Italy Personal Income Tax

Tax residents of Italy are subject to tax on their worldwide income. Individuals who are not tax resident in Italy are subject to tax on their Italian-source income only.

An individual is considered resident for income tax purposes if, for the greater part of the tax year, he or she satisfies any of the following conditions:

  • His or her habitual abode is in Italy.
  • The center of his or her vital interests is located in Italy.
  • He or she is registered at the Office of Records of the Resident Population in Italy.

Italian citizens who move their residence for tax purposes to countries considered to be tax havens (“black list” countries) are deemed to be tax resident in Italy in all cases, unless they provide specific evidence of their nonresident status.

Income subject to tax. Taxable income for personal income tax purposes consists of income from the following categories:

  • Income from employment
  • Income from self-employment
  • Business income
  • Income from real estate
  • Income from capital (primarily, dividends and interest)
  • Miscellaneous income, including capital gains

Each category, including miscellaneous income, is defined by law. If income falls under a category not specifically mentioned in the law, further investigation is needed to determine the tax treatment. Uncategorized income may not be automatically aggregated with miscellaneous income.

Employment income. Employment income is income derived from work performed for an employer. It includes any compensation, either in cash or in kind, received during a tax period in connec­tion with employment, including any payments received as shares, as acts of generosity or as reimbursement for expenses incurred in the production of the income. Benefits in kind are valued for tax purposes at the “normal value,” as defined by the Italian tax code. For certain benefits in kind, the Italian tax code provides specific rules for determining the applicable tax value. All compensa­tion received in connection with employment is considered employment income, even if the compensation is paid by a third party (for example, the legal employer’s parent company).

Employment income also includes income known as “income deriving from a collaboration,” unless the activity is performed by an individual who is registered for value-added tax (VAT) pur­poses, and income derived by directors, auditors and contractors.

An Italian employer, which qualifies as a withholding tax agent, must withhold income taxes monthly from payments of gross employment income, including benefits in kind. Employment income is also subject to social security contributions (see Section C). The same rules apply to the determination of the tax base for both income taxes and social security contributions.

The following items are not included in the taxable employment income:

  • Mandatory contributions paid by an employer and by an employee for social security as provided by law
  • Contributions, up to a ceiling of EUR3,615.20, paid by an employer or an employee to entities or funds for the sole pur­pose of medical assistance in accordance with collective labor contracts or company agreements and regulations
  • Goods provided to and services rendered for the employee if the overall value of goods and benefits does not exceed EUR258.22 per year
  • Business trip daily indemnity, up to a maximum of EUR46.48 for trips within Italy and up to EUR77.47 for trips abroad if the employer reimburses only the travel expenses
  • Certain benefits in kind, including meals in factory cafeterias and transportation services provided to a majority of employ­ees, up to certain amounts and under specified conditions

Nonresidents are subject to tax on income from employment derived from services performed in Italy and pensions paid by the state or by Italian residents.

A special tax regime applies to outbound employees who meet all of the following conditions:

  • The individual is resident for tax purposes in Italy.
  • The employment activity is rendered in a continuous and exclu­sive manner outside Italy for more than 183 days in a 12-month period.
  • The employee’s assignment outside Italy is regulated by an employment contract or by another written agreement signed by the parties.

Under the tax regime mentioned in the preceding paragraph, an individual is subject to tax in Italy on a notional employment remuneration, as determined each year by the Italian Ministry of Finance.

Effective from 2016, a special tax regime applies to an inbound employee who meets all of the following conditions:

  • He or she becomes as Italian tax resident under Italian domestic law.
  • He or she has been a non-Italian tax resident for the five years before the change in residency status.
  • He or she qualifies as an Italian tax resident for the following two years.
  • He or she qualifies as an executive or highly specialized employee as defined by specific law provisions.
  • He or she works mainly in Italy under an employment contract with an Italian tax resident employer or with a company of the same group.

