Italian MPs twice as pricey as German MPs

Italian MPs are raking in the cash compared to their European counterparts. Taking home €10,400 a month, they also earn thousands more than the average Italian. But are they worth it? The Local asks Luca Verzichelli, a politics professor at the University of Siena.

Italian MPs twice as pricey as German MPs
Italy has 630 MPs and 315 elected senators. Photo: Filippo Monteforte/AFP

Despite its dire economy, Italy’s politicians are not exactly feeling the pinch.

One senator, formerly the governor of Milan, went about his official business in a €270,000 BMW.

Regional politicians have also come under scrutiny. Earlier this month the regional council of Emila-Romagna was put under investigation for its suspected expenses, claiming for everything from cheese to toilet breaks.

Politicians who are elected to parliament, with a seat in Rome, are generously rewarded.

According to Verzichelli, an MP's monthly income is €10,400. Around half of that is base salary, with the rest being made up of allowances. Meanwhile, €3,500 of the lump sum is set aside to pay for accommodation while MPs work in the capital.

Politicians are usually well-paid, but the income of Italian MPs is exceptionally high according to Verzichelli.

“In studies done in recent years, it has emerged that the financial cost per capita of each Italian MP is around double that of a German MP, and around three times that of a French MP,” he says.

“This does not mean that Italian MPs earn twice as much as the Germans, but the ‘cost’ is double, considering the taxes on the various incomes, the deductions, etc.”

At the end of 2012 the Italian politicians agreed a cut of 10 percent, but Verzichelli says their earnings remains an “enormous waste of public resources”.

“Italy is without a doubt a country in which politicians, in respect to the rest of the population, earn a lot. Too much,” he says.

For Verzichelli, the token 10 percent pay cut will have little impact on the true cost of Italian politics.

“It is clearly a waste that can only be tackled with structural reforms of the system, not with slight changes to the marginal aspects of MPs’ allowances,” he says.

This means getting rid of some politicians entirely: “I would prefer to reduce the total number of MPs in Italy…There are 630 MPs and 315 elected senators, in addition to senators for life.” Comparatively, Germany has 630 politicians in its entire parliamentary system.

With a fragile coalition government holding the reins of power, cutting back on parliamentary seats is unlikely to happen any time soon.

While political progress remains at a near standstill, Verzichelli says transparency should at least be improved.

“Oblige MPs to produce receipts of their spending, which the administration of the chamber of deputies can reimburse. This is a practice asked of public officials,” he says.

This may not sit well with some Italian politicians, as corruption scandals continue to plague politics. Just a week ago Silvio Berlusconi, three-time prime minister, was indicted on charges of bribing a senator

Unsurprisingly, 89 percent of Italians believe their politicians are corrupt.

While Verzichelli says MPs salaries are undoubtedly too high, he says the principle of decent pay for public representatives is legitimate.

But the figure of €10,400 stands in stark contrast to the income of many Italians. According to national statistics agency, Istat, 12.7 percent of Italians were living in the relative poverty, with a monthly income of €991 shared between two people.

“We must increase the salaries of normal people,” says Verzichelli. “Those salaries are very low when compared with other European countries, and too far from the salaries of elected politicians in parliament or those in institutions.”

SEE ALSO: Italian MPs among highest paid in Europe

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EXPLAINED: What is Italy’s new digital invoicing rule for freelancers?

Italy is bringing in new rules from July that mean changes for freelancers on the 'flat tax' rate. Here’s what you need to know about the new ‘fatturazione elettronica’, or digital invoicing system.

EXPLAINED: What is Italy’s new digital invoicing rule for freelancers?

Italy has been slowly moving more of its bureaucratic systems online in recent years, and in many cases this has made it quicker and easier for residents to access services and get their considerable amounts of Italian life admin in order.

It was hoped that the new electronic invoicing rule would do the same for freelancers on Italy’s flat-tax regime, by doing away with the existing need to print out invoices and affix tax stamps by hand.

READ ALSO: Beat the queues: 19 bits of Italian bureaucracy you can do online

But a close look at the details of the new rules shows that it probably won’t make life easier for those on the flat tax rate, who have so far been spared the bulk of that infamous Italian red tape – but now need to get to grips with a new online system.

Known as the ‘regime forfettario‘, Italy’s flat-rate tax scheme for individuals and small businesses was introduced in 2015 to encourage more commercial activity by slashing tax rates and simplifying bureaucracy.

New freelancers who choose this tax system generally pay somewhere between just five and 15 percent tax on earnings, regardless of overheads.

