paying tax

[tessa myers]

I am wanting to start teaching English in the village where I live and have just got residency. I have asked at the commune about permits etc but keep getting conflicting info. Does anyone know how much you have to earn before you have to start paying tax? I have considered doing private lessons and getting paid cash in hand but as its such a small place and the authorities re bound to find out, I want to do it by the book from the off. If I don't earn very much do i still have to pay tax on that? I know I should get a commercialista if Im going to be self-employed who will help with tax returns etc but I want an idea before I sart as if I end up paying a lot of tax will it be worth my while earning? I have a UK passport - does this mean I don't need a work permit?

[Carole B]

This is a useful site and you can also search on it for specifics...
>UK in Italy<

The actual Tax you might be liable for is the '730 - IRPEF'
This is an explanation of that return:
>PERSONAL TAXATION IN ITALY<

[Nicola]

Hi Tessa

My very first instinct is to tell you to do it cash in hand but as that's not too helpful I'll give you my experience.

I'm going to be self employed next year so have been getting advice from my commercialista. As I already know how much I'm going to be earning because it's one fixed contract it's pretty straightforward to work out. First of all there is INPS to consider (Italian equivalent of NI). If I was in a profession that had to be registered with the camera di commercio then I would pay a flat rate of around 2600euro per year no matter what I was earning. On first hearing that I wouldn't be paying the fixed amount I was relieved, except when he went on to say that my INPS contribution would be 24%! The next thing to consider is taxes - rather complicated but I've been advised to go onto a tax regime that would mean I would pay a total of 14.5% in taxes for the first 3 years. However I have to charge IVA (VAT) to my clients. The other alternative was to be in a different tax regime where you don't have to charge IVA but you pay 20% tax. There are also the commercialista's costs which will be around 800-1000 euro for the year.

That doesn't really answer your question about the tax free amount - I'm not too clear on that so someone else may be able to provide a better explanation but it rings a bell that it's somewhere between 3000-5000 euro per year - sorry not too helpful but I'm pretty sure it's quite a bit lower than the UK amount. However as you can see from the above INPS is a really high cost here as well and I'm not sure if you'd get away with not paying INPS even if you were in the tax free limit.

You do really need to go and see a commercialista - their initial advice should be free. My gut feeling is that it wouldn't be worth your while declaring an income from doing some private English language teaching but you'd really have to get some professional advice.

Sorry if I've not painted too rosy a picture but it's been quite a wake up call for me and particularly annoying when I work out what my net income would be if I was in the UK! Good luck Ironically I just had a quick look to see if I can find you the tax free amount in Italy and came across an Italian site that was recommending Italians set up a UK Ltd company as it's far easier - says it all I think

[sueflauto]

I've just picked up some work in scuola elementare and my INPS is 17% as I'm already in receipt of a pension, otherwise as Nicola says it would have been [checks form] 24.72%. With 23% withholding tax I will take home 60% net. I think the tax free limit is 3000.

I've put in a quote to do some other work which will be invoiced and as I'll have a turnover of less than 30,000 (!) I can opt for a different treatment whereby I pay 20% tax and don't charge (or reclaim VAT - IVA): the invoices have to be annotated "“operazione effettuata ai sensi dell’articolo 1, comma 100 legge 244/07”. Thanks to 'English Teacher' for the above information.

Deductions are high here, but it's getting enough hours at the right time that is the problem. Try making up small groups as then you can charge more per hour.