Start a new life in Italy: get a Digital Nomad Visa, work remotely for a US company and keep your Social Security in the US!
If you are a US Citizen and you have the desire to start a new life in another country, you can move to Italy with the Digital Nomad Visa, work remotely for an American Company or as self-employed person, pay Social Security in the US and get an Italian Tax Break.
Let's see how you can do it!
In this post, co-authored with Italian Attorney Alessandro Zucca, we will show you how a US citizen who does not hold Italian citizenship can move to Italy with a Digital Nomad Visa, while working remotely for a US company.
We will go into details of the necessary requirements for applying for the Digital Nomad and Remote Worker visas, with a particular focus on the tax opportunities associated with this visa.
This Visa can be useful for employees as well as self-employed persons, such as consultants, lawyers, software developers, youtubers, bloggers, vloggers, etc.
Our Tax and Legal Firms can give step-by-step assistance in each stage and for every aspect of your stay in Italy.
SUMMARY
1. THE NEW DIGITAL NOMAD VISA
2.1 DIGITAL NOMAD AND REMOTE WORKER: WHAT'S THE DIFFERENCE?
2.2 DIGITAL NOMADS AND REMOTE WORKERS ARE EXEMPT FROM THE "DECRETO FLUSSI"
3. REQUIREMENTS FOR THE DIGITAL NOMAD – REMOTE WORKER VISA
3.1.1 What is the meaning of "highly skilled jobs"?
3.1.2 What if the American citizen is a YouTuber, Blogger, or Vlogger?
3.2 Additional requirements for Remote Workers
3.3 Income requirements
3.4 The housing requirement
3.5 The health insurance coverage requirement
4. THE ELECTRONIC RESIDENCE PERMIT (PSE)
5. FAMILY REUNIFICATION
6. MANDATORY COMMUNICATIONS
7. TAX ASPECTS OF THE DIGITAL NOMAD VISA
7.1 Acquiring Tax Residency with the Digital Nomad Visa
7.2 Tax differences between the Digital Nomad and the Remote Worker case
7.2.1 Opening a Self-Employment position in Italy (Partita IVA) for the Digital Nomad
7.2.2 Tax Issues for Remote Workers.
1. THE NEW DIGITAL NOMAD VISA
In February 2024 Italy has introduced a new visa to allow American Citizens who don't hold Italian citizenship to move to Italy for work purposes.
This new visa is specifically designed for highly skilled jobs that can be performed remotely.
We have already dedicated one of our posts to the Elective Residence Visa:
The main difference between the Digital Nomad Visa and the Elective Residency Visa is that the Elective Residency Visa is designed for American citizens moving to Italy without working, as they have income from passive sources (pensions, rents, royalties, interest, dividends, and capital gains) that support their stay. The Digital Nomad Visa, instead, is designed for individuals who move to Italy specifically to work, particularly to work remotely.
Below you can find the link to the Italian Consulate in New York's page on Digital Nomad and Remote Worker visas:
2.1 DIGITAL NOMAD AND REMOTE WORKER: WHAT'S THE DIFFERENCE?
Before diving into the details of this new visa, it's important to clarify a key distinction between the concepts of Digital Nomad and Remote Worker.
WHO IS A DIGITAL NOMAD?
A Digital Nomad is an American citizen who is a self-employed person and who wants to move to Italy working from Italy as an independent contractor.
WHO IS THE REMOTE WORKER?
A Remote Worker is an American citizen who works remotely from Italy as an employee for a US or Italian employer. The work is performed using technological tools that allow for smart working.
While both the Digital Nomad and the Remote Worker have in common:
- move to Italy to work,
- work remotely,
they differ in that the Digital Nomad is a self-employed person while the Remote Worker is an employee.
2.2 DIGITAL NOMADS AND REMOTE WORKERS ARE EXEMPT FROM THE "DECRETO FLUSSI"
One important point to understand is that individuals who meet the requirements for the Digital Nomad and Remote Worker visas, as highly skilled workers, are not subject to the "Decreti Flussi". The "Decreto Flussi" establish every year the maximum amount of work Visa that can be given by Italy to non-EU persons.
These boundaries don't count for the Digital Nomad and Remote Workers: being high skilled workers, they can move to Italy anytime.