If all the conditions listed in the preceding paragraph are met, the taxable employment income of the employee who qualifies for this special tax regime is reduced to 70% of the total amount for the tax year in which the employee changes residency and for the following five years.

Directors’ fees. For tax purposes, directors’ fees are treated as employment income, subject to progressive income tax rates and withholding tax. This tax treatment does not apply if the services are performed by a professional individual who is registered for VAT purposes (see Self-employment income).

Nonresident directors are subject to a final withholding tax at a rate of 30% on directors’ fees received.

Self-employment income. Self-employment income consists of income from a profession, including accounting, law and medi­cine. As mentioned in Employment income, income from a collaboration is treated as employment income, unless the activity is performed by an individual who is registered for VAT purposes.

Residents are subject to tax on worldwide self-employment income at the rates described in Rates; a 20% withholding tax applies to income derived from Italian sources. Nonresidents are subject to tax on income from self-employment derived from ser­vices performed in Italy. Nonresidents are subject to a final with­holding tax of 30% on self-employment income.

For professionals, taxable self-employment income consists of the difference between compensation received during a tax period and related expenses incurred during the same period, subject to certain limits. Self-employment income is determined according to the cash-basis principle.

Professional income is subject to VAT and to regional tax (IRAP) at a statutory rate of 4.82%. Such rate may vary depending on the region of Italy in which the activity is performed (see Business income). Bookkeeping is required.

Real estate income. Under certain circumstances, income from unrented real estate located in Italy may be subject to personal income tax. The related tax base equals 50% of a notional income called “cadastral value.” Rental income derived from real prop­erty is taxed as ordinary income (see Rates). Rental income derived from rented real estate located in Italy may be subject to a fixed tax rate (so-called cedolare secca) of 10%, 15% or 21%, if specific conditions are met.

Italian tax residents must report income from real estate located outside Italy in their Italian tax return, unless otherwise provided in an applicable double tax treaty.

Real estate is also subject to the tax on Italian real estate (IMU; see Section B).

Business income. Business income consists of income derived from the commercial or industrial activities (entrepreneurial activities) described in the Civil Code.

Taxable business income consists of profits disclosed in the finan­cial statements, adjusted for exemptions, disallowed expenses, special deductions and losses carried forward. Business income is determined using the accrual method.

Taxable business income is subject to personal income tax at the rates described in Rates. In addition, business income is subject to IRAP, a regional tax on productive activities. IRAP is levied at a statutory rate of 4.82%. Such rate may vary depending on the region of Italy in which the activity is performed and on the kind of activity performed. The tax base is the amount of net produc­tion income derived from activities carried out in Italy. Net pro­duction income is calculated by adding to taxable business income certain costs that are not deductible for IRAP purposes.

Nonresidents are subject to tax on business income from a per­manent establishment in Italy.

Investment income. 49.72% (40% for earnings yielded before 1 January 2008) of dividends derived from qualified participa­tions that are received by Italian tax residents from resident and nonresident entities is taxed as ordinary income (see Rates). Dividends derived from non-qualified participations that are paid to Italian tax residents by resident and nonresident entities are subject to a separate final withholding tax of 26%. The tax base for dividends on non-qualified par ticipations that are paid by non­resident entities is net of foreign taxes.

For listed companies, a non-qualified participation is a participa­tion representing no more than 2% of the voting rights in the ordinary shareholders’ meeting and representing no more than 5% of the issued capital. For unlisted companies, a non-qualified participation is a participation representing no more than 20% of the voting rights in the ordinary shareholders’ meeting and repre­senting no more than 25% of the issued capital.

One hundred percent of the dividends received by an Italian tax resident individual that are derived from an unlisted company resident in a tax haven (as defined by Italian authorities) is gener­ally taxed as ordinary income. Non-qualified dividends received by an Italian tax resident individual that are derived from a listed company resident in a tax haven (as defined by Italian authori­ties) are subject to a 26% substitute tax.

Dividends paid by Italian resident entities are subject to a 26% withholding tax. Tax treaties may provide for a lower tax rate for dividends paid to nonresidents.

