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Italian translator moving to the UK: taxes
Thread poster: Alessandra Vanni

Alessandra Vanni  Identity Verified
Italy
Local time: 02:07
English to Italian
+ ...
Feb 25, 2012

Dear Colleagues,

I am an Italian translator with 7 years of experience. I work mainly on a freelance basis but I recently opened my own translation agency in Italy where I currently live. As you probably know, in Italy taxes are incredibly high especially for freelance workers; therefore I am seriously thinking to relocate somewhere else in order to avoid paying so much money to receive nothing back in terms of public services. My favorite country is England -also because I have already lived there for 3/4 years in the past- and from those of you who struggle everyday with the economic crisis, I would like to know the current situation. What kind of taxes do freelance workers have to pay and how it is structured the financial system?

I thank you very much for you precious help.

Ciao,
Ale


 

Russell Jones  Identity Verified
United Kingdom
Local time: 01:07
Italian to English
First steps Feb 25, 2012

Hi Alessandra

As a first step, you might like to explore this site: http://www.hmrc.gov.uk/selfemployed/index.shtml

You should find details on working self-employed or as a limited company, income / corporation tax and VAT.

A search of previous threads in this forum, using relevant keywords, will also tell you about other people's experiences.


 

Tom in London
United Kingdom
Local time: 01:07
Member (2008)
Italian to English
Accountant in London Feb 25, 2012

After more than 20 years living and working in Italy I moved back to the UK largely because I was paying out an enormous amount of my income in about 20 different kinds of tax, and I seemed to be spending 1-2 full days per week just dealing with administrative matters.

So I sympathise, Alessandra. Here in the UK everything is much clearer, and more pleasant too although naturally, you do have to pay all your taxes.icon_frown.gif

If you want to keep your accounting and tax simple, you would need to leave Italy behind and become "resident in the UK for tax purposes" which is a technical expression you will come across if you explore the link provided by Russell. Of course because you are Italian, you may be pursued like a hunted dog by the Italian authorities. I'm afraid I don't know anything about that.

But we're only translators here, not tax consultants. If you want to speak to a real expert, I can recommend an accountant in London who will not charge you a fortune and is a really nice gentleman.

If you want his contact details, just email me privately.

[Edited at 2012-02-25 11:44 GMT]


 

XXXphxxx (X)  Identity Verified
United Kingdom
Local time: 01:07
Portuguese to English
+ ...
Your location Feb 25, 2012

You've had a lot of sound advice already. I just wanted to answer your question about the 'economic crisis'.

My clients have very little bearing on where I happen to be living and this has always been the case, at least for as long as the Internet has been around and allowed this flexibility. So, from that point of view, I wouldn't be specifically concerned about the economic crisis in the UK, you need not have a single UK client, if you so choose. However, what is a consideration are exchange rates and this is a problem for anyone living in a country that has a different currency to their earnings. It's not a reason for you not to move since none of us can predict the future on that score and things could go in your favour as well as against, but it is something to bear in mind in terms of possibly spreading your client base.


 

Alessandra Vanni  Identity Verified
Italy
Local time: 02:07
English to Italian
+ ...
TOPIC STARTER
Thank you Feb 25, 2012

Thank you all for your useful answers.

Here in Italy we have reached nearly the total of 46% of taxes, that is almost half of my income disappears and for me this is unacceptable. Do you know the approximate percentage in the UK? I would like to understand if my idea is feasible, in fact, I will have to consider also the living costs, which are generally higher than in Italy.

You are right Tom, I usually waste at least 2 working days per week just with administrative matters. Everything seems to be way too complicated. Not to mention eventual fines for any error your accountant could make (not a rare matter).

Russell: thank you for the useful link, I have already seen that in the website you suggested I can find many interesting information about my idea to relocate.

Lisa: fortunately the 75% of my work comes from international clients from all over the world so, I am quite accustomed to exchange rates and foreign currencies, but my major concern is that if the economic crisis in England worsens, probably even the tax burden will increase. Therefore, I am trying to understand the trend of the next few years.

Thank you again everyone and have a great weekend!!!

