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I am currently living and working in the UK, but may need to move to Italy within the next year.

My current employer is willing to employ me as a contractor while I am abroad but do not want to get involved with having non-resident permanent staff, which I can understand. In both Italy and for the period I'm still in the UK, the most tax efficient way of handling the situation would be to work for a British umbrella company; has anyone tried this strategy (working for a British umbrella company whilst being resident in an other EU country)?

And are there any legal pit falls I should be aware of from either the UK or Italian side?

Edit: Specifically, I'm aware of the bilateral tax and national insurance agreements between Italy and the UK, and know it is legal for me to work for a UK company and live in Italy. What I'm concerned by is that there may be regulations I'm not aware of around contracting, working from home, etc and also if anyone has actually worked with an umbrella company in this type of scenario?

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Be careful that you don't land up paying two lots of NI! –  Ian Ringrose Mar 26 at 20:35

1 Answer 1

You can live in Italy and work for and umbrella company (as a normal employee after all) in UK, but if you are goint to stay more than half a year in Italy you are going to pay taxes in Italy filling the Unico tax form.

There should be an agreement beetwen UK and Italy to prevent the double taxation of your income. Usually the taxes payed directly in the foreign country will count as reduction to the tax you should pay in the country where you live.

In UK

gross income = 100
tax already paid in UK = 20
net UK income = 80

In italian Unico tax form

gross foreign income = 100
tax that you should pay in Italy on a gross incompe of 100 = 30
tax paid abroad = 20
tax to be paid in italy = 10

It's not that simple because maybe the pension contribution may be not taxable, you should have other exemptions. etc.

Have a look at the UNICO instructions http://www.agenziaentrate.gov.it/wps/content/nsilib/nsi/home/cosadevifare/dichiarare/dichiarazioniredditipf/unicopf14/modello+unico+pf_2014/indunicopf14mod

Fascicolo 1 - QUADRO CR (page 85)

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Thanks Matteo! I'm aware of the bilateral tax and national insurance agreements already, and what you're saying matches what I've been told so far. I was also wondering if anyone had found Umbrella companies which allowed for this and whether there were any other legalities to look out for (things about work place conditions when working from home, or similar issues). I'll update my question to clarify. –  mavnn Mar 26 at 13:21

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