Italian-source interest paid to residents is subject to a final with­holding tax at a rate of 26%. Consequently, such interest is not aggregated with other taxable income. Foreign-source interest may be included with other income and taxed at the rates described in Rates or taxed separately at a rate of 26%.

Interest paid to nonresidents is subject to a final withholding tax of 26%; tax treaties may provide for a lower tax rate. Interest derived from bank and postal accounts that is paid to nonresi­dents is exempt from tax.

Residents are subject to tax on royalties derived from patents, trademarks and know-how at the rates set forth in Rates.

Nonresidents are subject to a final withholding tax at a rate of 30%. In some cases, this tax is imposed on 60% or 75% of the amount of royalties received.

Capital gains and losses

Securities—residents. The taxation of capital gains from the sale of securities (including shares representing capital and other similar interests, convertible obligations, stock options and simi­lar rights) not related to business activities varies according to whether the transaction involves a qualified percentage of the company’s shares (see Investment income).

If the transaction involves a qualified percentage of the compa­ny’s shares, the ordinary rates are applied to 49.72% (40% if the sale of securities occurred before 1 January 2009) of the gain. The ordinary rates are applied to 100% of the gain if the shares sold relate to qualified shares of a company residing in a tax haven (as defined by the Italian authorities).

If the transaction involves a non-qualified percentage of the com­pany’s shares, the related capital gain is taxed separately at a rate of a 26%. If the transaction involves non-qualified shares of a listed company residing in a tax haven, the related capital gain is taxed separately at a rate of a 26%. If the transaction involves non-qualified shares of an unlisted company residing in a tax haven, ordinary rates are applied to 100% of the gain.

In general, the capital gain or loss equals the difference between the sales proceeds and the purchase cost, or the value that has already been subject to taxation. If the taxpayer’s losses exceed gains, the difference may be carried forward up to a maximum of four years against future capital gains. The capital gains tax must be paid by the same date as the balance of ordinary tax due shown in the taxpayer’s annual income tax return. If the security is held with an Italian resident intermediary (for example, an Italian bank) and if the transaction does not involve a qualified percentage of the company shares, an election may be made under which the tax due is withheld at source by the Italian resi­dent intermediary and the transaction does not need to be reported in the individual’s annual income tax return.

Securities—nonresidents. Capital gains derived by nonresidents from the sale of securities (including shares representing capital and other similar interests, convertible obligations, stock options and similar rights) not related to business activities are subject to the tax treatment applicable to residents (see above) if the securi­ties are issued by an Italian entity. However, capital gains or losses arising from non-qualified shares issued by Italian compa­nies listed on the stock exchange are not subject to Italian tax.

Real estate. Capital gains derived by individuals from the sale of real estate are taxable if the sale occurs within five years after the date on which the property was purchased or built and if the property had not been used as a principal abode for the major part of the period of ownership. The gain is subject to tax as ordinary income, unless, in the transfer deed, the vendor asks the Italian Public Notary to apply a separate final tax at a rate of 20%. Capital gains derived from sales of real estate after the five-year period of ownership are not subject to tax.

Deductions

Personal deductions, tax credits and allowances. Tax deductions are allowed for various items, including the following:

  • Mandatory social security contributions paid by an individual to the social security authorities
  • Social security contributions made to qualified and individual complementary pension funds, within specified limits
  • Social security and welfare contributions required by law that are paid on behalf of servants and babysitters
  • Alimony payments to a spouse from whom the taxpayer is legally separated or divorced (children’s maintenance is not deductible)
  • Medical expenses paid to disabled individuals

A tax credit of up to 19% is granted for various items, including the following:

  • Interest paid to European entities on mortgage loans for real estate located in Italy that is used as a principal abode, up to a maximum amount of EUR4,000
  • Medical expenses, including specialized medical treatment, surgical expenses and prostheses, for the taxpayer or depen­dents if the expenses exceed EUR129.11
  • Life and health insurance premiums, up to a maximum amount of EUR530 (applies only in certain circumstances)
  • University tuition expenses, not exceeding tuition charged at state universities
  • Funeral expenses, up to a maximum amount of EUR1,549.37

A tax credit for family members may be claimed by resident taxpayers, regardless of the category of income earned. The fol­lowing are the amounts of the tax credit.

