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Freelance or employee: Which is the best way to work in Italy?

Freelance or employee: Which is the best way to work in Italy?
The city of Milan is the top destination for foreigners looking for work in Italy. Photo by Ouael Ben Salah on Unsplash
Wondering how you can secure work in Italy? We weigh up the pros and cons of going self-employed or being on the payroll.

Living in Italy is the dream for many, but making that fantasy come true long-term usually involves finding a way to support yourself financially. 

And, amid the Covid-19 pandemic, it’s true that you may have to be extra tenacious if you want to work in Italy. Almost one million people have lost their jobs over the past year, since the country was first hit by the outbreak.

No group came out of the findings unscathed, as the employed and self-employed alike of all ages were impacted by the economic backlash of the coronavirus. The country counts among one of Europe’s hardest hit, reporting its biggest shrinkage in GDP since the end of World War II.

But the possibility of finding work remains.

It’s expected that Italy’s fortunes will see an upswing, even if minimal at present, as the European Commission forecasts that Italy’s GDP will grow next year compared to 2021.

“Contrary to popular belief, this is a good time to move to Italy for work,” said tax and finance expert Nicolò Bolla of Accounting Bolla

READ ALSO: Doing business in Italy: The essential etiquette you need to know

“There are tax deductions for newcomers to the country, meaning that if you’re smart enough, you could find a position that allows you to enjoy the Italian lifestyle and bring in more income.”

In tumultuous times, it may be tempting to go down the employed route for security. But it’s not that black and white – and choosing one path doesn’t preclude you from changing your mind later.

“You can be flexible. If you come to Italy as a freelancer, you can then become an employee and vice versa,” Bolla said.

The first questions you should ask yourself

Your country of origin is the jumping-off point. EU nationals can stay and work in Italy with a much more straightforward set of rules, whereas non-EU citizens have plenty more bureaucratic hoops to jump through.

Since Britain left the EU this year, Brits are now counted as third country nationals, along with Americans and Candians, for example. This means the benefits of free movement to live and work across Europe are now lost.

Once you’ve taken into account where you are coming from and the paperwork that implies, where do you start?

Choosing self-employment or employment can depend on your qualifications, experience and field of work.

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

Photo: Andreas Solaro/AFP

“If you have a college degree or a Masters degree, it’s usually better to come to Italy as an employee. You’re more likely to get hired, which can give you an ‘in’, an entry to living here,” stated Bolla.

It’s also more probable you’ll get a job this way from a statistical point of view. Italy has an annual quota for how many people can enter the country to work, which is set by the so-called Decreto Flussi (Flow Decree).

The amount is determined each year and caps the number of workers coming from outside the EEA. For 2020, the government decree set the limit at 30,850, with 18,000 allocated to seasonal work and the rest assigned to non-seasonal or self-employment (including those converting an existing residency permit into a work permit).

READ ALSO: What’s the difference between Italian residency and citizenship?

Out of that overall figure, there’s an allowance for just 500 self-employed workers. Competition is high, therefore, and gaining a self-employment visa – which allows you to come to Italy as a freelancer – has one of the highest rejection rates.

“You have a lower chance of being turned down as an employee. Given that getting a self-employment visa is hotly vyed for and you have to prove your work history, as well as have a cash back-up, this route is harder than employment,” Bolla advised.

The annual cap on working in Italy might not apply to you

However, it’s not the same story for all careers. There are some categories of professionals who fall outside of this bracket and are not subject to a fixed allowance.

“There’s a limit on mid-level workers and seasonal workers, but there is no quota for highly-skilled professionals with a degree,” added Bolla.

Often referred to simply as ‘Article 27’, this section of European law provides an exemption for non-EU workers who fall outside of national quotas within the EU.

ICT workers, highly skilled executives or managerial employees working in the Italian branch of a foreign legal firm, artists, journalists, university lecturers and professors, translators, interpreters and nurses are some of the occupations excluded from the cap.

Instead of being subject to the annual competition, these highly qualified individuals can apply for the EU’s Blue Card.

To be eligible, you must have secured a work contract of at least one year, have a minimum gross salary of €24,789.93 per year and have documentation of your qualifications.

The processing time for getting one of these cards is up to 90 days and costs €100. 

Details of which category you might fall into are detailed on the EU’s immigration portal.

Working for a company doesn’t get you off the administrative hook

If you don’t qualify for a Blue Card and think you can clinch one of the annual employment spots granted by the Italian government, the onus is still on you to sort out your paperwork and you cannot rely solely on your employer.

“Companies might hold your hand through the bureaucracy and may even offer you a relocation package, but it is still the responsibility of the employee to get their papers in order. That means organising a work visa and proving you have a place of accommodation,” warned Bolla.

A work visa is a kind of Italian Long Stay visa and to get that, you need a work permit. This is called a Nulla Osta, which your Italian employer has to apply for at their local Immigration Office (Sportello Unico d’Immigrazione – SUI).

Once you get that from your employer, you can apply for the work visa in your home country at your consulate. From there, you have the ability to enter Italy, but still need to apply for an Italian residence permit within 8 days of arriving in Italy. The permesso di soggiorno is the documentation that allows you to legally live and work in the country.

