italian income tax question.

[corrado]

sorry this is getting really strange.
I will be teaching in Italy at a military base for an American university. There is a tax treaty called the status of forces aggrement or SOFA for short. Any income I make here is taxed as US income and not by Italy.
Here is my question. I teach online for an American college and will be doing this while in Italy. Should I somehow declare this as Italian income? Also I never stay in Italy more than 180 days a year so as not be become a tax resident of Italy.
Thank you for you help in this, have a great Christmas.

[bbivona]

sorry this is getting really strange.
I will be teaching in Italy at a military base for an American university. There is a tax treaty called the status of forces aggrement or SOFA for short. Any income I make here is taxed as US income and not by Italy.
Here is my question. I teach online for an American college and will be doing this while in Italy. Should I somehow declare this as Italian income? Also I never stay in Italy more than 180 days a year so as not be become a tax resident of Italy.
Thank you for you help in this, have a great Christmas.

Your SOFA agreement likely only covers that work. I would be very careful with all this. It’s my understanding that the Italian government takes the position that if you’re earning income from other work while you’re there that you need a work visa. I think that may make affect or invalidate your SOFA protections, which probably have a number of consequences beyond just taxes.

That said, outside of the SOFA there is a general U.S.-Italy tax treaty that could still help. Article 20 of the treaty likely protects your teaching income on the base from Italian taxation. More information is needed on your online teaching work to know how the U.S. teaching income would be handled under the treaty. Are you an employee or an independent contractor? Is the college associated with a state or local government or is it private? The treaty has different rules depending on these answers.

Even if you’re taxed in Italy, you’ll be likely be able to claim the foreign tax credit for the taxes paid in Italy on that income. The credit has the effect of eliminating double taxation but makes you pay tax at the higher of the U.S. or Italian rate on that specific income.

The Italian rules aren’t unreasonable. The U.S. ones work the same way. Regulation 1.861-4 provides that income from services is sourced to where the labor is performed, regardless of for whom it is performed.

I would suggest checking with the base and seeing if they have someone that could help you navigate this or point you to someone who can. You’re likely not the first instructor with this issue.

[corrado]

The Italian rules aren’t unreasonable. The U.S. ones work the same way. Regulation 1.861-4 provides that income from services is sourced to where the labor is performed, regardless of for whom it is performed.

thank you this is the important point. I don't need a visa as I am an Italian citizen. No one on the base will have any idea of what I am talking about. Your answer shows you are the 1 in a 1,000 who knows about the SOFA.
You have to be a EU citizen at least to do this job as the base is owned by the Italian government and of course they want a citizen doing the work. It doesn't seem to matter that I don't live in Italy. I will find out what I need to do report the income. I want to be able to take advantage of the benefits of living in Italy like the health insurance.

Your answer isn't the one I wanted, but is the most logical. Thank you for your info. Have a great Christmas.
Jon

[bbivona]

The Italian rules aren’t unreasonable. The U.S. ones work the same way. Regulation 1.861-4 provides that income from services is sourced to where the labor is performed, regardless of for whom it is performed.

thank you this is the important point. I don't need a visa as I am an Italian citizen. No one on the base will have any idea of what I am talking about. Your answer shows you are the 1 in a 1,000 who knows about the SOFA.
You have to be a EU citizen at least to do this job as the base is owned by the Italian government and of course they want a citizen doing the work. It doesn't seem to matter that I don't live in Italy. I will find out what I need to do report the income. I want to be able to take advantage of the benefits of living in Italy like the health insurance.

Your answer isn't the one I wanted, but is the most logical. Thank you for your info. Have a great Christmas.
Jon

Best of luck. You may need to get with a commercialista over there. There are some exceptions in the U.S. - Italy treaty that may still help you exclude it, depending on the type of college you're working for and whether you're a W-2 employee or independent contractor, but without knowing more details I don't know.