Frequently asked questions about doing business in Italy
Q: I am Italian, established in the UK and I work in London as an employee. Previously, I worked as a translator; I am still registered as a freelancer (sole trader) in the UK. Currently I still provide occasionally translation services for Italian institutions and clients. I would like to know what changes for me - to offer translation services on an occasional basis - after Brexit from a fiscal point of view and what are the new procedure. I do not have a VAT number because I do not reach the turnover required in the UK.
R: As of January 1st, relation between the United Kingdom and the Member State of the European Union are governed by the Trade and Cooperation Agreement between the European Union and the European Atomic Energy Community, on the one part, and the United Kingdom of Great Britain and Northern Ireland, on the other hand:
https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32020D2252&from=EN
Title II of Part Two allows temporary benefits and occasional services; more precisely, the provision of cross-border services is governed by Chapter 3.
As for the payment of VAT, services provided by professionals established in non-EU countries must be self-billed by the customer established in Italy. As for the tax, between Italy and the United Kingdom there is a convention against the double taxation:
https://www.finanze.it/export/sites/finanze/.galleries/Documenti/dipartimento_pol_fisc/uk-en.pdf
According to Article 7 of the Convention, the profits of a company of a Contracting State (United Kingdom) are taxable only in that State unless the company carries out its business in the other State contracting party through a permanent establishment located there. In such case, the profits are taxable in the other State (Italy), but only to the extent that they are attributable to the established company.
These principles also apply to self-employment activities. According to Article 14 of the Convention, the income that a resident of a Contracting State (United Kingdom) withdraws from the exercise of a freelance activity or other indipendent activities are taxable only in that Country unless such resident does not ordinarily have one in the other Country fixed basis for the exercise of its activities. If you have such a fixed basis, the income is taxable in the other State (Italy), but only to the extent that it is attributable to that fixed base.
Last update 22/02/2023
