# Contractor Tax Query



## marzipan71 (Jul 13, 2018)

Hi folks - I'm a British citizen resident in Italy, in possession of my carta d'itentita, and my wife and I own our own home here which we bought a year ago. We live here full time now. I have a UK company which is registered in the UK, with me as director, etc. Now that the house renovations are complete, I've returned to work as a contractor with a UK company - they have contracted my company to do the work and I will perform the work partly in the UK but mostly in Italy, such that I will be tax resident in Italy.

I issue invoices from my company to the client company; they pay my company, into my UK company bank account. I'm intending to pay myself exclusively via dividends - no personal salary and no NI etc. In paying those dividends, I'll transfer the money from my UK company bank account to my UK personal bank account. I'll pay UK corporation tax, of course. So far so good, yes?

Now - I'm tax resident in Italy since I live here full time. To my layman's eyes, my 'worldwide income' on which I will be taxed is equal to these dividend payments from my UK company.

I'm pondering whether as far as the Italian authorities are concerned this income will be taxed at the 'normal' income tax rate for employees (i.e., the tiered %'s up to 43% at the top tier), or taxed as dividends at 26%.

Now - what I was wondering is if anyone has direct experience of contracting with UK companies in this way as I'm having trouble getting our accountant to understand what I'm talking about, even though he speaks great English. He can't get his head around the typical British contractor director/ dividend payments scenario as this (generally) doesn't exist in Italy.

So - if anyone can help, I'm not looking for tax advice per se - just trying to understand if any contractors using the arrangement above have successfully paid their taxes in Italy on income paid as dividends through a UK-registered company, and if they were able to pay those taxes at the 26% rate?

Note that I have spoken with a very good local accountant who speaks English but he has no direct experience of the arrangement above - he'll still do my personal taxes but I feel he needs a little help in doing so!


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## NickZ (Jun 26, 2009)

26% is for non controlled companies. If you're the major or in this case sole owner you pay the much higher rate.

For example. Buy shares of Enel and pay 26% on the dividends.

Pay yourself dividends and you're taxed at the higher rate


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## foggie (Jul 9, 2016)

There are a number of special tax schemes that give reductions. This article may give you food for thought.

https://www.bakermckenzie.com/en/in...5/italy-broadens-the-scope-of-the-special-tax


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