Further to this, there’s more administration to be done in Italy, which depends on the country you’re coming from and your specific circumstances.

How can you do this if you’re not in the country? Bolla advises getting a proxy, such as an accountant or lawyer, who can navigate the system for you: “You need to provide the power of attorney to someone in Italy, who can deal with the paperwork for you and gather all the relevant documents, thereby representing you and acting on your behalf.”

Some of this documentation could include:

  • Copy of your signed work contract.
  • The original and a copy of your Nulla Osta.
  • Diplomas/certificates
  • Completed Long-Stay visa application
  • Passport with at least two blank pages, valid for at least three months after the duration of your visa.
  • Passport pictures
  • Proof of accommodation in Italy
  • Proof of sufficient funds

The Italian Ministry of Foreign Affairs has an updated visa portal to check what you might need, depending on your country of origin – the Italian authorities could ask you for any documentation they deem necessary.

Of course, it is allowed and possible for you to handle the paperwork yourself if you spend some time in Italy as a tourist before you begin work – and if your Italian language skills are up to scratch.

“The problem with moving through Italian bureaucracy is the language. Immigration policies are tough the world over, but the particular hurdle in Italy is needing to go through everything in Italian,” Bolla said.

In other countries, there may be the option to apply in English, but that’s not the case in Italy.

He points out that this is “the bottom line”, adding that, “If you don’t speak Italian, you can’t figure it out. If there are translations on an immigration office’s website, it’s usually poor and doesn’t make sense.”

‘Going freelance isn’t as hard as people make out’

If taking the employed route seems overwhelming, surely the small national quota and paperwork involved must be even tougher if you want to be self-employed in Italy?

Since the pandemic catalysed a change in how Italians do business, moving jobs to a digital environment, now could be the ideal time to go freelance in Italy.

It might require persistence and patience, but it’s the preferred option for accountant Bolla: “I would rather freelance, as it’s easier to make more money,” he claimed.

“People make it seem harder than it is by saying becoming a freelancer in Italy is impossible. It isn’t,” he added.

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Of course, how much money you make depends on your personal ambition and connections too.

However, a benefit of being self-employed is that there is no limit to your earning power. As an employee, on the other hand, you know what’s landing in your account every month – unless your wage fluctuates with commission.

There’s also a good degree of flexibility. If you’re self-employed, you can diversify your revenue streams. For example, you could work as a teacher by day and run an e-commerce site by night.

Bolla points out that all you need is a partita IVA (VAT number) and if you want to do different types of jobs, you have to log them under different income codes known as a ‘codice ATECO‘, which has to be communicated to the Revenue Agency (Agenzia delle Entrate).

You would also have to check your business activity is compliant with the law and may need to ask permission to trade from your local comune (Town Hall).

Being self-employed is also an opportunity to have clients in the U.S. or U.K. and receive a higher pay compared to Italy, according to Bolla.

“If you’re smart enough, you can get a higher, foreign wage, but live the Italian lifestyle,” he said.

There’s a double taxation agreement in place to ensure you don’t pay tax twice if you choose to work with international clients.

Photo: Luca Bravo/Unsplash

How taxation of employees and the self-employed compares

It’s undeniable that it’s more straightforward to be an employee, as your national security contributions, or INPS (Istituto nazionale della previdenza sociale’), and personal income tax known as ‘IRPEF’ are taken at source.

On the other hand, as a freelancer you have to put money aside for paying these yourself.

There’s also a little help from an employer with paying INPS – they stump up two-thirds of your social security contributions, with the remaining third coming from you. The self-employed are responsible for paying INPS solely.

How much income tax you pay as an employee varies depending on your gross earnings, varying between 23% – 43%, according to the Agenzie delle Entrate.

As a new self-employed professional, on the other hand, you could set up under the so-called Forfettario regime, which means you pay 5% flat tax for five years. Italian authorities introduced this tax scheme in a bid to encourage new commercial activity from sole traders and small businesses.

It’s also worth remembering that as an employee, there are various deductions, such as health insurance if you work in a chemical plant, for instance. This changes according to the profession and there’s no one-size-fits-all answer.

Equally, there are professional liability insurances you may need to take out yourself if you go freelance.

Being an employee also grants you a bonus if and when you leave a position. TFR, Il Trattamento di Fine Rapporto (the Staff Severance Fund), pays out a lump sum when you finish a contract with an employer. It amounts to 6.91% of an annual salary and is calculated on the years and months of service, potentially making for a tidy sum if you change jobs.

Consider your personality as well as your paycheck

Beyond money, there’s also the matter of Italian business culture to take into account. 

“Culturally, Italy has always been a country that prefers certainty over risk, so people would rather be an employee than self-employed,” claimed Bolla.

“There isn’t a corporate mindset and it’s hard to climb the ladder. Large businesses are normally family-run and so family members are likely to get hired and promoted. This can be a problem for people coming from outside Italy,” he added.

“So the question is: ‘Can you work with Italians?’ If you can deal with a different work ethos and get culturally adjusted, it’s a great place for people to live,” said Bolla.

There are plenty of steps to take into account, whichever route to working in Italy you may plump for. But it’s not impossible. With time, organisation and a strong stomach for bureaucracy, you too could be living out your career goals in il bel paese.

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