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Income from employment paid by a foreign company to a person tax resident in Italy 

The Revenue Agency clarifies the case of an Italian tax resident working from Italy for a Dutch company.

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With the answer N.124 dated 20/01/2023, the Italian Tax Revenue Agency clarifies the tax treatment of employment income received by persons tax resident in Italy who work for a foreign employer.

Request of the taxpayer to work from Italy for a Dutch company

The taxpayer declares that he intends to transfer his tax residence back to Italy and to work from Italy in smart working mode for a company resident in the Netherlands. He asks the Tax Revenue Agency to confirm the tax treatment of the remuneration paid by the Dutch company, already taxed at source under foreign legislation.

The position of the Revenue Agency

The Tax Revenue Agency confirms that the employee of a foreign company, who resides for tax purposes and carries out a working activity in smart working mode in Italy, has to pay taxes only in Italy. 

Assuming uncritically the taxpayer’s tax residence in Italy, the Tax Revenue Agency recalls Art 3, Paragraph 1, of TUIR (Presidential Decree 917/1986), which provides that the tax is to be applied on the total income of the subject, formed for residents by all the income earned net of deductible expenses.

In this specific case, the employment income received by the taxpayer, tax resident in Italy, will be subject to taxation in our country, pursuant to the combined provisions of Articles 49 and 51 of the TUIR, which clarify the nature of employment income and its determination.

The double taxation convention between Italy and the Netherlands

Having outlined the domestic legislation applicable to the income in question, the ruling verifies the provisions of the double taxation convention between Italy and the Netherlands relating to this category of income. 

Article 15 of the Convention between Italy and the Netherlands provides, as a general rule in paragraph 1, for the exclusive taxation of employment income in the State of residence of the beneficiary of such income, unless this activity is carried out in the other Contracting State. In this case the remuneration is subject to concurrent taxation in both countries.

Case in question declares income to be taxed exclusively in Italy

In the case presented by the taxpayer, the employment income paid by the Dutch company is paid to an Italian resident in respect of a work activity carried out in Italy. Therefore, the State of residence of the recipient of the income and that of the source of that income coincide. As a result, the income in question is to be taxed exclusively in Italy.

The Convention between Italy and the Netherlands prevents double taxation

The taxpayer will then have to ask the competent foreign tax authorities for a refund of the withholding tax incurred on such income, pursuant to the provisions of the current Convention between Italy and the Netherlands for the avoidance of double taxation. 

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Regulatory Framework

Art. 3 del TUIR


Art. 49 del TUIR


Art. 51 del TUIR


Convention between Italy and the Netherlands for the Avoidance of Double Taxation (Italian)


Response no. 124 of 20/01/2023 (Italian)


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