The Digital Nomad Visa
On 4 April 2024 a Ministerial Decree issued by the Italian Interior Minister was published in the Italian Official Gazette. Effective 5 April 2024, the Decree implements the Digital Nomad Visa and Stay Permit envisaged by a 2022 Law amending the Italian Immigration Code and introducing the Digital Nomad Visa for the first time into Italian law.
Outline
Italy has introduced new rules to allow certain non-EU citizens who are “digital nomads” entry into Italy to live and work remotely.
An amendment to the Law converting Decree-Law n. 4/2022 (Sostegni ter) legally defines who is to be considered a digital nomad as a worker from a country outside the European Union who perform “highly professional and digital” tasks.
An entry visa obtainable via an Italian consulate in the country of origin will therefore be sufficient to enter the country. This will allow individuals to come to and work in Italy on condition that on arrival they request a stay permit (“permesso di soggiorno“) and that they meet the conditions set out below. The stay permit can be renewed and extended after the initial one year period provided the conditions continue to be met.
Digital nomads will in any case be obliged to comply with all tax and social security provisions. Given that Italy has a couple of favourable tax regimes (see below) for new arrivers, this should not be an overly onerous condition (as regards the tax anyway) as long as new arrivers take advice prior to moving on the timing of the move, check the conditions for the relief, and properly forecast in advance the timing of tax/social security payments.
These new rules will allow non EU citizens to work remotely without needing to apply for one of the (few) working stay permits under the usual annual quotas set by the annual “Decreto Flussi” (pursuant to Legislative Decree No. 286 of 1998 – Consolidated Immigration Code) or otehr form of visa(stay permit which generally require sponsorship by an Italian employer or investment.
Who is a digital nomad?
The definition of a digital nomad is as follows:
“Citizens of a third country, who carry out highly qualified work activities through the use of technological tools that allow them to work remotely on a self-employed basis or for a business, including those not resident in the territory of the Italian State.”
It is therefore a rather wide definition which covers both the self-employed and individuals who a work under a contract of employment, either for an employer/client based in Italy or based outside the country. The new category refers to workers who carry out an activity requiring professional/technical skills remotely. For example, web programmers, digital marketing specialists, writers and bloggers or even translators and graphic designers. It does not therefore include manual workers or people who jobs require them to be mainly physically present at their employer’s premises when they are carrying out their activities.
Entry into force
The Ministerial Decree states that the digital nomad rules enter into force from 5 April 2024 and covers implementation matters such as:
- the procedures and detailed requirements for issie of the stay permit (including the categories of highly qualified workers who can benefit from it);
- the minimum income thresholds for applicants/family units;
- the procedures for checking the work activities carried on by applicants and compliance fall within the definition of “digital nomad”;
- procedures for the new stay permit renewal process, evidence of compliance with tax, healthcare and social security requirements;
- other pre-requisites
Procedure
The Request for a Visa needs to be presented at the Italian consulate for the jurisdiction in which you currently reside along with supporting documentation. The Consular Authorities will be responsible for the issue of an Italian fiscal code number.
Once the Visa is issued you can enter Italy and within 8 days of arrival you need to present to the Police Immigration Service for the jurisdiction in which you reside, a request for the issue of a Stay Permit (Permesso di Soggiorno). The application needs to be made online using a kit available from Italian Post Offices. You will be given an appointment to attend your local Police Immigration Service Offices (Questura) to check your ID, the relevant supporting documents, and for your fingerprints to be taken. You will be called back later to the Questura to collect your stay permit card when it is ready.
A request for renewal of the stay permit will need to presented within 60 days before the first year of expiry, if you want to stay and continue to meet the conditions for issue.
Tax and Social Security
It is clearly the intention of the legislator that individuals requesting the DV Visa/Stay Permit need to be entirely compliant with their Italian tax and social security obligations.
