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As an Italian citizen, if I open a company outside Italy (for example, a LLC in US) and operate strictly online, will I still have to pay business taxes on the income of this foreign company to the Italian government?

Since I live in Italy, of course I need to pay my personal income tax in Italy, including the money that I receive from this company.

My doubt is about business taxation on the money that my foreign business receive, not me.

Details: I am Italian and I am thinking in opening a LLC in US for my cloud computing company.

My initial understanding is that US-based companies must pay business taxes on US, but the Italian law isn't clear on that and it seems to try to apply business taxes on foreign companies when owned by Italians, even when those companies are not based on Italy.

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Your business income will also be taxed in Italy.

You need to distinguish two cases:

  • Your company is a "pass-through" entity, i.e.: indistinguishable from the owner for tax purposes. This is how LLCs are taxed in the US by default, but it may not be the same in Italy (for the same company you may end up with a pass-through entity in the US, but a corporate entity in Italy). If it is in fact pass-through - then it just flows to your personal income taxes.

  • Your company is a separate entity. In this case you need to determine where it is resident. It is not resident where it is organized (e.g.: in the US in this case) same as you're not resident where you're born. You may be, but you don't have to be. You're resident where you physically reside, and the company is resident where it's headquarters and operations are. In your case, the company would be organized in the US, but resident in Italy since that's where the headquarters (you) and the operations (your work) are. See more here.

Italy taxes worldwide income of its residents, both individuals and corporate.

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Which income will be taxed in Italy

Are you living in Italy?

You must pay tax on your worldwide income there. (criteria: you are in the Population Registry as having lived there for at least 183 consecutive days over a 12-month period or your life is centred there)

Are you living in Italy for less than 183 consecutive days over a 12-month period?

You pay tax only on the income you earned in Italy.

Do you receive income from other EU countries?

Make sure you never pay tax twice on the same income.

https://europa.eu/youreurope/citizens/work/taxes/income-taxes-abroad/italy/index_en.htm

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  • I really appreciate the reference, thanks! Unfortunately it is clarifying only the part about personal income tax. My doubt is about business taxation on the money that my foreign business receive, not me. Anyway, great reference. Mar 13, 2019 at 12:43
  • Adding just a link at the end of your answer, is not the proper way of providing a reference. We expect you to use external sources only to reference a post which you have written in your own words. Please edit the post and rewrite the answer, or leave the reference as a comment on the post. Mar 13, 2019 at 15:00

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