I opened my freelance account by going to the Italian Revenue Office (Agenzia delle Entrate) and declaring my intention of working as self-employed. After describing the services that I intended on offering (Civil Engineering field), I also asked to belong to the tax regime of minimum tributary payment (contribuenti minimi) for which I could expect minor benefits if earning below 30’000€ yearly.
I got assigned a VAT Tax Number, or Numero di Partita, IVA. This national tax regime has been improved today to offer further benefits, and is called the Regime of Minimums or Regime dei Minimi. It is open to newcomers or people who have not been self-employed for over than three years, and is facilitated to those under the age of 35.
At the end of the tax year around May I count all expenses involving transportation (including gas and car insurance), office expenses such as computers and phone bills, and give these all to my tax accountant. Prices for a tax-accountant range from €200 to €600 and over depending on the complexity of one’s business and the quality of the service one is expecting. Closing in on the declaration date my clients file in communications of having paid their taxes, in case the employer has covered the mentioned net and gross-gross totals.
This happens often when offering services to other companies or employers and the reason is that they will declare these as tax-deductible in their own tax declarations. There is a specified date towards the beginning of June in which I will then pay my taxes with a module called F24, which will be split into two rates: one due in July and one due in September.
They can also both be paid together immediately. Electronic payment of these is possible through internet with one’s bank, but does require that one fills out coded entries and the risk of mistakes could cause loss of money and time. For this reason, when it comes to paying taxes I always go in person to my local bank and file for payment at the desk.
It is needless to say that the presence of agross-grossand anet-net, in addition to the conventional gross and net, make it more difficult to negotiate over prices. This is one of several aspects that make this system a tedious and tricky ordeal. The lack of information is also due to the excessive need that the freelancer must have on an accountant in order to overlook operations and calculations, which as I described beforehand may result in either higher prices or faulty information.
The first year, for example, was quite tough in terms of taxes, as the sum due is calculated based roughly on half of the earnings of the previous calendar year and half on the presumed earnings of the following year to come. Since I had opened my tax regime around June my turnover that year had actually been low compared to what I was required to pay. My accountant assured me however, that this would return in my favor when I should decide to close the freelancer tax account and file my final declaration.
Another interesting aspect is that if you do not complete 5 years of tax declarations above the first taxation threshold of 15’000€ and close business, as incredible as this may sound, the account will be considered exempt from receiving a pension plan from that tax regime. There has recently been a parliamentary commission concerning this matter, trying to allow a more inclusive and simple systems of income convergence. I was also insufficiently informed of this aspect upon opening my own account.
This, as well as other problems concerning the compatibility aspects of taxes for freelance accounts as accumulations to different types of contract work have resulted with some people considering the system as “too hard” on the freelancer, some have gone as far as to call it a “gyp”.
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