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Italy’s youth unemployment rate falls to lowest level in five years

Italy's unemployment rate saw a slight drop in February, with a particularly significant fall in the number of jobless young people, which hit its lowest level since 2012.

Published: 3 April 2017 10:52 CEST

Italy's youth unemployment rate falls to lowest level in five years

File photo: Pexels

The overall unemployment rate was 11.5 percent in February, a slight decrease of 0.3 points from the previous month.

But among the 15-24 age group, which has been hardest hit by Italy's economic troubles, the unemployment rate fell by a more dramatic 1.7 points to reach 35.2 percent.

This is the lowest level in almost five years, according to national statistics agency Istat, which provides the monthly data.

However, the employment rate had overall remained stable for four months at 57.5 percent.

The reason for this apparent discrepancy is that an increase in 'inactive' people or those who are not actively job-seeking, for example because they are students. This increase was particularly noticeable among the youngest age group.

Prime Minister Paolo Gentiloni hailed the drop on Twitter, saying “commitment to reforms gets results. And it continues.”

#Istat Cala la disoccupazione, anche tra i giovani. L'impegno per le riforme ottiene risultati. E continua

— Paolo Gentiloni (@PaoloGentiloni) April 3, 2017

NOW READ: Meet the smart young Italians who refuse to quit the country

Smart young Italians refuse to quit the country
Photo: Itinerant Art Museum

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If you work remotely, can you just move your life and laptop to Italy? Photo by Persnickety Prints on Unsplash

All you need is a computer and an internet connection for many jobs, meaning that living in Italy while working for a company based in the US, Canada or the UK, for example, is technically straightforward.

In fact, it’s easier than ever before after the pandemic created a worldwide shift to working from home – including in Italy, where the concept was practically unheard of before.

Dubbed ‘smart working‘ in Italy, remote work is widely seen as an opportunity to boost economies outside of the main cities and reverse ‘brain drain’ in the south. It has even kickstarted much-needed efforts to improve the country’s internet speeds and accessibility.

Some of Italy’s many depopulated towns are also offering incentives to remote workers who could help revive the area.

But while it’s becoming increasingly feasible to work remotely in Italy, foreign nationals taking this option need also to consider how it affects their residency, work permits and tax status.

Here’s what you need to know before you pack your laptop and passport.

Digital Nomad or Italian resident?

Digital Nomad is a term used to describe people who work from their laptop or smartphone and move around, from country to country.

It usually involves spending a short time in each place while doing some short-term tech-based work, like blogging or publishing content. Instagram influencers are counted among such type of workers.

Some countries including Spain are even offering Digital Nomad visas to tempt people to head to under-populated areas of the country.

Remote working in Italy — Photo: Helena Lopes on Unsplash

While Italy doesn’t specifically have a Digital Nomad visa, there are tax breaks on offer for people moving to Italy to become self-employed – see below for how to obtain this type of visa.

What you need to do depends on how long you intend to be in Italy for. If you want to live in Italy rather than just pass through for a short while, working digitally as you go, you’ll need to get some paperwork in order.

It’s important to have a strategy if you’re planning to work remotely in Italy, according to Nicolò Bolla who runs finance firm Accounting Bolla. His advice is to create a rigorous plan regarding immigration and tax.

“If you fail to set up a proper immigration and business strategy, it could cost you time and money. Make your calculations before making any decisions,” he said.

Working in Italy

If you come here for a short amount of time and continue working for a company in your home country, does that count as working in Italy?

Firstly, you need to consider where your home country is as that has an influence on your first step.

If you hold a passport of any EU country, including Ireland or a Schengen zone country, then you are covered by the European Union freedom of movement rules and can move to Italy with much more ease than is the case for non-EU nationals.

READ ALSO:

In fact, EU citizens and also nationals from Norway, Iceland, Liechtenstein or Switzerland don’t need a permit to work in Italy.

However, if you belong in this category you will need an Italian residence permit for stays longer than three months.

If you’re from a country that doesn’t benefit from EU freedom of movement, such as the UK, New Zealand, Canada or the US for example, you can take advantage of the 90-day rule, which means you can travel to Italy visa-free for up to 90 days in every 180.

This may be enough if you’re a digital nomad and only want to spend some time in Italy before returning home. However, if you want to stay longer, you’ll most likely need to work out which visa you’ll need.

Work visas

If you’re planning to move to Italy outside of these parameters you’ll need a work visa. Let’s look at non-EU citizens, as work visas apply to this group.

As a non-EU citizen, there are three main documents you need to live and work in Italy:

a work permit
a work visa
a residence permit (permesso di soggiorno) within 8 days of arriving in Italy.

If you’re working remotely, you may choose to be self-employed or, if you have a really understanding boss who’ll let you live abroad, you may continue working for a company in your home country.

Let’s look at the self-employment route first.