Type of tax credit                            Theoretical amount (EUR)

Dependent spouse (a)                                              800 (b)

Each dependent child (a)                                         950 (b)(c)

  • A taxpayer’s spouse or child is considered a dependent if he or she earns less than EUR2,841.
  • A formula is used to determine the actual tax credit available. The dependent spouse tax credit is not granted for taxpayer income higher than EUR80,000. The child tax credit is not granted for taxpayer income higher than EUR95,000.
  • For each dependent child under three years of age, the amount is increased by EUR270. For each handicapped child under three years of age, the amount is increased by EUR670. In others cases, it is increased by EUR400. If the tax­payer has more than three dependent children, an additional amount of EUR200 for each child is granted.

The tax credit for each dependent child can be either shared between the two spouses or claimed by the spouse earning the higher taxable income. However, if one spouse is a dependent of the other spouse, the tax credit for dependent children must be fully claimed by the other spouse.

Foreign taxes that can be considered to be definitively paid by resident taxpayers on foreign-source income may be credited against personal income tax. The maximum amount of foreign

tax that may be credited is the full amount of Italian tax attributable to the foreign-source income, based on the proportion of the foreign-source income to the aggregate income. However, the foreign tax credit cannot exceed the net income tax due from the taxpayer.

Other deductions. In addition to deductible expenses specifically allowed, other expenses may be deducted from aggregate income for personal tax, depending on the category of income.

Rates. The income tax rates applicable to individuals are described below.

Personal income tax. The following are the rates of the personal income tax (imposta sul reddito delle persone fisiche, or IRPEF).

Taxable income (EUR)

Exceeding                    Not exceeding

 

Rate on excess

%

0 15,000 23
15,000 28,000 27
28,000 55,000 38
55,000 75,000 41
75,000 43

Additional regional tax. For 2016, additional regional ordinary tax rates may range from 0.7% to 3.33% on taxable income as calculated for income tax purposes.

Additional municipal tax. An additional municipal tax applies at rates ranging from 0% to 0.9% on taxable income as calculated for income tax purposes.

Solidarity tax. A solidarity tax at a rate of 3% is imposed on income in excess of EUR300,000. The solidarity tax is deductible from income subject to ordinary taxation.

Additional income tax on variable remuneration earned by employees working in the financial sector. Additional income tax of 10% is imposed on employees and collaborators (self-employed individuals who are not registered for VAT purposes) working in the financial sector on their variable remuneration (which may be represented by cash bonuses, stock options or shares) exceeding the yearly fixed remuneration.

Nonresidents. Nonresidents are taxed on Italian-source income at the rates described above.

Other taxes

Tax on real estate held abroad by Italian tax resident individuals. A tax on real estate held abroad for Italian tax resident individuals (imposta sul valore degli immobili situati all’estero, or IVIE) took effect in 2012. The standard tax rate is 0.76%. However, a 0.4% rate applies if the real estate abroad is the taxpayer’s princi­pal abode. The tax base is the purchase cost or, only for European Union (EU) and European Economic Area (EEA) countries, the cadastral value (if applicable) used to calculate and pay the wealth tax. The taxpayer is entitled to a credit for wealth tax paid abroad on the properties. IVIE is calculated and paid through the Italian tax return filing process.

Tax on financial assets held abroad. A tax on financial assets held abroad by Italian tax resident individuals (imposta sul valore delle attività finanziarie detenute all’estero, or IVAFE) took effect in 2012. The tax rate is 0.20% from 2014 onward. The tax base is generally the market value of the financial asset at the end of the year. In the case of double taxation, it is possible to deduct the wealth tax paid in the country where the financial asset is held. IVAFE is calculated and paid through the Italian tax return filing process.

