- Ilariailaria began providing accounting services in 1999 following an excellent academic career that included two semesters at the European Business School in London and one summer session at the Berkeley University of California. She is a certified accountant both in Italy and in the UK (ACCA). The principle services that ilaria provides, includes tax accounting, bookkeeping, real estate taxation, business legal consultancy, auditing and company evaluations/due diligence.
Against the backdrop of the looming Brexit, a common concern among those currently considering a move to Italy is whether they should open a Limited Company there, on the basis that this may help with residency claims at a later date. Unfortunately there is no definitive answer to this question. Ultimately both the public and the business world are dependent upon the outcome of negotiations at a governmental level.
That said, there appears to be a widespread belief taking root, that those who are resident and ‘working’ in the UK or Europe, regardless of their nationality, shall be permitted to stay – at least before an ‘as yet’ unspecified date.
It would therefore seem prudent for British citizens planning a move to Italy, and who plan to work here, to consider doing so as soon as possible. It is also important that they register as living locally by way of getting listed on the local padron (ie register with the local Council) and obtaining a Foreigner’s number, then becoming either self-employed or setting-up a limited company – according to preference and circumstances. Moving to Italy, but failing to register as described could leave an individual in the worst possible situation of having accumulated considerable expense in moving to another country, but not being able to stay beyond a certain date in the future.
Apart from the above, the main decision you will need to make is as it always was – should you set-up a limited company or as a sole trader?
Both have benefits and drawbacks. Here we will look at the differences between the two so that you can decide on which is the most appropriate for your business in Italy.
Office Locations Across Italy
As well as two private offices in the north of the country (blue markers on side-map), ilaria also provides accounting and associated services to English-speaking clients via the Advocate Abroad network of offices in Italy (red markers on main map below). Each of the lawyers on the map of Italy below are registered and regulated by the Bar Associations of Italy and so we are able to offer a truly nationwide service to English-speakers wherever they wish to set-up their business in Italy.
Assuming you have already decided on the type of business you want to run and where in Italy you wish to locate it, then the main decision you will need to make is whether you should set it up as a limited company or as a sole trader.
This can be extremely important as you can save a considerable amount of money depending on which option you choose. Both have benefits and drawbacks. Here we will look at the differences between the two so that you can decide on which is the most appropriate – and cost effective – for your business in Italy.
Sole Trader v Limited Company
Sole traders in Italy are known as ‘autonomis’ and those who are just starting-out and where the income is likely to be low tend to choose this route.
Mainly because it is less complex and more economical to both set-up and run. Accountants will normally charge 50% to manage compliance and tax returns in comparison to a limited company, given the lower administrative requirements.
As in other countries, whether your business is classed as ‘autonomi’ or as a limited company there are a number of fiscal obligations that the owner of a business in Italy will have.
Most larger businesses will have an obligation to make VAT (in Italy this is called IVA) and Income Tax returns. Of course if you decide to create a limited company then you will also have to make a company tax return (impuesto de sociedades) as well as file the annual accounts with the Company’s Register.
A company will need to retain up to 15% of any invoice presented to it by a professional/autonomo and file a return.
These extra obligations mean that the cost of maintaining the company are higher than where a sole trader is concerned.
For sole traders, the income tax rate varies depending on income (from 23% to 40%). For small entities with revenues up to about 30.000 euros (the limit may vary according to activity) you can opt for a special regime called forfettario which allows you to pay just 15% tax and do not apply VAT (IVA in Italy).
As for limited companies, two different taxes apply, with a different tax base. The first one called Ires is now 24%, the second one called Irap varies between 3,9 to 5%. It is quite a complex system, with a lot of special cases and exceptions.
Social Security Obligations
As an autonomo or sole trader you will need to register with the local social security office and pay contributions each month. These contributions tend to be significantly higher than in other northern European countries with a current minimum of approximately €2800-3000 per year payment for commercial activities (for example shops, agents, manufacturing etc), or a fixed rate on income for consultants/professionals that varies each year and is currently approx. 26%, .
