10719 Health coverage for the self-employed

Hi,

I have a question, which I thought was a minor thing, but may turn out to be a big deal.

My wife and I are EU Citizens (Danish), living in the US, where we have set up a company that now runs well enough that our participation is solely over the internet. Since we have a brain-damaged daughter, we have decided to move back to Europe to be closer to family, and are planning to move to Italy.

We will be permanent residents of Italy, pay taxes on our worldwide income there, even though our income is sourced from the US. According to tax treaty, we would simply get a deduction for taxes already paid in the US.

All the time, I had assumed that by being permanent residents in Italy, paying all our taxes there and contributing to the national health system, that we would be entitled to coverage. But now I'm being told that even EU citizens need to bring a health insurance with them in order to obtain residency.

Is this really true? We can not get international health insurance for our daughter, who was turned down by IHI. But if we pay all our taxes in Italy and contribute fully to the health system, how is it possible for us to not be covered? We will report about $200,000 in taxable income a year in Italy. We will also likely structure it as setting up an EU branch of our company, and being employed directly by it, rather receiving the income from the US. But we would pay taxes as permanent residents, and report our worldwide income.

I would love to hear anyone's expertize on this matter, as this has suddenly become the number one issue that would determine IF we can even move to Italy.

Thanks much,

Per

Category

Legal

You are, unfortunately, well advised, Per. As a citizen of another EU member state you certainly have the right to live and work in another member state - subject to the laws of that member state. In Italy, you will have to have private health care unless you have a work contract here. As self-employed, you should contact an Italian accountant and sort out your legal position. Once you have paid taxes here, it should not be a major obstacle to enter the public health schemes - but you will need professional help and guidance to do this. Of course, if you were to be resident in the country of your citizenship, you will have the full benefit of the health provisions of that country - once you have established your residency there again.

I think you may have an additional problem in that although EU citizens you haven't recently been paying in to another EU health system which would, I believe, at least entitle you to short term cover.

I'm semi-retired and had a related problem but managed to get my cover extended to 2013 on the back of a temporary summer contract and smiling a lot at the local ASL. I've since got work at a couple of local schools so maybe that will help me if I ever need to renew. There doesn't seem to be a minimum you need to earn so perhaps one of you could get a short term contract whilst matters are sorted out? Either way I think this is one situation where professional advice is needed.

Good luck

Hi,

Yes, I don't believe it would be possible to get reciprocal coverage, because we've been in the US for 8 years. Yes, we need to hire a professional. And we need to find some sort of short term international cover, even if we couldn't get long-term cover.

The burning question is, assuming that we find short term cover, how long would we need to pay taxes and contributions in Italy in order to access the health system?

Thanks,

Per

[quote=perholmes;99879]Hi,

The burning question is, assuming that we find short term cover, how long would we need to pay taxes and contributions in Italy in order to access the health system?

Thanks,

Per[/quote]

The only person/people that could possibly answer that particular question with any chance of being right would be an accountant here in Italy. You would have far too much to lose to take the risk of following any advice proffered on the internet without professional support and local knowledge of both the legal position and your own financial circumstances.

Good luck! I hope you work it out, Per.

Yes, I agree on all points. So the next question is, does anyone here want to recommend an accountant who could be hired at least as a consultant on this isolated issue. FYI, we were/are planning to move to Rome.

Thanks,

Per

[quote=perholmes;99881]Yes, I agree on all points. So the next question is, does anyone here want to recommend an accountant who could be hired at least as a consultant on this isolated issue. FYI, we were/are planning to move to Rome.

Thanks,

Per[/quote]
Your own embassy will have a list of accountants that may be helpful to you - also look at both the USA and UK embassy websites for English-language speakers (I assume that you would be more comfortable dealing with speakers of either your mother tongue, or English?)

I have contacted the Danish Consulate in Milano, who asked me to write an email to a specific person at the consulate and call her tomorrow.

Best,

Per

If you don't have, or can't find a Danish tax/accountancy advisor who specialises in Italian and cross border stuff, you could send a Private Message to another member here [url=http://www.italymag.co.uk/forums/members/michael-j-murphy-aca.html]Italy Magazine Forums - View Profile: Michael J Murphy ACA[/url] or make contact via his website [url=http://www.mjmurphyaccounts.com/index2.html]Michael.J. Murphy A.C.A[/url]. He's a cross border specialist who deals predominantly with UK nationals, but he also also offers advice & guidance to individuals & businesses in the USA (amongst other English speaking countries) dealing with Italian tax issues. I believe that several members here have used his services and have been very happy.

My own tuppence worth meantime: if you do what your first post suggests (set up an Italian branch of your US company and become an employee of that company) the company will need to pay healthcare contributions on your behalf. Then, as an EU citizen employed in Italy, you would not need to rely on reciprocity or the timing/value of previous state healthcare contributions in your home country - the Italian employer contributions should surely cover you from day 1 (as long as you have incorporated the company and issued a work contract to yourself prior to day 1, which you then use to obtain the state healthcare).