3. REQUIREMENTS FOR THE DIGITAL NOMAD – REMOTE WORKER VISA
The Digital Nomad and Remote Worker Visa is an administrative authorization granted by the Italian government to American citizens and other non-EU citizens who wish to relocate to Italy and engage in highly skilled work.
The visa must be applied for at the Italian diplomatic-consular representation (Embassy or Consulate) in the United States and is typically valid for up to 365 days.
The first requirement is that the work activity performed by the American citizen must be a "highly skilled job".
Let's understand what exactly this means.
3.1.1 What is the meaning of "highly skilled jobs"?
American citizens who perform work in Italy are considered "highly skilled" if they meet at least one of the following criteria:
A. Bachelor's Degree, Master's Degree, or PhD.
B. Certification from an Italian Professional Association confirming eligibility.
C. A high-level professional qualification with at least 5 years of work experience.
Let’s look at these criteria in detail.
A. BACHELOR’S DEGREE, MASTER’S DEGREE, OR PhD
The first and most used criterion is not connected with the kind of job performed, but to the education of the US Citizen who moves to Italy: it's necessary to have a Bachelor's Degree, a Master's Degree or a PhD.
The degree must be formally recognized in one of the following alternative ways:
- Through the CIMEA website:
- Through the "Declaration of Value (DV)", which can be requested at the Italian Consulate in America:
It's important to note that the Declaration of Value is a descriptive document about the degree obtained in the U.S. (or other countries), issued by the Italian Consulate, but it does not imply recognition of equivalency to Italian degrees.
B. CERTIFICATION FROM AN ITALIAN PROFESSIONAL ASSOCIATION
The second criterion can be relevant for all the US Citizens who work as Professional like Architects, Engineers, etc.
This certification is issued by an Italian Professional Association (such as the Italian National Association of Architects, Engineers, Lawyers, CPA, etc.) to confirm that the American citizen possesses the qualifications required to practice a regulated profession in Italy.
You can find the complete list of Italian Professional Association here:
C. A HIGH-LEVEL PROFESSIONAL QUALIFICATION WITH AT LEAST 5 YEARS OF WORK EXPERIENCE
The third criterion concerns some specifically highly skilled technical jobs, such as, for example:
- Electronic Technician;
- Technician for the operation and maintenance of automated systems;
- Industrial automation technician;
- Business services technician;
- Thermal systems technician;
- Etc.
It is recommended to verify with the relevant Italian consulate whether your profession qualifies as "highly skilled job"
American citizens needing to demonstrate "highly skilled" expertise must provide the following documents to the Consulate:
- Information on the American company for which they worked for the previous 5 years.
- Details of the role and position held in the company.
- A copy of the employment contract or the payrolls.
- A letter from the employer describing the work performed, including dates of employment.
3.1.2 What if the American Citizen is a YouTuber, Blogger, or Vlogger?
If the American citizen is a professional YouTuber, Blogger, or Vlogger, the requirement that must be met is, of course, the first one, that means the possession of a Bachelor's Degree, a Master's Degree or a PhD.
3.2 Additional Requirements for Remote Workers
For Remote Workers only, the following additional documents are required:
- The employment contract (American or Italian), or the binding offer, showing a salary equal to or greater than the amount required by Italian laws (our Tax and Legal Firm can give assistance in this matter);
- A letter from the employer (American or Italian) confirming that, over the past 5 years, the employer has not been convicted of crimes related to assisting illegal immigration, the exploitation of child labor, violations of labor laws, or other immigration-related offenses. The letter must be signed by an executive or a legal representative of the Employer.
3.3 Income Requirements
About the income requirement, the American citizen who wishes to move to Italy must prove that they can have a minimum annual income.
In 2024, the minimum annual income must not be less than €24,790.
It should be noted that, formally, this proof can be provided in several ways, including:
- Payrolls;
- Tax returns;
- Form W2;
- By showing the last three bank statements giving proof of the revenue produced by the self-employed position.
It's important to understand that the income must come from the work the American citizen will carry out in Italy. Passive incomes such as pensions, rents, interest, dividends, and capital gains are not considered.
3.4 The Housing Requirement
The Digital Nomad Visa has an housing requirement that is similar to the one for the Elective Residence Visa.
The house in Italy must be owned or rented.
Other forms of accommodation, such as staying in hotels or B&Bs, are not permitted.