There are some reductions for those under 30 years of age or a temporary discount for example where the person has been unemployed and has decided to become self-employed.
In the case of a limited company there is an obligation to make social security contributions on behalf of an employee of 24% of their income. Where there are no employees of the company i.e. a single director company then that director must register as an autonomo and pay those social security contributions.
Just as elsewhere, one of the major differences between the two forms of business is that creating a limited company ensures limited liability to the owner of the company. If as a result of the operation of the company a financial liability should arise, then often this is limited to the amount of capital in the company.
As a matter of law in Italy the minimum level of capital that any company can have at any time is set at €3000 though this is sometiimes disrgarded by less scrupulous business owners.
One of the major drawbacks of registering as an autonomo is that you will be personally liable for any debts or losses incurred by your business and any personal assets could be at risk if your business is in financial trouble – either as a result of damages owed to a client or failure to pay due taxes and social security contributions.
For details of our services, please refer to the right-hand column of this page.
Of course, it is always prudent to consider real, honest testimonials from English-speaking individuals and businesses operating abroad before choosing a professional that will be pivotal in your future success.
Below are real testimonials from previous clients who have sourced tax and accounting services in Europe via Advocate Abroad® (placed by the the clients themselves directly onto the Wufoo client survey platform):
- Cheryl, SevillefemaleMonday, May 28, 2018Miguel was helpful and kind. We will use his service in the future.
- Caroline R, BarcelonafemaleTuesday, April 24, 2018Miguel has been great!
His English is excellent, he explains everything clearly, emails when he says he will, and is very efficient in the service he provides.
I'd definitely recommend him to ...friends.
- SH, EnglandFriday, April 20, 2018Very satisfied with the service provided. Miguel was approachable and prompt in replying.
- A. Kavanagh, GlasgowThursday, March 15, 2018Miguel provided a great service and fully explained to me about the procedures with tax & business registration. My emails and questions where always answered straight away with an immediate response ...or solution.
Very helpful and very friendly I would definitely recommend to anyone considering using Advocate Abroad
- A.Kavanagh, GlasgowFriday, March 09, 2018Rosa was exceptional at helping me setting up my business abroad.
This was a big move for me and Rosa fully explained everything to me in detail so I had a full and clear understanding of the lega...l side of things as well as always promptly responding to any emails or questions I had.
I couldn’t of asked for a better lawyer and I would 100% recommend Rosa to anyone who is deciding to move abroad.
Great service could not be happier.
- Gavin Jones, UKMonday, February 19, 2018It was a real pleasure to have Miguel working on my behalf to file my non-resident taxes. He was extremely helpful, gave reassuring advice and I had a high level of confidence in the transactions.
...Miguel is now acting as my fiscal representative in Spain and I plan to continue to use his firm's services for all my tax requirements.
- Ali Hashemi, AlicanteWednesday, February 14, 2018Rafael was extremely helpful, accommodating and understanding. He couldn't have done more.
- Richard Quick, EsteponaSunday, February 04, 2018I was particularly impressed by Miguel's approachability & professionalism, excellent service!
- Francis Dale, MarbellaThursday, December 21, 2017Very helpful, quick to respond and very knowledgeable.
- Bart Cuyvers, BelgiumWednesday, December 20, 2017The service we received was perfect!
- S Crawford, Alhaurín El GrandeWednesday, November 22, 2017Miguel was quick to respond to questions, professional, personable, knowledgeable. Very Satisfied with the service.
- Bruce and Susan Moore, EnglandTuesday, October 31, 2017Great responsive and assured service
- Hugh and Ann Morgan, Palma de MallorcacoupleMonday, October 30, 2017His command of English is First Class.
He demonstrated the highest level of professionalism and efficiency and l would have no hesitation in using him again or recommending him to any of my collea...gues or friends
Competent, capable value for money FIRST CLASS and a credit to the organisation
- Anthony Bennett, BarcelonaThursday, October 19, 2017Anna provided the best possible solution for me in my situation, and helped out as much as she possibly could. I would recommend her services to anybody seeking legal or financial advice.