Tax on Italian real estate. Imposta unica comunale (IUC) is a municipal tax on real estate composed of imposta municipale propria (IMU), Tasi and Tari.

IMU is a tax on Italian real estate that is partly due to the state and partly due to the municipality where the real estate is located. The tax base is calculated starting from the cadastral value attrib­utable to the real estate. To calculate the tax base, the cadastral value is multiplied by a coefficient that varies depending on the nature and characteristics of the real estate. The standard tax rate is equal to 0.76%. Each municipality can decide whether to increase or decrease the standard rate.

Tasi is a tax due for services rendered by the municipality for real estate, and Tari is a municipal tax for garbage. Tasi and Tari are local taxes due with respect to the possession of real estate located in Italy. The tax rate depends on the Municipal Decree.

Inheritance and gift taxes. Inheritance and gift taxes apply to residents and nonresidents. The tax base is related to the value of the assets. The following are the applicable tax rates:

  • 4% for recipients in a direct relationship (spouse and children) with the deceased or the donor, to the extent that the assets have a taxable value of greater than EUR1 million
  • 6% for brothers, to the extent that the assets have a taxable value of greater than EUR100,000
  • 6% for other relatives, with no assets exclusion
  • 8% for recipients who are not related to the deceased or the donor, with no assets exclusion

In addition to the above taxes, an additional fixed amount of EUR200 is due for each gift.

Cadastral and mortgage taxes apply if immovable properties are inherited or given as a gift. The applicable tax rate is 3%. However, if the real estate inherited or gifted is classified as a primary home, the cadastral and mortgage taxes are imposed at a fixed amount of EUR50 each.

To prevent double taxation of estates, Italy has entered into estate tax treaties with Denmark, France, Greece, Israel, Sweden, the United Kingdom and the United States. In the absence of a treaty, a tax credit may be available for foreign taxes paid on assets located abroad.

Social security

Coverage. Italian law provides for a comprehensive system of social insurance covering the following:

  • Disability, old age and survivorship
  • Illness and maternity
  • Unemployment and “mobility”
  • Family allowances
  • Health care
  • Labor injuries
  • Professional diseases

The system is controlled by the government, with various sec­tions administered by separate public institutions, most notably, the National Institute for Social Security (Istituto Nazionale Previdenza Sociale, or INPS).

Collective labor agreements provide for compulsory additional coverage through pension and health funds. Both employers and employees usually make contributions to these funds.

Contributions

Employees. In general, social security contributions are payable at varying percentages of gross remuneration, depending on the employee’s qualification level and the employer’s activity sector.

In general, employees’ social security contributions range from approximately 9% to 10% of their gross remuneration.

Employees must make an additional 1% contribution on the part of gross remuneration exceeding the threshold of EUR46,123 for 2016.

The employers’ part of the contributions ranges from approxi­mately 27% to 32%.

Employees with no record of social security contributions before 1 January 1996, are subject to pension contributions on gross income up to a maximum of EUR100,324 for 2016.

Self-employed individuals. Self-employed individuals, directors and consultants must enroll with the so-called Gestione Separata (INPS), unless other specific rules apply (for example, certain professionals, such as lawyers, engineers and accountants, are required by law to enroll in specified pension plans). The contri­butions to the INPS are calculated at a flat rate of 31.72%. If the individual already contributes to another mandatory social secu­rity system or if he or she is retired, the applicable flat rate is 24.5%. In both cases, the flat rates apply on annual income up to a maximum of EUR100,324 for 2016.

In addition, foreign citizens, such as nonresident directors, must enroll with the INPS.

Under certain circumstances, a totalization agreement may pro­vide an exemption from the above-mentioned contributions.

Totalization agreements. To provide relief from double social security taxes and to assure benefit coverage, Italy has concluded totalization agreements with various jurisdictions. In addition, an EU regulation on social security applies to all of the EU coun­tries, including all of the new member states (plus Switzerland).

Italy has entered into totalization agreements with the following jurisdictions.