You'd obviously still need professional adivce in order to set up that company legally & efficiently, but as regards eligibility for state healthcare, I can't see why your contract of employment alone wouldn't be sufficient?

Hi,

That is excellent advice on all counts. And yes, we were intending all along to set up an EU branch, because I will continue to run the business, just from the EU, and we need a tax framework to do that anyway. I have allocated a budget for that exact purpose, and I'm thankful for your accounting referral. I'll wait and see who the DK consulate recommend, but their guys may not have tax treaty experience, which is important.

Do you by chance know if it is possible for a non-present/non-resident person to incorporate in Italy? In the US, for example, anyone can incorporate, and in fact, much foreign investment wouldn't exist if foreignors couldn't incorporate.

In any case, don't worry, I'm not planning on doing this on my own. I just want to understand everything that's done.

Best,

Per

Actually, a Google search answered my question on foreigners incorporating:

[url=http://openaeuropeancompany.com/italy.html?gclid=CImoypuctpYCFRxNagodzFgQLg]Italian Company Formation, Company Incorporation Italy[/url]

Not that I would use them to incorporate. But the SrL structure appears comparable to a US LLC, and it appears they have a specific structure for setting up a "branch" of a foreign company, where the foreign company maintains all liability.

While not out of the woods, I think there's a solution in there somewhere.

Thanks!

Per

Per, I would certainly agree with others that a professional is required to advise you before you do anything. A commercialista may be able to advise on much of what is required too.

I am self employed and yes this does cover you - you will (as part of the process) have to register and start to pay IMPS (social security payments) exact amount will vary, but perhaps circa 4,000 per year. Part of the "self employed" game is to register with your local chamber of commerce, who will issue you with a registration/IVA (VAT) number. Of course (!) you can't register with the CoC until you have residency. So some short term cover to get you through that hurdle will be usefull.

No idea (but [url=http://www.formacompany.com/italy.html]Italy Company Formation[/url] suggests that you may be able to do so as long as you elect a tax domicile in Italy). Suggest this is one for your professional advisor to clarify, though presumably the incorporation will only happen if you also proceed to become resident, so I think that this is at worst a matter of timing?

Note - I think there is also an option to form a "branch" of a foreign company. Branch in this context being a legal instrument which, in return for the parent company assuming all liabilities, lessens the bureaucracy of the setup somewhat.

[EDIT - Per, I see you're much quicker at answering your own questions than I am! Still, at least we broadly agree]

Hi Pigro, Piedmont,

Thanks for all your help! Yes, I was aware of the CoC registration. We're now starting to move into true accountant territory, because it's very important to know exactly what's possible to do as a non-resident, i.e. how far you get get in materializing the Italian entity without being resident. Presumably, if it were impossible to set up an Italian entity as a foreigner, Italy would reject billions of dollars in investment. Are you certain you're required to have residence to register a company with the CoC?

In any case, this is very interesting. I strongly feel there's a solution buried in here somehow. The absolutely ideal situation is simply short term health coverage, because that will give me a year to simply be present and set everything up. Short-term should be easier to get than long-term, even with pre-existing conditions (which we'd exclude, so the risk to the insurer is minimal). But even so, it has to be somehow possible to set up a structure and then "move into it".

Contrary to what's common on the internet, I have really gotten excellent advice here. Thanks much!

Per

Italian law makes many distinctions between 'una persona fisica' and un azienda (or persone giuridiche). I agree with your thinking that it cannot be impossible to 'have a business' in Italy whilst not being a resident. However, a really good cross-border tax specialist is who you need. Michael Murphy is most expert in UK/Italian highways and by-ways - and if he isn't up to your somewhat complex origins I'd hope he would be able to put you onto someone who is.

Hi there,

Yes, I'm going to talk with Michael Murphy.

BTW, as I understand it, the key is that your entity has multiple shareholders, or it'll be seen as basically a sole proprietorship with unlimited liability, and personal tax treatment. But at this point, I'm out of my league! I only know US structures.

I'll be out for the rest of the day, but I really appreciate the snappy and wise answers. I'll respond to any new posts tomorrow, but I haven't walked out on the thread.

Thanks much!

Per

Isn't it refreshing to have a "newbie" who is not only "clued up", but also prepared to research endlessly, ask sensible questions and listen to solid advice? :yes:

[quote=juliancoll;99908]Isn't it refreshing to have a "newbie" who is not only "clued up", but also prepared to research endlessly, ask sensible questions and listen to solid advice? :yes:[/quote]

Thank you very much!

Per

Grazie a lei.

Yes indeed. That's why gave the thread five stars!!!

More mundanely, all depends on the age of your daughter. If she is a minor she will be entitled to state healthcare, you will have private insurance but your daughter won't need it. Once you're in the system Im pretty sure it all becomes academic - after you've filed your first return - so its only the first year you should worry about.

Hi,

My daughter is 2 years old. And yes, it seems the concensus is that it's only the first year that's the problem.

Thanks!

Per