Italy has two very attractive tax regimes which can apply to digital nomads:-
- the Regime Forfettario – a 5% flat tax for the first five years on a percentage (typically 78%) of gross billings, for the self employed earning (gross) up to Euro 85,000 per year;
- the Impatriates Regime – a 50%/60% exemption in calculating earned income subject to tax. This relief is available to both the employed and the self-employed. For the self employed the salary/profit reduction also applies for purposes of social security
For many individuals benefitting from the new visa regime, the effective rate of Italian tax on earnings can be extremely low, at least in the early years. Statutory social security contributions to the Italian Social Security Institute (INPS) on the other hand may represent a higher cost. Contributions are generally due where the work is being performed from Italian soil. The contributions made may entitle the worker to a pension in future providing the relevant requirements are met. The contributions include also a healthcare contribution and it is hoped that this will enable workers to avoid the need to pay for private healthcare insurance at least on renewal of their stay permits (although this remains to be seen). Italian social security contributions are compulsory for all workers unless exemption applies (and these are limited). Since compulsory social security contributions are tax deductible, the payment of contributions reduces the tax bill even further. For remote workers working under a contract of employment with a non Italian employer, the employer will need to register in Italy with the social security authorities and pay the relevant social security contributions, contracting with an Italian payroll bureau or staff agency to handle the payroll.
Self employed workers will need to register with the Italian Tax Agency, applying for a VAT number and with INPS (or alternative social security authority) within 30 days of starting work in Italy. They will also need to register with an electronic invoicing platform (either (without cost) via the Italian Tax Agency, a private provider or their accountant’s system (for a fee) prior to issuing any invoices. Since the Tax Agency platform can only accessed with an Italian digital ID (SPID) and a SPID cannot be issued before the individual is registered as registered, at the outset pr9ivate arrangements will need to be made pending acceptance of the application to be registered as resident.
Relatively few social security exemptions apply to workers carrying on their activity from Italian soil. U.S. and dual U.S./Italian citizens working in Italy may (opt to) remain covered by U.S. social security arrangements by virtue of the treaty between Italy and the US providing they obtain appropriate certification of coverage from the U.S. Social Security Administration. There are no similar facilities under any other of Italy’s other social security treaties. But on the whole digital nomads while resident in Italy, will find themselves with a relatively low tax bill and a bigger amount to pay in terms of social security, the bulk of which represents a personal pension contribution. And eligibility to actually receive a pension will depend on personal circumstances – minimum number of qualifying years of contribution, minimum income and other factors.
Individuals, especially those moving during the course of a calendar year, will need to understand whether they are tax resident in Italy or not for the year of arrival (and of departure) by reference to the Italian statutory tax residence test. If so they will likely be liable on income received during the whole of the year and liable to wealth tax on foreign assets held during the year.
Regardless of their residence status digital nomads will in general be liable to income tax and social security contributions in respect of any income derived from a working activity carried on from Italian soil.
Conditions for accessing the DV Visa
Entry into and residence in Italy of non EU citizens who meet the definition of digital nomad and who:
- possess the minimum education qualifications as set out in Article 27-quater, paragraph 1, of Legislative Decree No. 286 of 25 July 1998 (see below) and who present evidence of the same;
- have a clean criminal criminal record and present the necessary certification issued by the authorities in their country of residence (e.g ACRO for the UK );
- have a minimum annual income from lawful sources that is not less than three times the minimum level laid down for exemption from participation in health expenditure -i.e. approximately Euro 28,000 annually for singles – higher amounts apply to family units
- have health insurance for medical treatment and hospitalisation valid for Italian territory and for the period of stay;
- have appropriate documentation concerning accommodation arrangements in Italy;
- can demonstrate previous experience of at least six months in the context of the work activity to be carried out from Italy;
- present the contract of employment or collaboration or a related binding offer, if they are a remote worker, who, for the performance of a work activity is required to possess of one of the requirements set out in Article 27-quater, paragraph 1, of Legislative Decree No. 286 of 25 July 1998 (see below);
- works or is to work for an Italian employer who presents a declaration signed by the employer, accompanied by a copy of a valid identity document attesting to the absence of any criminal convictions, in the past five years, for Immigration offences referred to in Article 22, paragraph 5-bis, of the Immigration Code.