Ale
icon_smile.gif


 

Angie Garbarino  Identity Verified
Member (2003)
French to Italian
+ ...
Have you considered Spain? Feb 25, 2012

Alessandra Vanni wrote:
I would like to understand if my idea is feasible, in fact, I will have to consider also the living costs, which are generally higher than in Italy.


I moved to Spain mainly for the same reason, I considered UK but in the end I decided for Spain, for many reasons but mainly the living costs.

If you like please contact me and I will be happy to let you know why I decided for Spain, since here it is off topicicon_smile.gif

Good luck, I fully understand, poor Italy...

P.S. Dear Russel, please forgive me the slight off topicicon_smile.gif

[Edited at 2012-02-25 15:01 GMT]


 

Russell Jones  Identity Verified
United Kingdom
Local time: 01:07
Italian to English
Percentage Feb 25, 2012

Alessandra Vanni wrote:

Do you know the approximate percentage in the UK?



As self-employed, the first £7,475 (this year) is free of tax (Personal allowance)
The next £35,000 is taxed at 20% and the rest (up to £150,000) at 40%.
All as detailed on this page: http://www.hmrc.gov.uk/incometax/basics.htm#2
So if, for the sake of argument, you can earn £60,000 a year, the tax rate will be about 23% (lower of course with lower earnings).

If your annual business turnover is less than the VAT threshold (currently £73,000) you will not have to register for VAT. Not many translators have sufficient outgoing expenses to justify registration, though some register to avoid arguments with foreign clients (especially in Spain as I understand it).

The other "tax" is National Insurance (for health services, state pension etc.) The current rate for the self-employed (Class 2) is very low, at £2.50 a week, though the benefits are also less than for those in salaried employment.

my major concern is that if the economic crisis in England worsens, probably even the tax burden will increase.


The political pundits tell us that the Government is looking for ways to reduce the tax burden to help boost economic growth, though Government cost saving targets in very many areas could result in some essentials becoming more expensive.


[Edited at 2012-02-25 14:55 GMT]

[Edited at 2012-02-25 14:56 GMT]


 

Vincent Lemma  Identity Verified
Italy
Local time: 02:07
Member (2008)
Italian to English
+ ...
New government financial tax regimes Feb 25, 2012

Hi everybody.

This is quite a topic indeed, especially for Italy lately.
I recently went to an accountant to see what options I had to getting a tax id number for my private business.
They told me all about a fixed rate plan where you pay 5% of all income for a total of 5 years (if you are over 35 as I happen to be).
This dosen't seem half bad at a glance, however I am still compiling more info. I was actually thinking of going back to the US as I have dual citizenship, but really am not sure how much better things are in terms of taxes and spending on health insurance and mortgage rates.

So it's kind of selecting the least of the two evils.

Anyway, at the moment I am pretty much stuck in Italy for reasons that go beyond work, but if worth the deal then I'd probably consider going back home.
Anyone have any personal experiences to share to this regard?

By the way, I just don't get Italy's brutal policy on freelance workers, who are the backbone of this befuddling little country (excuse the term, but as Italian citizen I feel free to indulge).

Catch u,

Vince

[Edited at 2012-02-25 18:07 GMT]

P.s. I too ask grace for speaking about the US instead of my "paesani" from the UKicon_smile.gif

[Edited at 2012-02-25 18:09 GMT]


 

Sonia Hill
United Kingdom
Local time: 01:07
Italian to English
Much simpler Feb 25, 2012

Hi Alessandra,

Having lived and worked in Italy for 5 years in the past, I understand exactly where you're coming from. I moved back to the UK in 2005, partly due to the high level of taxation in Italy. There are many things I miss about Italy (food, friends, etc.), but the taxes aren't one of them!

Russell has given you a pretty detailed breakdown of what you can expect to pay here if you are self-employed. I certainly find that I pay about half the amount I paid in Italy. The whole system is also a lot simpler in my opinion. The cost of living is more expensive, but only up to a certain point these days. The cost of living also depends on where you choose to live in the UK. For example, London and the south in general are more expensive than other areas. I really don't think income/corporation tax is likely to rise significantly in the near future, so I wouldn't worry too much about that.

Good luck with your decision!

