With UK-Spanish dual citizenship, can I be self-employed in Italy but also supply UK companies?

Contractor’s Question: I’ve got a dual nationality of British and Spanish, but it’s Italy I’m moving to in 2024.  

I have worked in the UK for over 30 years, albeit as employee, although I will become self-employed in Italy.

So, will I be able offer my services in the UK, for UK companies, while primarily working remotely from Italy? I do envisage I will be visiting the UK a few days a month for face-to-face meetings and demonstrations to customers.

Are there tax or compliance considerations here, and also, would my situation put off potential UK customers? Finally, I would like the customers to pay me in pounds, and I feel that is going to be easier for them anyway. Please advise!

Expert’s Answer: Yes, you can offer your services in the UK, to UK companies, while primarily working remotely from Italy.

However, you should indeed be aware of a few tax and compliance considerations.

Tax

As a self-employed individual working in two countries, you must pay taxes. However, double taxation treaties are in place between the UK and Italy to prevent you from being taxed twice on the same income.

In the UK, you must pay income tax and National Insurance Contributions on your earnings. You must also register for self-assessment with HMRC and submit a self-assessment tax return to the tax department each year.

When you’re in Italy, you must pay income tax and social security contributions on your earnings. You must also register as a self-employed individual with the Italian tax authorities.

If you are no longer a UK tax resident, you will not need to pay UK tax on your income outside the UK. However, you will still need to pay taxes in Italy on your global income.

Further (HMRC) considerations

Be aware, you must inform HM Revenue and Customs (HMRC) if you’re either:

• leaving the UK to live abroad permanently
• going to work abroad full-time for at least one full tax year.

The tax year runs from April 6th to April 5th the following year.

As to how to inform HMRC, that depends on whether you fill in a tax return. It also depends on your employment status.

If you don’t usually complete a Self-Assessment tax return…

If you’ve already left the UK, fill in form P85 online. If you haven’t already left the UK, download and fill in form P85 offline.

If you usually complete a Self-Assessment tax return…

You can tell HMRC you’re leaving through your Self-Assessment tax return. Complete the ‘resident’ section (form SA109) and send it to HMRC by post. Please note, you cannot use HMRC’s online services to tell them you’re leaving the UK.

Once you have established your UK non-tax resident status you are no longer subject to UK taxes on your worldwide income, although you will still be taxable on income that arises in the UK such as rental property income.

Compliance

Fortunately for you, with your Spanish passport, you can work and live freely in Italy, but you should register with the commune where you live.

You should also register as a self-employed individual with the Italian tax authorities.

What about UK customers?

Your dual nationality and being based in Italy should, in our experience, not discourage potential UK customers. Many UK businesses are looking to hire remote workers from overseas.

Also, your UK clients should not have difficulty paying you gross when you present your invoices. They need not worry about IR35 and the Off-Payroll Rules as you are not planning to work through a limited company.

GBP payments

You can ask your UK customers to pay you in GBP -- your preference. You can open a GBP bank account in Italy to receive these payments. You may also consider using a currency exchange service for the best exchange rate.

Final recommendations (includes learning the lingo!)

I recommend you speak to a tax adviser for specific advice on your tax situation.

Here are some additional tips with the move to Italy you’re considering:

• Make sure that you have a clear contract in place with each of your UK clients. The contract should specify the scope of work, the payment terms, and other relevant details. Your supply of services will likely need specifying as remote.
• Keep accurate records of your income and expenses, which will help you to complete your tax returns accurately.
• Make sure that you pay your taxes and social security on time.
• Practice your Italian now as outside of Italy’s major cities, you may struggle to make a go of living there if you’re constantly relying on your UK contacts for a conversation you understand!

The expert was Kevin Austin, managing director of overseas contracting advisory Access Financial.