# Digital US contractor work from Italy



## Lamond64 (Dec 22, 2021)

Hello -
My husband and I are planning to buy a home in Italy, and we will retain our home in North Carolina, at least in the short-term. I don’t know yet how much of the year we would spend abroad, but we would probably eventually pursue residency there. I’m currently researching my work options. 

I work as a self-employed medical writer, contracting remotely with US companies and digitally submitting my writing.

I’m trying to figure out the tax ramifications of doing this from Italy. I would not have any interaction with the Italian economy through my work.

I know I’d need to continue to file US tax returns, but my questions are:
1). Does anyone know how much of the year I can work from Italy before I need to pay taxes there on that income?
2). Does buying a home in Italy and/or establishing residency trigger a requirement to file there?

Thank you!


----------



## Nononymous (Jul 12, 2011)

Before you worry about taxes, how to you propose to obtain a residence permit in Italy? As a tourist you would be limited to 90 days out of every 180; as far as I'm aware there is no provision to obtain permission to stay longer on the basis of income earned from remote work (although a few countries are beginning to consider this). 

If you did succeed in becoming resident then you'd likely be subject to Italian taxes from the moment you arrived.


----------



## Bevdeforges (Nov 16, 2007)

Very generally speaking, you are considered to be working in whatever country you are physically located in while doing the work for which you are paid. (We often refer to this as the "butt" rule - you are working wherever you park your butt.) Add to that, the fact that in much of Europe, to work as a "contractor" means that you would have to establish some form of business entity in the country where you are working - to handle all the necessary registrations for taxes, social insurances and labor laws. So, to answer your questions:
1. There isn't a time threshold for determining your tax status in Italy. If you're there under the 90 days in any 180 day period rule, then you are basically a "tourist" and aren't supposed to be working. (There are special rules for employees on a "business trip" for their foreign based employer if they enter on the 90 day Schengen visa.)
2. No - foreigners can certainly own property, including a "second home" - but overstaying your "welcome" can cause other problems.


----------



## Lamond64 (Dec 22, 2021)

Nononymous said:


> as far as I'm aware there is no provision to obtain permission to stay longer on the basis of income earned from remote work (although a few countries are beginning to consider this).


Wow. If I understand what you’re saying, they wouldn’t count self-employment income from international digital services (medical writing for the US) as income for a residence visa?

My initial plan was to buy a second home in Italy while on a tourist visa. If (when) I wanted to move there for a longer period, I’d apply for a long term visa while in the US, then apply for a residence visa when I got to Italy. I hoped I’d be able to use my medical writing income for the US to qualify, but maybe not?

I have assets that amount to about $1mil (US home + $450k liquid), but no passive income right now. I’m still not clear if that would qualify financially for a residence visa, so I guess it’s time to consult a professional.


----------



## Lamond64 (Dec 22, 2021)

Bevdeforges said:


> Very generally speaking, you are considered to be working in whatever country you are physically located in while doing the work for which you are paid. (We often refer to this as the "butt" rule - you are working wherever you park your butt.) Add to that, the fact that in much of Europe, to work as a "contractor" means that you would have to establish some form of business entity in the country where you are working - to handle all the necessary registrations for taxes, social insurances and labor laws. So, to answer your questions:
> 1. There isn't a time threshold for determining your tax status in Italy. If you're there under the 90 days in any 180 day period rule, then you are basically a "tourist" and aren't supposed to be working. (There are special rules for employees on a "business trip" for their foreign based employer if they enter on the 90 day Schengen visa.)
> 2. No - foreigners can certainly own property, including a "second home" - but overstaying your "welcome" can cause other problems.


Ok, thanks for that answer. That makes things much clearer for me.

I’ve been told that some people get around the 90 day limit by leaving Italy and then coming right back in to have the stamps in their passport, but that doesn’t make sense to me. Besides, it sounds sketchy, and I’m trying to do everything above board.


----------



## Nononymous (Jul 12, 2011)

Lamond64 said:


> Wow. If I understand what you’re saying, they wouldn’t count self-employment income from international digital services (medical writing for the US) as income for a residence visa?
> 
> My initial plan was to buy a second home in Italy while on a tourist visa. If (when) I wanted to move there for a longer period, I’d apply for a long term visa while in the US, then apply for a residence visa when I got to Italy. I hoped I’d be able to use my medical writing income from the US to qualify, but maybe not?
> 
> I have assets that amount to about $1mil (US home + $450k liquid), but no passive income right now. I’m still not clear if that would qualify financially for a residence visa, so I guess it’s time to consult a professional.