READ ALSO: The pros and cons of Italy’s five percent flat tax for freelancers

Little has changed since its inception seven years ago, but freelancers using the scheme now need to be aware of new rules coming into force from July 1st, 2022.

How you invoice – how you send, receive and store receipts, therefore – is due to move from analogue to digital, bringing new requirements and know-how on digital invoicing software.

Here’s what’s changing for freelancers with the so-called ‘fattura elettronica‘.

Who is required to send electronic invoices?

While this was already a requirement for the self-employed on other tax regimes, those on the flat tax rate will now be included from July 1st.

They were previously exempt, but that changed under the PNRR (National recovery and resilience plan or piano nazionale di ripresa e resilienza) – the Italian government’s plan for using EU funding for post-pandemic economic recovery.

Digital invoicing is intended to fight Italy’s major problem with tax evasion, as well as to further automate accounting processes.

For now, not all freelancers under this tax scheme need to move to digital accounting – only those who received an income in excess of €25,000 in the previous year are required to comply with the new rule.

It will then extend to all freelancers using the flat-rate scheme from January 1st, 2024.

From that date, everyone subscribed to the ‘regime forfettario’ will have to switch to electronic invoicing and there are hefty penalties in place for those who don’t.

How will electronic invoices work?

Italy’s tax authority has defined a couple of notable differences between the digital or electronic invoice (fattura elettronica) and a paper invoice (fattura di carta) in its updated guidelines.

Firstly, the digital invoice has to be created using a digital device (a computer, tablet or smartphone), and secondly it has to be sent to the client via an ‘Interchange System’, the so-called Sistema di Interscambio (SdI).

READ ALSO: ‘Smart working’? Here’s what you need to know about going self-employed in Italy

Italy’s flat-rate tax scheme is going digital. Photo by Christian Dubovan on Unsplash

This electronic postal system checks whether the invoice contains the required data for tax purposes, as well as checking the verified e-address (or the so-called PEC address) of the recipient.

In doing so, the electronic invoice automatically checks that the VAT number (partita IVA), or the tax code (codice fiscale) depending on who you send the invoice to, really exist.

Once the checks are completed, the system sends the invoice to the client, which will trigger an alert to the freelancer with a delivery receipt, showing the date and time the document was delivered.

How can you send an e-invoice?

There are a few accounting software options on the market if you’re now faced with having to send electronic invoices.

Some charge a fee of around €1-€4 per month or come at a cost per transaction.

Platforms such as ‘Aruba‘ or ‘Fatture in Cloud‘, are competitive and may offer you a free trial before you deciding to buy.

The Italian revenue agency (Agenzie delle Entrate) has also created free-of-charge services to help send and receive e-invoices. These include websites as well as apps for completing the required steps, which are detailed in their guide here.

You can access their Invoices and Receipts (‘Fatture e Corrispettivi‘) portal to benefit from these free services.

You’ll either need a Spid ID (‘Sistema Pubblico dell’Identità Digitale‘), a Carta Nazionale dei Servizi (CNS) or accounting credentials known as Fisconline/Entrate, which are issued by the Agenzie delle Entrate.

You can also delegate this task to an intermediary, such as an accountant (commercialista) who would do this on your behalf, the revenue agency stipulates 

What about the Italian tax stamp?

Until now, freelancers issuing invoices under the ‘regime forfettario‘ have had to attach a €2 stamp, called a ‘marca da bollo’, to every invoice over the value of €77,47.

So what happens when e-receipts go digital and you can’t physically stick a stamp on a document? Well, that goes digital too and the Inland Revenue has issued a 16-page guide on how you need to go about it.

It seems the previously attractive ‘light’ accounting of this regime is about to get bogged down by time-consuming bureaucracy too.

Authorities will systematically check that the fee has been paid each quarter for all the invoices that require it.

As a general rule, you can see if there are any discrepancies by the 15th day of the first month following each quarter on their Invoices and Receipts portal.

You or your intermediary have until the end of that month to fix any accounting errors, but make sure to check with an accountant if you have any difficulties or need specific advice for your personal circumstances.

Once you receive your final stamp duty bill for each quarter, you can pay either via IBAN, which you set up on the portal, or by filling out an electronic F24 form – details of how to do that are included in the guide.

For further information and FAQ’s, see Italy’s Inland Revenue Agency website on the electronic invoice here.

Please note The Local cannot advise on personal cases and seeking expert financial advice is recommended.