Modern information technology permits people to work from a laptop or computer wherever they find themselves. So is it is tempting to bill through a foreign company possibly in a low-tax jurisdiction, especially if clients themselves are outside Italy.
However careful planning and set-up are required if this kind of structure is going to be effective.
If you are working from a fixed base in Italy (including your home), the Italian authorities have power under “permanent establishment (PE) rules” to apply Italian income tax to the profits of the foreign company if they consider the profits derive from an activity carried on through that fixed base. The Italian government like most European countries are concerned to ensure that tax revenues from people working especially in the digital economy are not lost. The definition in Italian law of PE has recently been extended to counter perceived abuse, in particular from people carrying on “online” or web-based businesses (digital nomads).
Another armament in the weaponry of the authorities, in case of foreign owner-managed companies, is the power the Italian authorities have to tax the foreign company as if it was resident in Italy if the company is effectively managed from Italian soil.
Having said that a foreign company can present advantages, especially in terms of social security, healthcare and pension planning for the globally mobile. However if particular facts and circumstances permit and a viable structure can be implemented and maintained, then this is a route that may be open.
Should you require any assistance with your personal or business tax, please reach out to our experts.