IVIE and RESIDENCY

I read here that being domicile resident in Italy does not mean you automatically pay IVIE. A couple of questions;-

1. When calculating how many days you are resident in Italy do you discount days out of the country if you are departing and returning to Italy? Is it important to keep note of this? I'm not sure how you prove this if you were driving out of Italy etc but nonetheless I'm curious to know how i should keep track to satisfy the tax authorities.
2. If I took up residency in late february of this year but all my earnings are from the UK where I also own property should I have paid IVIE yet?

Thanks

I'm afraid I can't answer point 1 but on point 2 the answer is sort of. You have to pay the 2012 IVIE on the 2013 (ie this year's) tax return PLUS a sum on account for 2014's IVIE. However if you took out residency in Feb this year then you will not have to file a tax return for 2013 until 2014 so the answer in your specific case is probably NO.

Confused? Welcome to Italy where nothing is clear and everything will change

If you are up for it, have a look at these links which will tell you why this question is difficult for anyone to answer.... UK's HMRC and/or KPMG Article

Great article Steve.

This might be/become of interest AbruzzolutelyForum LINK to some.

My understanding is that IVIE is only payable if you are tax resident in Italy (which is not necessarily the same as resident for other purposes including registering as resident or becoming liable to register as resident with the local commune).

Please note that both articles referred to by Steve above are out of date as regards the determination of UK tax residency (although still relevant regarding the myths surrounding the 183 day situation). New statutory rules were introduced with effect from 5 April 2013 (for 2013/14 and subsequent tax years)

The 183 days rule is neither absolute nor sacrosanct in determining residence for tax purposes. As noted in other postings, it is quite possible to be tax resident in both the UK (under its domestic rules) and Italy (under its domestic rules). However under the UK/Italy DTA it is only possible to be tax resident in either Italy or UK but not both. There are tie breaker provisions that determine which and it is quite possible to be physically resident in Italy for more than 183 days but tax resident in the UK (and under the tie breaker provisions not tax resident in Italy).

The difficulty may be persuading the Italian tax Authorities that you are not Italian Tax resident even though you are registered as a resident and there for more than 183 days in the year. The first stage would be to get confirmation from the UK HMRC that they consider you tax resident under both UK domestic rules and under the DTA.

Although the UK has made the resident test statutory from 2013/14 the old rules still apply for any tax years before that and are therefore not fully out of date yet and will in fact not be until 2017/18 or thereabouts.... This HMRC LINK  gives or leads to the boring detail.... HMRC have still not interpreted (the way they want to...) the legislation, so you have to read their guidance along with the Regs if you want the full details!
It's interesting to note Panner that you think IVIE is only if you are tax resident....?

That's a good point Steve. IMU/ICI is payable by residents (not tax residents) and this IVIE tax is supposed to be the same as that.

I think taking it to the European Court will be very interesting.

IVIE is payable only by tax residents, ie only those who need to fill in a tax return with RW section.   Elective residents are not eligible as they are not tax resident in ITaly.

Thanks for the info Modi. That's the second time I've heard the term "elective resident" in 2 days, what is it?

Here is an interesting article about Elective Residency in Italy

Great link Gala thanks...

Glad to help, I thought that it was the best on the topic.Certainly, it is a visa for non-EU citizens...

How would a Brit be an elective resident if we don't need a visa nor a permesso? Where would it say that?

Admin wrote:How would a Brit be an elective resident if we don't need a visa nor a permesso? Where would it say that?

They wouldn't and couldn't because they are EU would be my guess. However that does raise the question of it being different/easier for none EU people. This will be resolved long term, but heavens knows where we will be by then!

The way I see it is that income tax should be paid in the country where your income is produced, which may not be your country of domicile. Simple!

Gala Placidia wrote:The way I see it is that income tax should be paid in the country where your income is produced, which may not be your country of domicile. Simple!

I would kind of agree, but do not think it is that simple in reality. You work for a multinational based in country "A" with a base in country "B", you work in country "B" , but get paid in country "A". You are living in and using tax resources of country "B", but paying no tax there? I'm sure there are other scenarios where it just does not work. In point of fact, with the growing internet sales I suspect this is going to become a major challenge for all governments.

Steve, in the case you mention, country "B" is not a mere domicile.It is the country where that person WORKS, even if the headquarters of his company are located in country  "A" and they look after payments, etc. I think that a better example would be a retiree from country "A", who lives more than 183 days in country "B", but whose income comes exclusively from funds invested in country  "A". And I think that this is the "spirit of the law" behind the visa for elective residents.

No I'll go with my example thanks Gala....

Admin wrote:How would a Brit be an elective resident if we don't need a visa nor a permesso? Where would it say that?

The article specifies non-EU citizen; however, although a Brit - or any other EU citizen - could argue that the same "spirit of the law" could apply to everybody. Otherwise, it would be discrimination... I wonder what the EU would say...

stevegwmonkseaton wrote:No I'll go with my example thanks Gala....

Steve, the article mentions pensions, dividends or income from leases, etc. It is meant for retirees, or for people who do not work and who are not EU citizens...

Gala Placidia wrote:

stevegwmonkseaton wrote:No I'll go with my example thanks Gala....

Steve, the article mentions pensions, dividends or income from leases, etc. It is meant for retirees, or for people who do not work and who are not EU citizens...

What article Gala... you referred to "income tax" 

No, Steve, I was talking about elective residency, see my post on the othr page; however, it has to do with domicile and elective residencies and where tax is to be paid. Also, see Modi's post. It is all related.

Elective residency is not available (in practise) for EU citiziens - as you are either a resident or not.  For anyone else from outside the EU its an option when you get your PdS.     In effect if you are a European you have no choice to be domiciled but not resident, or vice versa - so if you are resident in Italy for whatever reason according to the anagrafe you are also tax resident.  Or not.  Basically its because with open borders they cant keep tabs on you, so opt for the usual Italian viewpoint of guilty until proven otherwise.

Gala Placidia wrote:The way I see it is that income tax should be paid in the country where your income is produced, which may not be your country of domicile. Simple!

?  ?