- Carlos Pelaez, LondonMonday, July 03, 2017She was friendly and attentive at all times, quick answers on whatsapp app and always up to help and answer my questions. I'm pretty satisfied with her service.
- Amy Wahba, BarcelonafemaleMonday, March 06, 2017She was understanding and tried to maintain positive always even when doors closed in our face. She is always smiling and tried to find solutions to my problems which kept me always at rest.
- Richard Whiteside, LucenaMonday, February 20, 2017Miguel has provided an excellent service, helping me sort out my tax and social security obligations as an ‘autonomo’.
He is always prompt with his answers to my questions, he offers timely adv...ice and always makes sure that I am prepared in advance.
His English level is excellent and I will continue to use his service in the future.
- Robert Toth, IrelandThursday, February 09, 2017Anna was very, very helpful, always happy to assist and also approachable and professional. I was very satisfied with the legal services.
- Saeid Aboutalebian, IranWednesday, February 08, 2017Everything is good about Anna. She is very friendly. And I definitely would use the same lawyer again in the future.
- Fiona Murie, UKfemaleWednesday, November 09, 2016Miguel has always been extremely approachable, helpful and given sound advice. He has kept us informed at every stage and quickly answered questions to help us make informed decisions.
We feel like... we have had value for money and will definitely use Miguel as our only lawyer for all Spanish business.
He has been fantastic! Very professional
- JS, BarcelonaFriday, May 20, 2016Miguel is extremely helpful, couldn’t have done more. He is also responsive, transparent and informative.
- Sharon Janet, Stoke-On-TrentfemaleWednesday, April 06, 2016Miguel was always available to discuss any issues we had.
Excellent service more than happy and will be going back to him with and future legal issues. I would advise anyone to deal with this pract...ice more than accommodating.
- AJH Platino Servicios, S.L., TenerifeTuesday, March 31, 2015To date these are routine services but he appears to be up to date with the latest legislation and the advice we have received thus far has appeared sensible to me. As we begin to explore what our com...pany might do I am sure we can make it a little more challenging for him!
- Marian O’Dwyer, Alhama GranadafemaleMonday, March 30, 2015Prompt, professional, friendly, explained everything clearly, went above and beyond the necessary to make things easy.
- Kevin Neylon, PolandMonday, February 23, 2015Jaime was very responsive, represented value for money and was very professional and helpful. I was very satisfied with his advice.
- P.T., BenalmadenaThursday, January 15, 2015All tax returns are handled online, so I don't need to go anywhere to accomplish my tax obligations in Spain. Although the service is provided mainly by internet, Jaime met me when necessary, and I ca...n always contact quickly him or his team by phone, email, skype and even whatsapp.
Jaime and his team have been really helpful during the setting-up process of my business.
- Nikolay Denev, CádizThursday, November 20, 2014I was very satisfied with the short time it took to set-up my documents and register me as autonomo initially.
Now I'm happy with the service, and if I have any questions I have them answered quickly... and the answers are always easy to understand.
The service represents excellent value for money.
- H R Crowther, HuddersfieldMonday, November 10, 2014Prompt response followed by confirmatary e-mails. Very approachable, and inspired confidence. Good value for money. Very satisfied and would definitely use the service again.
- Florian Burkart, BarcelonaFriday, September 05, 2014What we like about the service from Advocate Abroad: - Very knowledgeable and competent - Very friendly and helpful - Very good English and reasonable prices - Not trying to rip us off
- B Clarke, JayenaFriday, February 14, 2014Jaime was extremely helpful and professional. He was happy to meet all of our requests and made our transaction extremely simple. Everything was explained clearly and all of our questions were answere...d.
We also felt that the service provided to us, offered great value for money and we would highly recommend Jaime to other individuals.