Moving to Italy from the UK: a guide to tax differences

A Comparative Guide to UK and Italian Taxation for Workers Business Professionals Taxation Systems in Italy

UK

In the UK, the tax system is based on residency and domicile, meaning that residents are taxed on their worldwide income, while non-residents are taxed only on income earned in the UK.

The UK tax system is complex, with various allowances, thresholds, and rates ranging from 20% to 45% for different income brackets.

ITALY

On the other hand, Italy also operates on a residency-based taxation system, similar to the UK.

Residents are taxed on their worldwide income, while non-residents are taxed only on income earned in Italy.

Italy’s tax system is progressive, with tax rates ranging from 23% to 43% for different income brackets. Deductions and credits are available for certain expenses, such as healthcare and education.

Social Contributions in Italy vs UK

UK

In the UK, National Insurance contributions are mandatory for employees and employers and cover benefits such as the state pension, healthcare, and unemployment benefits. The contribution rates vary depending on the type of employment and income level.

ITALY

Similarly, in Italy, social contributions are mandatory for both employees and employers and cover benefits such as healthcare, unemployment, and pensions. The contribution rates also vary depending on the type of employment and income level.

Business Taxes

IN THE UK

Businesses are subject to corporate income tax at the national level, with a standard rate of 19% for most companies. Additionally, there may be other taxes such as business rates and VAT.

IN ITALY

Similarly, businesses are subject to corporate income tax at the national level, with a standard rate of 24%. Additionally, there may be regional and municipal taxes applicable to businesses.

Value Added Tax (VAT):

IN THE UK

VAT is a consumption tax levied on the value added to goods and services at each stage of production or distribution. The standard rate is 20%, with reduced rates for certain goods and services.

IN ITALY

Similarly, VAT is a consumption tax levied on the value added to goods and services at each stage of production or distribution. The standard rate is 22%, with reduced rates for certain goods and services.

Tax Incentives in Italy

Italy offers attractive tax incentives to foreigners relocating to the country for work-related reasons. These include tax relief measures for both employees and freelancers, with different regulations for those who moved before December 31, 2023, and after January 1, 2024.

Under the new taxation law effective from 2024, the tax relief percentage has been reduced from 70% to 50% of the taxable income. For individuals who relocated before the end of 2023, a 70% reduction in taxable income is still applicable.

Additionally, there’s an opportunity for further tax relief if the worker chooses to transfer their tax residence to certain regions, where a 90% exemption can be obtained instead of the standard 70%.

Another notable incentive is the “Regime Forfettario” or flat-rate tax regime, which allows eligible individuals to pay a flat tax of 15% on their gross income for certain professional activities. This regime is particularly beneficial for self-employed professionals and freelancers.

You might also be interested at:

Are you looking for professional assistance?

Relocating to Italy from the UK: considerations:

Professionals considering relocating from the UK to Italy should evaluate the tax implications of their move, including potential tax treaties between the two countries to avoid double taxation.

Italy offers special tax regimes, such as the “Regime Forfettario,” designed to simplify taxation for certain professionals, including freelancers and small businesses. However, eligibility criteria and benefits should be carefully assessed.

In conclusion, while both the UK and Italy share similarities in their tax systems, they also have distinct features and complexities. Business professionals contemplating a move from the UK to Italy should seek professional tax advice to navigate the intricacies and optimize their tax planning strategies effectively.

Relocating to Italy can be challenging and stressful. Moving2Italy is here to alleviate that stress with our user-friendly online service. Our dedicated experts will assist you every step of the way, ensuring you take full advantage of all the tax benefits available to you.

Our services

Managing your relocation to Italy is often stressful. Moving2Italy wants to help you by offering a simple and effective online service. Thanks to our experts who will follow you step by step, you will be guaranteed to obtain all the tax benefits to which you are entitled.

Italian Tax Advisor Consultancy

Thirty-minute tailored consultation with a specialized Italian Tax Advisor

Fiscal relocation package for employed workers

Package designed for employed workers who are moving to Italy and wish to take advantage of the incentives.

Fiscal relocation package for self-employed workers

Package designed for self employed workers who are moving to Italy and wish to take advantage of the incentives.

VAT Number opening for self employed workers (ADE and INPS)

If you need to open a VAT position upon your relocation to Italy, this is the right solution for you. It doesn't include consultation on meeting the requirements to access the tax benefits.

VAT Number opening for individual company (ADE and INPS and CCIAA)

If in addition to managing your relocation to Italy, you need to open a sole proprietorship, this is the plan for you. Excludes consultation on meeting the requirements to access tax benefits.

Tax Ruling with Italian Revenue Agency

If you have a specific question that needs to be asked to the Italian Revenue Agency