Argentina                        Croatia                              Turkey

Australia                          Israel                                 United States

Bosnia and                      Korea (South)                   Uruguay

Herzegovina                    Macedonia                        Vatican City

Brazil                               Monaco                            Venezuela

Canada and Quebec         San Marino                       Yugoslavia

Cape Verde                     Tunisia                              (former) (b)

Channel Islands (a)

a) The Channel Islands consist of Alderney, Guernsey, Herm, Jersey and Jethou.

b) This treaty applies to Montenegro and Serbia.

Most of Italy’s totalization agreements allow an employee tempo-

rarily seconded abroad to remain covered under the social secu­rity scheme in the employee’s home country for a two-year period that may be extended to five years or more. The agreement with the United States does not provide a time limit. Italy’s totalization agreements with the United States and a few other countries do not cover all the mandatory social security contributions payable in Italy. As a result, US and other foreign companies must pay minor contributions in Italy.

Tax filing and payment procedures

In Italy, the tax year is the calendar year. Income tax returns for the preceding year must be filed by 30 September. Married per­sons may not file joint returns.

A failure to make a filing is subject to a penalty ranging from EUR250 to EUR1,000 (if no income tax is due) or ranging from 120% to 240% of the tax due, plus interest (if a tax liability arises). If a tax return is filed within the filing deadline for the following year, the penalty ranges from EUR200 to EUR500 (if no income tax is due) or ranges from 60% to 120% of the tax due, plus interest. The penalties increase by one-third with respect to income taxes due on foreign-source income.

If the tax return is filed within up to 90 days after the due date, under a special procedure to reduce penalties called ravvedi­mento operoso, the ordinary penalties mentioned above may be reduced to EUR25.

Income tax must be paid by 16 June for income earned in the preceding calendar year. Advance tax payments must be made, equal to 100% of the preceding year’s tax liability. Advance tax payments may be reduced if the individual has a lower estimated tax liability in the current year. Forty percent of the advance tax payments must be paid by 16 June, and the remaining 60% must be paid by 30 November. Individuals who make tax payments during the period 17 June to 16 July must pay 0.4% additional interest calculated on the tax amount due. If a late payment is made on or after 17 July, ordinary penalties and interest apply. However, under the special procedure to reduce penalties called ravvedimento operoso, it is possible to avoid the application of the ordinary penalty (30%) by paying a reduced penalty, which ranges from 0.1% to 5%, depending on the length of the delay.

Monitoring of foreign investments. Italian tax resident individuals must declare in Italy their investments held outside Italy during the tax year for monitoring purposes. Persons with a proxy (in this context, a person with a proxy is a person who is not the owner of the assets but has the right to dispose of them) are sub­ject to the same filing obligations. This declaration is made through the filing of the foreign investment return (RW Form).

The purpose of the RW form is to report the following:

  • All foreign investments
  • All foreign bank accounts held outside Italy if they exceed EUR15,000 during the tax year

The RW form is filed jointly with the Italian income tax return.

Penalties ranging from 3% to 15% apply in the case of omitted or incorrect filings of the RW Form. The penalties may increase to rates ranging from 6% to 30% in the case of assets held in a non­cooperative country as indicated in the list published by the Italian tax authorities.

Double tax relief and tax treaties

A tax credit for taxes paid abroad on foreign-source income is available; however, it is limited to the portion of Italian tax due based on the ratio of foreign-source income to total income.

Italy has entered into double tax treaties with the following jurisdic­tions.

