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How expensive is Italy compared to other EU countries?

What's cheaper in Italy than in other European countries, and what is more expensive? We took a look at the data to find out.

Published: 27 June 2019 11:42 CEST
How expensive is Italy compared to other EU countries?
How much do you spend on food in Italy? Photo: Tiziana Fabi/AFP

EU statistics agency Eurostat compares everything from the price of groceries to utility bills to get a snapshot of how much living in each country in Europe really costs.

Here's what its consumer price level comparison has to tell us about Italy.

What costs more in Italy?

Even though Italy is one of Europe's biggest food producers, buying groceries here is more expensive than the EU average: 13 percent higher, in fact, making it cheaper than Ireland, Sweden or France but pricier than Germany, the Netherlands, Spain or the UK.

According to the latest national statistics available, the average Italian household spends €457 a month on groceries, the equivalent of nearly 18 percent of their total expenditure. But at least inflation is relatively low: food prices increased by just 0.4 percent between May 2018 and May 2019.

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Photo: Andrea Solaro/AFP

It'll also cost you more to kit out your house: home furnishings cost 11.9 percent higher than average and are more expensive in Italy than any of the 28 EU countries except Luxembourg – so if you're moving here, it might be worth considering shipping some of your homewares with you.

The cost of communications – phone and internet services and equipment, the post – is 10.4 percent higher in Italy than the EU average, which makes it slightly more expensive than the UK and significantly more expensive than France. But it remains cheaper than Sweden, the Netherlands or Spain.

Even so, communications is one of the few areas of spending in Italy where prices are actually falling: they cost 9.4 percent less in May 2019 than they did in the same month a year before, a far bigger decrease than in any other category.

Internet companies in particular have struggled to attract customers more than in other EU countries: just 79 percent of households in Italy have a broadband connection, compared to 85 percent across Europe.

READ ALSO: Foreigners rank Italy 'worst in Europe' for internet and paying without cash


Photo: Vincenzo Pinto/AFP

Disappointingly for those looking to travel or eat out in Italy – i.e. everyone – bills for restaurants, bars and hotels here are 4 percent higher than the EU average. It's noticeably cheaper to dine or stay in Greece or Spain, and only marginally more expensive in the UK (7 percent above average), though most northern European countries are significantly pricier.

Prices for restaurants and hotels have increased by 1.1 percent in the past year, according to Italy's national statistics office. But the in-depth picture probably varies widely because of the sheer number of establishments in Italy: yes, there are plenty of pricier places, but it's not hard to find great-value options, especially when it comes to eating out.

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Buying a car, motorbike or bicycle in Italy will cost you 2.4 percent more than the EU average. When it comes to personal transport, you're better off going to Germany, the UK, Sweden or Spain (though you'll save money compared to France, Ireland or the Netherlands). 

It's perhaps surprising when you consider that Italy has almost the highest rate of car ownership in the EU, with 625.1 cars per 1,000 residents compared to the European average of 507.3. But many people in Italy feel obliged to buy their own vehicle regardless of cost when public transport is limited or unreliable.

The other things that will cost you slightly more in Italy than most other EU countries are clothing and footwear (1.1 percent above average), and recreation and leisure such as books, cinema tickets, TVs, pets and package holidays (+1.7 percent).


Photo: Marco Bertorello/AFP

What costs less in Italy?

Moving to Italy isn't all bad news for your wallet. Though it might be for your liver and lungs: alcohol, tobacco and narcotics are 5.1 percent cheaper in Italy than the EU average, which puts it in between Greece (-3.8 percent) and Germany (-5.3 percent). And it's much cheaper than expensive Ireland or the UK, where prices are 77.8 and 56.7 percent higher than average respectively.

But booze and smokes are getting more expensive in Italy: they're are among the consumer products with the highest rate of inflation, at 2.1 percent in the past year.

READ ALSO: Seven reasons why living in Italy can be bad for your health

In better news, housing will also cost you less here. The cost of buying or renting property in Italy, as well as maintaining it and paying the utility bills, is 8.8 percent lower in Italy than the EU average. That makes Italy cheaper in this respect than even Spain, which beats it in almost every other category, and tallies with the fact that Italy is the only country in the EU where house prices are actually falling (-1.1 percent in 2017).

But overall, housing expenses in Italy are rising. Inflation is at 3.3 percent on housing and utilities, making it the fastest-increasing cost in Italians' household budget.

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Photo: Christophe Simon/AFP

Travellers will be happy to hear that Italy is one of the cheapest places in the EU to take transport. Catching a train, bus, plane or boat is 22.7 percent cheaper in Italy than average, making it slightly cheaper than Spain and a fraction more expensive than Greece. Almost every western European country is pricier, especially the UK (26.6 percent above average) and Netherlands (+34.3 percent).

Anyone who's ever waited for a bus in Rome will tell you, though, that you get what you pay for. Public transport in Italy is cheap and it shows, though trains (mostly) offer better service and often at bargain prices.

What do you think?

In my own experience as Brit in Rome, I find anything bought from a pharmacy here, whether medicine or cosmetics, significantly pricier than in the UK. Public transport is a fraction of what I'd pay in London, though usually for a fraction of the service – the one exception being regional trains, where I'd take Trenitalia over Thameslink any day.

READ ALSO: The 25 stats that help explain Italy today

Groceries aren't dirt cheap, but nor are they overpriced – and you often get a great price-quality ratio, especially if you shop at markets. My internet and phone contracts offer worse value for money than I could get in the UK, but eating and drinking out is almost always cheaper.

And I'm surprised to hear that clothes and footwear are more expensive in Italy than other EU countries, because I'm always amazed by how cheaply I can find well-made leather shoes here.

What's your experience? And how does Italy measure up to countries outside Europe? 

Fill in the form below to let us know.

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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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