[Edited at 2012-02-25 19:36 GMT]


 

Russell Jones  Identity Verified
United Kingdom
Local time: 01:07
Italian to English
Location again Feb 25, 2012

Sonia Atkinson wrote:

The cost of living also depends on where you choose to live in the UK. For example, London and the south in general are more expensive than other areas.


Where you choose to live is certainly an important consideration but perhaps not quite as black and white as this might suggest, at least as far as accommodation is concerned.
For example, I live in Cambridgeshire; Cambridge itself is one of the most expensive places outside London but 20 miles North or West is probably below the national average, so house prices and rents can be very localised.


 

Nicholas Stedman  Identity Verified
Italy
Local time: 02:07
French to English
Two other factors Feb 26, 2012

I moved to Italy last year from France which also has high tax rates for freelance translators - probably ending up at about 47 % of income. After reading all the pages in Proz fora about taxation in Italy I'm waiting in trepidation to learn how much I will have to pay this year and have even chalked in a move back to the UK if things are really bad despite the incomparable quality of life where I live now (Siracusa).
Two factors seem to have been forgotten in the above calculations however - the council tax in the UK which for the size of my flat here in Italy would be about €2000. Also the calculation of tax rates in Italy and France often seems to include the very high obligatory pension contributions. When you calculate your total of 46 %. Alessanda are you including your INPS pension contributions? A lot depends on how much of this enormous "mystery" contribution/tax is actually reallocated.


[Edited at 2012-02-26 08:39 GMT]


 

Paul Stevens  Identity Verified
Local time: 01:07
Member (2003)
Spanish to English
+ ...
Not forgetting Class 4 NI contributions... Feb 26, 2012

Russell's post headed "Percentage" seems to sum up the situation nicely except that he did not mention Class 4 National Insurance contributions which a self-employed translator also has to pay. The amount of Class 4 National Insurance contributions you have to pay for any tax year is based on your profits for that year. For the 2001/12 tax year, it is 9% on annual profits between £7,225 and £42,475 and 2% on any profit over that amount. See http://www.hmrc.gov.uk/working/intro/class4.htm#1

This will obviously add to your direct tax burden, but the total percentage payable by a UK taxpayer would still be less than 46%!

[Edited at 2012-02-26 08:37 GMT]


 

Russell Jones  Identity Verified
United Kingdom
Local time: 01:07
Italian to English
Well spotted Feb 26, 2012

Paul Stevens wrote:

Russell's post headed "Percentage" seems to sum up the situation nicely except that he did not mention Class 4 National Insurance contributions which a self-employed translator also has to pay.


Well spotted Paul; I don't pay these now as I'm over State Pension age.


 

Russell Jones  Identity Verified
United Kingdom
Local time: 01:07
Italian to English
Council tax Feb 26, 2012

NR_Stedman wrote:

... factors seem to have been forgotten in the above calculations however - the council tax in the UK which for the size of my flat here in Italy would be about €2000.


To give Alessandra a rough comparison here - rough because it depends on the 1991 official valuation of the property and varies from area to area - council tax varies in my area from about £1,000 to £3,000 a year. The equivalent of €2,000 would represent quite a nice property. Single occupiers get a 25% discount.


 

XXXphxxx (X)  Identity Verified
United Kingdom
Local time: 01:07
Portuguese to English
+ ...
There are so/too many variables to consider Feb 26, 2012

Taxes are but one of the considerations. I have moved backwards and forwards over the past 12 years between France and the UK, been a registered self-employed worker and paid taxes in both. I realise France isn't the comparison country here but am just using it by way of example. I agree with NR_Stedman that taxes for the self-employed are high in France but if you're on a lowish income there(below around €32k) you have a wonderfully simple system where you simply write off about 30% of your income and just declare that, i.e. no need to present receipts, have complicated accounts etc. That said, there was still plenty of other admin (and time ultimately is money). As a general rule, housing is very expensive indeed in the UK but then food, electrical/electronic goods, clothes etc I find much cheaper than in France. Next you have to weigh up what you're getting for your taxes: healthcare, education, pension, benefits (if applicable) etc and you start seeing that it is an almost impossible calculation, which finally led me to conclude that you should just live where you feel happiest!

 
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