What does the Italian consulate say - that's who you need to be asking. Look at the different types of visa they offer.

I don't have specific experience with Italy, but the general rule for Europe is that you can't obtain a residence permit to stay past 90 days unless you are studying full-time, or have a job that sponsors you for an employment permit, or you make a serious investment in the local economy. There is no "I've got enough money to move here" visa, unfortunately.

This leaves you with a number of options:

Buy a house as a vacation property and spend almost half the year there, in two 90 day periods. Technically you shouldn't be "working" during this time - even remotely - but nobody will care.

Attempt to obtain a visa to move to Italy on the basis of self-employment. This would likely mean some very intense paperwork, to set up a business and pay the appropriate taxes. 

Since you have enough money to buy a property outright, look into one of the "golden visa" schemes in other parts of Europe - Portugal has been extremely popular. Also there is talk that some countries are looking into possible digital nomad visas that offer longer stays for people working remotely.


----------



## Nononymous (Jul 12, 2011)

Lamond64 said:


> I’ve been told that some people get around the 90 day limit by leaving Italy and then coming right back in to have the stamps in their passport, but that doesn’t make sense to me. Besides, it sounds sketchy, and I’m trying to do everything above board.


Nope. It's a rolling 90 days out of 180. The "visa run" - hopping over the border to obtain a passport stamp - is an expat move that works some parts of Southeast Asia and Central America, but it doesn't apply to Schengen.

PS You'd also need to leave Schengen to get a passport stamp, not just Italy. So basically Croatia or the UK.


----------



## Nononymous (Jul 12, 2011)

The elective residency visa is an intriguing option. With the assets the OP has in play it might be possible to generate €38k in passive income (though there may not be much left over for a house purchase). As regards employment, the visa clearly does not permit working in Italy, and salary does not count towards the income requirement, but does this _really_ mean that one could not work remotely while living in Italy on such a visa?


----------



## 255 (Sep 8, 2018)

@Lamond64 -- Italy (like most countries) has various visas. They have both self-employment visas and visas to start a business. Either of which you could probably fit your circumstance to qualify. Visto per l'Italia If you want to work, while living in Italy, I recommend obtaining a visa with a work authorization included. You'll have to establish an abode and have a minimum amount of income to qualify.

If you wanted to qualify for one of the non-working visas, that have been discussed, you can annuitize your "liquid" assets by buying an immediate annuity to provide "passive income" for whatever period you need (including life and joint life payouts.)

The "Big Four" accounting firms (Deloitte, Ernst & Young, PwC, and KPMG) generally publish country tax guides annually, which might warrant your review. Cheers, 255


----------



## Lamond64 (Dec 22, 2021)

255 said:


> @Lamond64 -- They have both self-employment visas and visas to start a business.


Ah, this is what I was looking for! I did look at the list of visas on the Italian consulate website, but I did not see a self-employment visa. I would need to apply for that one. 

Otherwise, I guess I could invest for passive US income and go the elective residence visa route (would rental income qualify?), but I’d have to do my remote work in Italy under the radar. That would mean paying my income taxes to the US, but that could lead to repercussions in Italy, right? I’m not sure how Italy could find out about my work, but it does make me nervous.


----------



## Bevdeforges (Nov 16, 2007)

Lamond64 said:


> That would mean paying my income taxes to the US, but that could lead to repercussions in Italy, right?


When living overseas you don't get to choose where you pay your taxes. You would need to check on the US-Italy tax treaty to see how things work - but generally speaking your primary tax obligation is to the country in which you are resident (i.e. Italy). For the US side of things, you generally would take either the Foreign Earned Income Exclusion to eliminate the US taxation on your earned income, or the Foreign Tax Credit to offset your US taxes with whatever you pay to the Italian government.

Check with the Italian consulate in the US, but not all countries have "self-employment" visas. In many cases these days, they expect you to either be making a certain minimum amount with a business you establish in your new home or to be bringing some sort of innovation or technology to your new country - ideally with the possibility of creating jobs with your new business for locals where you'll be living. There are very few countries that actually cater to remote working, at least as far as visas are concerned.

Anyhow, start here: Visa: information and application


----------



## Nononymous (Jul 12, 2011)

Bevdeforges said:


> ...they expect you to either be making a certain minimum amount with a business you establish in your new home...


The German "freelancer visa" is a case in point. People assumed that if granted it meant you could be self-employed entirely with foreign clients, but the intention was that you have local clients and become part of the local economy. Given the occasional flexibility of the Ausländerbehörde, a few people did seem to get those for remote work only, and the rumour spread.


----------