If you’re planning on working for yourself, with potentially various clients, but you want to do so while living in Italy, you’ll need a self-employment visa.

The process can be tricky and take months, so it’s best to ensure you account for long timescales before transferring your life to Italy.

It’s also far from guaranteed, even if you’re ready to take on the bureaucracy. Tax advisor Bolla warned that this visa has one of the highest rejected application rates.

What’s more, there is a cap on how many foreign national workers are allowed to come into Italy each year, which is determined by the so-called Inflow Decree, or ‘decreto flussi’.

This only opens for a few months every year and it’s the only time non-EU nationals can apply for all kinds of work visa.

This year’s cap has still not been released, but for 2020 the government decree set the limit at 30,850. Very few of those are allocated to self-employed workers – just 500 in 2020 – so you’ll need to be tenacious and quick to get hold of one.

It’s also worth bearing in mind that, among other documents, you’ll also need to show proof of accommodation, funds exceeding €8,500 and a police check.

If you do manage to claim one of these elusive self-employment visas, you can enter Italy.

Once you’re in the country, you have eight days to apply for a ‘permesso di soggiorno’ (a residence permit), which will be issued by your local Questura (the provincial police headquarters).

The visa is valid for two years initially and can be renewed.

What about being an employee for a company in another country?

In this case, you’re still on a payroll somewhere and don’t count as self-employed in Italy.

As stated above, provided you are an EU national, there will be no requirement to obtain a visa or work permit.

If you’re not lucky enough to be in this group, it gets tricky.

EXPLAINED: How to get an Italian work visa

How to work remotely in Italy. — Photo by Hannah Wei on Unsplash

If you are British and covered by the post-Brexit Withdrawal Agreement (for people resident in Italy before December 31st 2020) – the carta di soggiorno maintains your right to work in Italy.

However, the UK/EU Trade and Cooperation Agreement does not contain any provisions to allow new remote working arrangements in the way that UK citizens may hope is possible.

EXPLAINED: What Brits need to know about visas for Italy after Brexit

Employees are entitled to stay in Italy for a maximum period of 90 days without needing to apply for a visa or a residence permit.

Beyond that, it’s currently not possible to stay working in Italy for any longer under these conditions – that is, remotely and without a work visa.

For everyone else, Italy’s official visa portal has created a questionnaire which shows the visa requirements that may apply to you, depending on your reason of stay and how long you intend to stay.

Furthermore, the EU guidelines on moving and working in Europe have provided this advice: “As a basic rule, you are subject to the legislation of the country where you actually work as an employed or a self-employed person. It doesn’t matter where you live or where your employer is based.”

Living and working in Italy

If you decide to make the move and live and work in Italy, what do you need to do?

Once you’ve figured out which work visa is right for you (for those who need one), you’ll then need to apply for residency.

A work visa is a type of long-stay visa that allows you to enter Italy only. After that, you will also have to get an Italian residence permit (permesso di soggiorno) in order to be allowed to stay for longer than 90 days.

READ ALSO:

There are a few different types of permit to stay in Italy and it must correlate with your intentions and with the conditions of your visa.

The permesso di soggiorno is usually processed in about three to six months, and the duration varies according to the type. Having the permit will give you full access to public healthcare, social assistance and education.

After five years of residence in Italy a non-EU citizen can apply for a permesso di soggiorno per soggiornanti di lungo periodo (permission to stay for a long period), which can be renewed less frequently. But you’ll need to meet certain conditions like having a minimum income and passing a language test.

Tax and social security

This is often an area that trips people up if they work for international clients but live in Italy. Where do the taxes get paid to?

“If you live in Italy, you pay taxes in Italy,” Bolla clarified.

If you’re a resident in Italy, as an employee you are subject to Italy’s income tax rates known as ‘Irpef’ (L’imposta sul reddito delle persone fisiche), which currently range from a minimum of 23 percent to a maximum of 43 percent.

The employer is also required to pay the social security contributions to Italian Social Security Authority (INPS) – even if the employer is based outside Italy.

READ ALSO:

This is currently equal to a minimum of 33 percent of earnings, of which approximately 9 percent falls to the employee.

Different tax rates apply for freelancers with tax breaks available to new residents – and of course, you’re responsible for paying social security contributions too.

You’ll need to file an annual tax return in Italy as stipulated by the worldwide taxation principle, which dictates that you must report your worldwide income and therefore file your taxes in the country where you reside.

You shouldn’t be paying your taxes twice, however, according to Italy’s Inland Revenue (Agenzie delle Entrate).

“Italy has bilateral agreements with many foreign countries to avoid double taxation on income and capital. These agreements establish the range of the power to set taxes of the two States,” the tax authorities stated.

The subject of tax for remote workers is complicated, so please seek professional advice based on your personal circumstances before proceeding.

Have you moved to Italy to work remotely? Please get in touch or leave a comment below to tell us about your experience.

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