Evidence of the meeting the requirements will need to be presented, when applying for the Visa at the competent diplomatic-consular office. What various consular offices will require in this context remains to be seen but applicants should focus on attending the consular appointment with
- an original copy of a degree certificate;
- a copy of a Dichiarazione di Valore (certification issued by an Italian Consular authority attesting to the validity of the certificate of you degree of your educational qualifications i.e. that the institution and course(s) followed are bona fide – or in other words that your degree was not issued by a “degree mill”;
- criminal record certificate;
- proof of income (recent payslips, annual certification of earnings, tax return, recent bank statements);
- receipt for health insurance and copy of the contract;
- proof of accommodation arrangements in Italy – signed rental contract or copy of home purchase document;
- evidence of prior six months working as remote worker;
- offer or contract of employment in Italy, contract for services or other evidence of future source of income;
- self certification signed by or on behalf of the prospective employer in Italy, if you will be working for an Italian employer, certifying the absence of criminal convictions in the past five years.
Practice varies from consulate to consulate in terms of exactly what is required, and also in terms of translation of documents not in the Italian language and requirement for he affixing of an Apostille to applicable documents.
Applicants will be well advised to seek the services of an attorney or other counsel familiar with the procedures of the Italian Consular Service to assist collating the appropriate documents minimising the need for repeat appointments and the risk of the documents ceasing to be valid due to the passing of time. It is hoped that Italian consulates will publish a detailed listing of requirements for the issue of the DN Visa is due course.
Conclusion
The new digital nomad regime is a welcome addition to the existing measures (tax breaks and investment visas) designed to attract workers able to support themselves and their families to Italy, encouraging them to make a contribution to the social welfare system and the Italian economy generally. The new regime will make Italy an even more attractive location for mobile workers looking to sample La Dolce Vita in person, whilst continuing to work from their laptops.
Now that the rules have been implemented it is up to Italy’s consulates to gear up to accept and examine requests for entry visas.
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Legislation
Art. 6-quinquies of Law No. 4 of 28 March 2022 published in the Official Gazette on 29 March 2022 – conversion into law, with modifications, of Decree Law 27 January 2022, no. 4. The Law introduces a new sub-paragraph q-bis to para 1 and a new paragraph 1-sexies to article 27 of Legislative Decree no 286 of 25 July 1998, (the Italian Immigration Code).
Decree of 29 February 2024 – Modalities and requirements for the entry and residence of citizens of States not belonging to the European Union who carry out highly qualified work through the use of technological instruments that allow remote work. (OG General Series n.79 of 04-04-2024)
Legislative Decree No. 286 of 25 July 1998
Consolidated text of provisions governing immigration and rules on the status of foreigners.
1. Entry and residence for periods of more than three months is permitted, outside the quotas referred to in Article 3, paragraph 4, to foreigners, hereinafter referred to as highly qualified foreign workers, who intend to perform paid work for or under the direction or coordination of another natural or legal person and who alternatively hold:
(a) a tertiary level higher education qualification issued by the competent authority in the country where it was obtained attesting to the completion of a higher education course of at least three years’ duration or a post-secondary level vocational qualification of at least three years’ duration or corresponding at least to level 6 of the National Qualifications Framework referred to in the Decree of the Ministry of Labour and Social Policies of 8 January 2018, on “Establishment of the National Framework of Qualifications issued under the National System of Certification of Competences referred to in Legislative Decree 16 January 2013, no. 13′, published in Official Gazette No. 20 of 25 January 2018;
(b) the requirements laid down in Legislative Decree No 206 of 6 November 2007, limited to the exercise of regulated professions;
(c) a higher professional qualification attested by at least five years of professional experience at a level comparable to tertiary education qualifications relevant to the profession or field specified in the work contract or binding offer
(d) a higher professional qualification attested by at least three years of relevant professional experience acquired during the seven years prior to the submission of the application for an EU Blue Card, in the case of managers and specialists in the field of information and communication technology as referred to in ISCO-08 classification No 133 and No 25.
I am right that if your income tax is reduced, the social security tax goes up, as the latter is typically calculated on the basis of your income, the amount of income after taxation?
No. It is the other way around. Since statutory social security contribtions are, as a general rule, deductible in computing your taxable income, reducing social security contributions means, on the whole, more income tax.
I cannot think of any circumstances where income tax, per se, impacts the level of social security contributions (otherwise we would be getting into circular computations all the time).
Taxable income from employment (or self employment) = gross income (or profits) less statutory social security contributions paid in the relevant period.