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Italy’s migrant centres are running out of money

The accommodation centres which house migrants across Italy are running out of money and if the funds don't turn up by the end of the month, they may be unable to continue.

Published: 26 September 2016 11:34 CEST
Italy's migrant centres are running out of money
Migrants at a Red Cross centre in Ventimiglia, near the French border. Photo: AFP

The centres are run by charitable organizations and NGOs, which provide accommodation, food and health care to those living there.

But the Italian Treasury owes them €600 million, according to Il Corriere, and the organizations have set the government a strict deadline to pay up: this Friday.

The money was set aside by Italy's Stability Law to deal with the crisis – €100 million each month – but the Italian daily reports that the fees have not been paid since April, despite numerous requests from Interior Minister Angelino Alfano.

Several of the organizations responsible for the centres, including the Italian Red Cross, have said that if they don't receive the money by September 30th, they will be unable to continue offering their services.

In 2016, 131,000 migrants arrived in Italy. Between these and the large number who arrived last year, the total number of people living in Italian migrant centres is 159,753, plus a further 15,000 unaccompanied minors.

Around 13,000 live in welcome centres, while 22,000 are staying in Sprar (Protection System for Refugees and Asylum Seekers) centres or secondary reception centres, and many are being housed in temporary structures while they wait for the outcomes of their asylum applications.

The cost of providing accommodation, food and healthcare for new arrivals cost Italy over €1 billion in 2015.

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AMERICANS IN ITALY

How to lower your social security bill as an American freelancer in Italy

A special bilateral agreement means that American freelancers can usually lower their tax bills by paying Social Security in the US instead of Italy. But exactly how can you take advantage of it?

Published: 13 September 2024 11:05 CEST
How to lower your social security bill as an American freelancer in Italy

Freelancers in Italy who register for a VAT number (called a partita Iva) pay two main forms of tax: IRPEF, or income tax, and INPS, which are Italian social security contributions.

However, the US is one of just two countries worldwide that uses citizenship-based taxation instead of residence-based taxation. That means US citizens must file US tax returns even if they move abroad – and even if they don’t actually owe any tax.

Because of this citizenship-based taxation, Italy and the US have signed a bilateral social security agreement allowing Americans to pay US Social Security instead of INPS.

Why paying US Social Security can save you money

This bilateral social security agreement can be good news for US freelancers. Professional associations such as the Italian Bar Associations (Ordine degli avvocati) and the National Order of Architects (Ordine degli architetti) have separate pension funds that members can pay into, but foreign professionals often don’t qualify for membership.

Freelancers of any nationality who are not enrolled in a professional association must pay into a state benefits scheme called the gestione separata.

The INPS contribution for the gestione separata is currently 33 percent. That number doesn’t include income tax – just Social Security. By contrast, the US self-employment tax – which covers Social Security and Medicare taxes – is 15.3 percent.

For US freelancers who aren’t enrolled in an ordine, the US Social Security savings are substantial.

How to pay US Social Security instead of INPS

Get a coverage letter

Freelancers who want to pay US Social Security must first request a certificate of coverage from the US Social Security Administration to provide proof that they are exempt from paying Italian INPS. The letter can now be requested online and is valid for five years. 

READ ALSO: LISTED: The visa options Americans can apply for to live in Italy

Pay quarterly self-employment taxes to the IRS

Continue filing a US tax return. Self-employment taxes are calculated using two main forms: a Schedule C (1040) with income or losses, and a Schedule SE self-employment tax form. Freelancers must pay estimated quarterly taxes in January, April, June and September. The amount is based on the previous year’s earnings and can be paid online. Any differences between the estimated tax paid and the actual amount due are reconciled when you file your annual tax return.

Continue paying Italian income tax to the Italian Revenue Agency

Freelancers must continue filing an Italian tax return and paying income tax (IRPEF) in Italy. However, instead of paying Italian social security (INPS), they submit their Letter of Coverage provided by the US Social Security Administration.

FAQs

Are there restrictions on what income I can pay Social Security on?

Americans can pay Social Security on all freelance income, even if the client is located in Italy and pays the invoice in Italy.  

If I paid INPS in the past when I was eligible for Social Security, can I get a refund and pay Social Security instead?

Generally speaking, a taxpayer who makes INPS contributions that were not in fact due can request a reimbursement. However, it can take a long time. The money is refundable within 10 years. 

My Italian accountant said I have to pay INPS even as an American. What should I do?

Many Italian accountants are not aware of the US Social Security exception. 

“The social security agreement between Italy and the United States has existed since the 1970s and is still in force, but it’s not well known,” said Andrea dell’Aquila, a certified chartered accountant in Milan. “It’s quite specific and not well publicized.” 

Dell’Aquila suggests working with a commercialista who specializes in international clients and social security benefits. 

Information about the bilateral agreement is also available on the INPS website in addition to the Social Security Administration site.  

Can I still charge Italian clients 4 percent for social contributions if I am paying US Social Security instead of Italian contributions?

Under Italian law, freelancers can charge clients an extra 4 percent on each invoice to help cover the cost of social contributions, and the client is obligated to pay. However, the law specifically refers to INPS, Dell’Aquila said. 

“If you don’t pay INPS, you can still ask for a Social Security contribution, but you can’t ask by virtue of the law,” he said. 

READ ALSO: Americans in Italy: Is it worth paying for professional help with your taxes?

The client can decide whether to pay the contribution, which is treated like regular income under Italian tax rules. 

Key vocabulary

Partita Iva – Tax identification number

Libero professionista – Freelancer

IRPEF – Italy’s main income tax

INPS – Italy’s National Institute for Social Security 

Gestione separata – INPS’ state benefits scheme for freelancers

Commercialista – Tax accountant

Please note that The Local is unable to advise on individual cases. Find more information on the INPS website or seek independent advice from a qualified tax professional.

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