Albania                            India                          Russian Federation

Algeria                            Indonesia                  San Marino

Argentina                        Ireland                       Saudi Arabia

Armenia                          Israel                         Senegal

Australia                          Japan                         Singapore

Austria                            Jordan                       Slovak Republic

Azerbaijan                       Kazakhstan                Slovenia

Bangladesh                      Kenya (a)                  South Africa

Belarus                            Korea (South)           Spain

Belgium                           Kuwait                      Sri Lanka

Brazil                               Latvia                        Sweden

Bulgaria                           Lebanon                    Switzerland

Canada                            Lithuania                   Syria

China                               Luxembourg             Tanzania

Congo (Republic of) Macedonia                       Thailand

Côte d’Ivoire                   Malaysia                   Trinidad and

Croatia                             Malta                         Tobago

Cyprus                            Mauritius                  Tunisia

Czech Republic               Mexico                      Turkey

Denmark                         Moldova                   Uganda

Ecuador                           Mongolia                  Ukraine

Egypt                               Morocco                   United Arab

Estonia                            Mozambique             Emirates

Ethiopia                           Netherlands               United Kingdom

Finland                            New Zealand             United States

France                             Norway                     USSR (b)

Georgia                           Oman                        Uzbekistan

Germany                         Pakistan                    Venezuela

Ghana                              Philippines                Vietnam

Greece                             Poland                       Yugoslavia

Hong Kong SAR            Portugal                    (former) (c)

Hungary                          Qatar                         Zambia

Iceland                             Romania

a) The treaty has been ratified, but it is not yet in force.

b) Italy honors the USSR treaty with respect to the republics of the Common­wealth of Independent States.

c) This treaty applies to Bosnia and Herzegovina, Montenegro, and Serbia.

The above treaties generally follow the Organisation for Economic Co-operation and Development (OECD) model treaty.

In general, the treaties provide that employment income is taxable only in the employee’s country of residence, unless it is derived from work performed in Italy. Income derived from work performed in Italy, however, is not taxed if all of the following conditions apply:

  • The recipient is present in Italy for a period not exceeding 183 days in the relevant fiscal year (a different time frame applies under certain treaties).
  • The remuneration is not paid by, or on behalf of, an employer in Italy.
  • The remuneration is not borne by an employer’s permanent establishment or fixed base in Italy.

Self-employment income is generally taxable only in the country of residence of the recipient, with the following exceptions:

  • Professional income produced in Italy by a fixed base
  • Directors’ fees paid by an Italian company (see Section A)
  • Temporary visas

Visas for temporary stays in Italy include transit visas, Schengen Type C Visas, tourist visas, student visas and business visas. They entitle non-EU citizens to spend up to 90 days in Italy and the other Schengen countries.

Foreign nationals must apply for temporary visas at the Italian consulates or embassies in their country of residence.

International travelers, who are nationals of Visa Waiver Program countries, do not require a visa to enter Italy for short-term visits. However, their stay in the whole Schengen area cannot exceed 90 days within any 180-day period.

Visas for employment and self-employment

EU, EEA and Swiss nationals do not need permits to work in Italy. An EU, EEA or Swiss national who intends to reside and work in Italy must enroll with the Office of Resident Population (Anagrafe) if his or her stay exceeds 90 days.

Non-EU nationals must enter Italy with a National Type D Visa if they intend to carry out professional activities. In this context, a professional activity is intended as “work” and differs from travel to Italy under a “business” status. In particular, if a foreign worker comes to Italy to perform work activities, he or she needs a National Type D Visa even if the duration of the stay does not exceed 90 days. Determining whether an activity falls within the “professional/work” category or “business” category typically requires a case-by-case assessment.

The type of permit and visa required, as well as the procedures to obtain the immigration clearances, differ depending on the nature of the work to be performed (for example, as a self-employed worker or a subordinate worker).

The procedure for obtaining an employment visa for a foreign national is initiated by the prospective Italian employer (or the Italian entity for which the employee is assigned to work), which must first submit an application to the Italian Immigration Office (Sportello Unico per l’Immigrazione) for a Work Permit (Nulla Osta al Lavoro). The approval and issuance of such authorization usually takes up to 3 months (90 days). Italian Work Permits are typically issued subject to the availability of the quotas, which are released on a yearly basis by the Ministry of Internal Affairs. However, some immigration permits are exempted from this numerical limitation.