3.5 Health Insurance Coverage Requirement
The American citizen applying for the Digital Nomad Visa must submit to the Italian consulate in the US a travel medical insurance policy that demonstrates coverage for medical expenses, hospitalization, and medical repatriation costs. The insurance coverage must not be less than €30,000.
4. THE ELECTRONIC RESIDENCE PERMIT (PSE)
After entering Italy with the Digital Nomad Visa, the American Citizen must apply for the Electronic Residence Permit (PSE) within 8 working days from the arrival.
This request must be made directly to the "Questura" (Police Headquarter) in the province where is located the apartment he/she has planed to live in.
The application must include all the original documents submitted at the time of the visa application: it's thus necessary to request the Consulate to receive back all the documentation given for the Visa.
The Electronic Residence Permit will indicate "Digital Nomad/Remote Worker," ant it will be valid for one year; it can be renewed yearly.
5. FAMILY REUNIFICATION
The American citizen who has obtained the Electronic residence Permit can also request Family reunification for the spouse and minor children, allowing the entire family to move to Italy.
Family reunification is not allowed for parents or adult children, even if they are financially dependent.
In the case of family reunification, the income requirements are obviously higher.
For example, if the US Citizen wants to move to Italy with spouse and one child, the required income would be:
€24,790 for the American citizen;
+ €3,475 for the spouse;
+ €3,475 for the child (if there are two children, the sum is the double, etc.);
Total: €31,740.
The reunited family members will be granted an Electronic Residence Permit for family reasons, valid for the same duration as the applicant’s permit.
6. MANDATORY COMMUNICATIONS
The Questura (Police Headquarter) will send communication of the Electronic Residence Permit to several offices, and in particular to:
- The Italian Revenue Agency - Agenzia delle Entrate;
- The Italian Social Security Administration - INPS.
The Questura will also handle the issuance of the Italian Tax Code (Codice Fiscale), but in many cases the American Citizen has already requested and received the Codice Fiscale in order to rent or buy the house for the housing requirement.
For more information on the Codice Fiscale, you can refer to this link:
Digital nomads will also be required to apply for opening of the Italian self-employment position - Partita IVA.
7. TAX ASPECTS OF THE DIGITAL NOMAD VISA
7.1 Acquiring Tax Residency with the Digital Nomad Visa
The first point that we have to take into consideration from the fiscal point of view is that the American Citizen moving to Italy will acquire Italian tax residency.
Acquiring Italian tax residency means paying taxes in Italy on income from American sources as well. Therefore, the following US incomes will be subject to Italian taxation:
- Dividends, interest, and capital gains earned in the U.S.;
- American pensions;
- Distributions from American pension funds such as IRA, 401K, TIAA CREF, etc.;
- Rental income from American properties;
- Royalties received in the U.S.;
- Any other income from American sources or any other country, including Italy.
Let's now focus on a couple of points concerning Tax Residency in Italy.
- The timing of tax returns: the Italian tax return must be filed first, which will result in the payment of Italian taxes without any deduction of American taxes. The US tax return must be filed by the deadline of October 15 (after filing the extension with Form 4868), with the possibility of using the taxes paid in Italy as a Foreign Tax Credit in order to avoid double taxation.
- The process of acquiring Italian tax residency: the process of acquiring Italian tax residency is not trivial and we suggest you to read the following posts:
We particularly recommend watching the following video:
The key point about tax residency is always connected with the number of days spent in Italy: if an American Citizen spends more than 183 days in a calendar year in Italy, he/she will acquire Italian tax residency.
For example, if an American Citizen arrives in Italy on June 6 of a specific year (Year N) and stays in Italy for the remainder of the year, he/she will certainly have exceeded 183 days in Italy in that year, thereby acquiring Italian tax residency.
The most important consequence is that they will be required to file an income tax return in Italy for Year N as a resident, reporting all worldwide income, including income earned in the U.S. from January 1 to June 5, when they were still in the U.S.
Thus, the timing of the move to Italy is very important and should be planned carefully.
Our Tax and Legal Firm can give assistance on the whole matter and can also make a simulation of what the Italian tax burden can be.
7.2 Tax differences between the Digital Nomad and the Remote Worker case
The tax aspects related to this visa must be clearly distinguished between the case of a Digital Nomad and a Remote Worker.
If the Us Citizen is a Digital Nomad, it will be necessary to open a business position in Italy by opening a "Partita IVA" (VAT number).
