liability concerns become more significant, transitioning to an SRL may be worth considering.
The choice of business structure should consider factors such as expected turnover, liability risks, administrative capacity, and long-term business goals. Professional advice is recommended to determine the most suitable structure for your specific situation.
City Traders and Contracting in Italy
At City Traders, we provide comprehensive support to help contractors navigate Italy's complex business environment. Our services are designed to minimize administrative burden and ensure full compliance with Italian regulations.
Our multilingual team has extensive experience with Italian bureaucracy and can bridge the language gap, making the entire process smoother for international contractors. We maintain a network of Italian professionals, including commercialisti (tax consultants), who ensure you receive expert local advice.
Whether you're looking to set up as a Libero Professionista under the Regime Forfettario or establish a more complex corporate structure, we can guide you through each step and provide ongoing support as your business grows and evolves in the Italian market.
Italy vs Other Contracting Markets
Compare key aspects of contracting in Italy with other popular European markets. See how Italy compares in terms of taxation, lifestyle factors, and administrative complexity.
Quick Contracting Markets Comparison
See how Italy compares to other popular contracting destinations
| Metric | Italy | United Kingdom | Germany | Netherlands |
|---|---|---|---|---|
Corporate Tax Rate Standard corporate tax rate for businesses | 24% | 25% | 15% + 5.5% solidarity | 15-25.8% |
Fast Company Setup Ability to establish a business entity quickly | ||||
Self-Employed Structure Availability of sole trader/self-employed status | ||||
Umbrella Company Option Availability of umbrella company services | ||||
VAT/Sales Tax Rate Standard VAT or sales tax rate | 22% | 20% | 19% | 21% |
English Business Environment Ease of doing business in English |
Data updated: April 2025
View full comparisonRequirements Checklist
- Codice Fiscale (Tax identification code)
- Partita IVA (VAT number) for self-employed
- Registration with Camera di Commercio (Chamber of Commerce)
- Registration with INPS (social security)
- Residence permit (non-EU) or registration (EU citizens)
- Italian bank account
- Certified email address (PEC)
- Digital signature device
Need Assistance?
Our Italy contracting experts can provide personalized guidance for your specific situation.
Get Expert AdviceFrequently Asked Questions
What is the 'Partita IVA' system in Italy?
Partita IVA is the Italian VAT number required for self-employed individuals and businesses. Opening a Partita IVA requires registration with the tax authorities (Agenzia delle Entrate), the social security administration (INPS), and often the Chamber of Commerce. This allows you to invoice clients legally. There are different regimes available, including the simplified 'Regime Forfettario' for lower-income contractors, which offers reduced tax rates and simplified accounting.
What are the benefits of the 'Regime Forfettario'?
The Forfettario regime is designed for self-employed individuals with annual revenue below €85,000. Benefits include a flat tax rate of 15% (reduced to 5% for new activities in the first 5 years), no VAT on invoices, simplified accounting requirements (no need to track expenses for tax purposes), and exemption from electronic invoicing. However, contractors can't deduct expenses and can't recover VAT paid on purchases.
How does social security work for self-employed in Italy?
Self-employed contractors must register with INPS (Italian Social Security Agency) and pay social security contributions based on their professional category. For most freelancers, this is the 'Gestione Separata' scheme, requiring contributions of approximately 26-35% of annual income (depending on whether you have other forms of pension coverage). These contributions cover pension rights, maternity/paternity benefits, and sickness benefits.
Can I work as a contractor in Italy as a non-EU citizen?
Yes, but you need proper authorization. Non-EU citizens typically require a self-employment visa (visto per lavoro autonomo) which has annual quotas. The application requires proof of sufficient financial resources, suitable accommodation, and often pre-agreements with potential clients. An alternative is the new Digital Nomad visa introduced in 2022, designed for remote workers who primarily work with non-Italian clients.