The creation of a free trade area has opened the door to a greater flow of people, goods and services between European countries, encouraging economic and political integration and helping to reduce trade barriers. Cases in which non-Italian residents provide professional services to Italian clients are constantly increasing. In these cases, our tax legislation and the general principles dictated by the OECD provide that the income produced by the non-resident self-employed worker is taxed in the country in which the latter is resident for tax purposes, applying what is known as the 'Worldwide Taxation Principle'.

However, the place where the service is rendered plays a crucial role. In fact, according to the OECD, if the service is rendered in Italy, the Worldwide Taxation Principle cannot be applied. For a long time, there has been debate as to how to clearly identify the place where the service is performed, especially in cases where the income is generated through an activity of an intellectual nature, which could potentially be performed anywhere in the world. To address this issue, the fixed base principle was formalised. According to the definition given by the OECD, later confirmed by case law and the Revenue Agency, 'fixed base' is to be understood as that place on Italian soil available to the professional where, with a certain degree of permanence, the service is performed (not necessarily for most of the year). As already mentioned, the occurrence of this condition precludes the application of the Worldwide taxation principle against the application of Article 23 paragraph 1 of the Income Tax Consolidation Act, by virtue of which the remuneration produced in Italy is taxed according to domestic law, without prejudice to the possibility of obtaining, through a specific request, the reimbursement of taxes paid in Italy if the withholding tax applied is greater than that provided for by any double taxation convention entered into between Italy and the country of residence of the self-employed worker. The taxability of income produced in Italy could result in the non-resident self-employed worker being subject to a greater number of obligations to fulfil, such as:

• requesting a tax code and VAT number
• obligation to produce documentation proving the income actually produced in Italy;
• submission of an income tax return within the ordinary terms provided for the Unico model;
• payment of Irpef and additional taxes;
• payment of social security charges.

In the presence of these accomplishments, and in keeping with the logic of the application of the aforementioned Article 23 paragraph 1 of the TUIR, we might be led to believe that non-resident self-employed workers with a fixed base are equated with self-employed workers resident in Italy. But this is not the case. In fact, a single type of income is subject to different tax treatment depending on the place of residence of the professional. In particular, one of the main differences between self-employed workers resident in Italy and non-resident self-employed workers concerns the definition of the withholding tax to be applied to remuneration. Over the years, the subject has been at the centre of ups and downs; in fact, the Agenzia delle Entrate (Revenue Agency) had equated the non-resident self-employed worker to the resident self-employed worker in this respect, providing for the application of a 20% withholding tax. This orientation, shared for years, was subsequently disregarded following a recent pronouncement of the same Revenue Agency (reply 285//2022) in which, without stating any particular reasons, it affirmed that a 30% withholding tax must be applied to the non-resident subject on a definitive basis and not on a withholding basis.

Other substantial differences can be summarised as follows

• limitations on the deductibility of incurred expenses and on social security contributions (if due, as the
• case may be)
• preclusion from the facilitated regimes if the income produced in Italy is less than 75% of the total income produced by the subject.

That said, in light of the above, in the event a non-Italian resident performs a work service in Italy, it will be necessary to carefully evaluate the applicable legislation on a case-by-case basis.