Workers who can be exempted from the entry-quota limit and for whom a Work Permit can be requested any time during the year are primarily the following:

  • Executives or managerial employees assigned to the Italian branch of a foreign legal entity (Standard Intra-Company Transfer)
  • Highly skilled workers assigned to the Italian branch of a for­eign legal entity for carrying out a specific project
  • Highly skilled workers assigned to an Italian company in accor­dance with a Service Level Agreement in place between the foreign employer and the Italian host

Other categories of workers, such as translators and interpreters, university lecturers, and health care assistants, can apply for a Work Permit out of the quota limit. Each situation needs to be assessed on a case-by-case basis.

In addition, Italy is one of the countries that has implemented the EU Blue Card directive, which enables companies to locally hire executives and high-skilled workers, avoiding the quota system. To obtain the EU Blue Card, an individual must prove at least three years of university education through a Declaration of Value (Dichiarazione di Valore), which is issued by the Italian consulate in the country where the university was attended. In addition, some restrictions are imposed on the employment con­tract with the Italian company. This contract must have a mini­mum validity of one year and grant a minimum annual gross compensation of approximately EUR25,000.

As soon as the Immigration Office issues the Work Permit, the document is automatically sent to the competent Italian consulate abroad. The employee is then allowed to request the employment visa at the Italian consulate in his or her last country of residence.

After the employment visa is obtained, the individual must sign the Residence Contract within eight days after his or her arrival in Italy; the signature of the Residence Contract allows the indi­vidual to start the work activity. Subsequently, a Permit of Stay (Resident Permit; Permesso di Soggiorno) for employment rea­sons must be requested.

Under certain conditions, a holder of a residence permit for employment reasons may engage in self-employment activities and vice versa, if the activity for which the Permit of Stay (Resident Permit) was requested remains the predominant activity.

Foreign nationals may engage in the following self-employment activities in Italy:

  • They may be directors of companies (that is, members of boards).
  • They may pursue freelance or other professional activities.

In both cases, foreign nationals must obtain a Self-employment Visa (Visto di Lavoro Autonomo).

Permits of Stay (Resident Permits)

Within eight days after arrival in Italy with the proper visa, a non­EU foreign employee must request a Permit of Stay (Resident Permit; Permesso di Soggiorno).

A simplified registration process applies to non-EU citizens entering Italy for short-term reasons (business or tourism). These individuals are not required to apply for a Permit of Stay but only have to report their presence in Italy at the local police station.

Family and personal considerations

Family members. Family members who accompany a non-EU foreign national to Italy or wish to join a foreign national in Italy must request special visas from the Italian consulate in their last country of residence. These visas (Visto per Familiare al Seguito or Visto per Ricongiungimento Familiare) allow family members to work in Italy after the relative residence permit for family purpose is obtained (see below).

After the competent consulate abroad issues the visa, within eight days after their arrival in Italy, family members accompany­ing a foreign national must report to the police in the area where they will live to request their Permits of Stay (Permesso di Soggiorno per Motivi Familiari).

A special rejoining procedure (coesione familiare) can be favor­able for family members who legally entered Italy and hold valid residence permits or visas (even for tourism).

Family Permit applications can be filed by the following categories of relatives:

  • Spouses (same-sex marriages are currently not recognized in Italy)
  • Children younger than 18
  • Parents, provided that they are older than 65 and are not able to financially support themselves in their home country

Permits of stay for study reasons are convertible into permits for employment reasons within the quota limits. However, if a for­eigner graduates from an Italian university, the conversion is not subject to the quota restriction.

Driver’s permits. Foreign nationals may drive legally in Italy using their home country driver’s licenses if they also possess international driver’s licenses. If the individual resides in Italy, he or she should carefully investigate if he or she may continue to drive legally without any action (specific rules apply depending on the country that issued the driver’s license). Italy has driver’s license reciprocity with all EU member countries and certain non­EU countries, but not, for example, with the United States.

To obtain an Italian driver’s license, foreign nationals must take a driver education course, undergo written, physical and medical examinations, and register with the Italian resident population records.