If we are in the Remote Worker case, the person will be considered an employee (either of an American or Italian Employer)
7.2.1 Opening a Self-Employment position in Italy (Partita IVA) for the Digital Nomad
An American citizen who receives a Digital Nomad Visa is considered an Independent Contractor and must open self-employment position in Italy.
In this case, we suggest the following three-steps strategy:
A) Open a Partita IVA (VAT number);
B) Apply for the Regime Impatriati;
C) Elect to pay Social Security in the US and not in Italy with the Self-Employment Tax.
This strategy is optimal because it combines several important advantages:
- The American citizen can continue to work for the American company he/she used to work before moving to Italy; the only difference is that he/she will be working remotely from their home in Italy instead of working in the US.
- With the Election, the person can make contribution to his/her US Social Security position by paying the Self-Employment Tax: this is extremely important as they do not need to open a Social Security position in Italy and pay for their pension to the Italian Administration.
- The American citizen can benefit from a significant tax break under the Regime Impatriati, which allows for a 50% reduction in taxable income for up to 5 years.
- The tax advantage of the Italian Tax Break is not mitigated by US taxation, as there are mechanisms to eliminate double taxation:
- The Foreign Earned Income Exclusion (FEIE).
- The Foreign Tax Credit.
Now, let's take a look at each of these three steps in more detail.
A) OPENING A PARTITA IVA (VAT NUMBER).
We have already analyzed in depth the opening of a self-employment position in Italy.
For more details you can take a look at these posts:
It is important to note that an Italian self-employment position must be always opened for Youtubers, Bloggers and Vloggers.
It is not possible to use an American business position to make invoices, such as an LLC, for two reasons:
1) It is not allowed, without exception, under the Digital Nomad Visa rules.
2) It is not a great idea to have an LLC when acquiring Italian tax residency.
For more details, please take a look at this post:
B) APPLYING FOR THE REGIME IMPATRIATI
Regime Impatriati is an important tax break as it reduces the taxable income for employees and self-employed person by 50% for 5 years, upon certain conditions.
You can take a look at all the articles and posts related to the Regime Impatriati here:
Regime Impatriati for 2024: what are the new rules?
C) THE ELECTION TO PAY SOCIAL SECURITY IN THE US
This election can be made because of an important Social Security Agreement signed between the US and Italy in 1971.
You can find all the details here:
7.2.2 Tax Issues for Remote Workers
While the tax profile for Digital Nomads is very clear and well-defined, the situation for Remote Workers is more complex.
Remote Workers can apply for the Regime Impatriati, whether the employer is American or Italian; but the Remote Worker case has also some cons to be considered:
- The potential creation of a Permanent Establishment in Italy if the Employer is an American Company;
- The payment of Italian the Social Security Contributions if the Employer is an Italian Company.
Let’s examine this first case by imagining a dual citizen (both American and Italian) who decides to move to Italy. Since he/she is a dual citizen, they will not need a visa. However, let’s explore this scenario as it may be relevant when analyzing the case where a Digital Nomad Visa is needed instead: so, we are considering a dual citizen who moves to Italy as an employee of an American company.
This situation can, in the long run, create a Permanent Establishment of the American Company in Italy, which would mean that the Italian Revenue Agency could require the American company to pay Italian taxes.
American Companies are generally reluctant to allow an employee to work remotely from another country for an extended period of time, and therefore, they often (but we can say, from our expertise, in 100% of cases) ask at some point the employee to become an independent contractor.
With the status of independent contractor (that is the Digital Nomad case), the issue of the Permanent Establishment doesn't exist.
If we consider now this case from the perspective of a US Citizen (not a double citizen), it can be extremely problematic to switch from a Remote Worker Visa to a Digital Nomad Visa, while in Italy: this is why it's important to plan carefully the moving and also to have a transparent approach with the US company.
If the Employer is Italian, the Remote Worker Visa is a visa for Highly Skilled Employment: in such a case, there are no problems, but the US Citizen must accept to pay Social Security in Italy and not in the US.
Our Tax and Legal Firms, can provide comprehensive assistance for both obtaining the visa and managing all the tax-related aspect connected with moving to Italy.
CONTACT US FOR MORE INFORMATION
If you need more information, you can send an email to:
enrico.povolo@dottcomm.net
or make a phone call to the following number:
+39 0444 322987
Enrico Povolo - Italian CPA - Vicenza
Alessandro Zucca - Italian Attorney at Law - Brescia