Important - Declaring your foreign property on your Italian Tax return

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Post by Admin on Wed Feb 05, 2014 3:52 pm

Several people in Marche have been hit (or will be shortly) with a stonking big bill (3% of the property purchase price for each year not declared) for not declaring their UK property on section RW of their Italian tax return. Some of these had been under the false impression they did not need to complete an Italian tax return as they paid their taxes in the UK.

They have now found out to their cost that this is not the case. If you are an Italian resident and own a property in the UK or anywhere outside Italy you must declare it on section RW of your Italian tax return. Up until 2012 no tax was due on it but you still had to declare it (along with transfers from abroad over €10,000 and a number of other things). Failure to do this incurs a huge fine even though you have not avoided tax. Obviously since 2012 IVIE is also due on the value of this property of IVAFE on any proceeds of foreign investments. We do not know yet if they will also be fined for not paying tax in Italy on their UK rental income. I suspect they will but it remains to be seen.

Do not ignore this. The Italian tax office contacted the UK one to find out who owned properties in the UK, checked this against their Italian tax return (or lack of one) and that is how they found out. Things are a lot more joined up than the used to be. The fine is 3% of the purchase value of the property for each year not declared. This is a huge fine.

Also remember for properties in joint names that both of you must make the declaration.
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Post by stevegwmonkseaton on Wed Feb 05, 2014 5:39 pm

Admin you have been busy... Thanks.

Now off to find the post where Modi said how to tell them you are no longer resident over there... Must be loads cheaper to do that and pay IMU (or whatever it is these days). Great way to get investment in the country - scare everyone away...

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Post by Admin on Wed Feb 05, 2014 5:42 pm

Steve - they recently put the fine down from 10% to 3%! Can you imagine? The law has been in place for many years so it is not new. I think they now have the tools and agreements to catch you out.
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Post by stevegwmonkseaton on Wed Feb 05, 2014 5:54 pm

Admin wrote:Steve - they recently put the fine down from 10% to 3%! Can you imagine? The law has been in place for many years so it is not new. I think they now have the tools and agreements to catch you out.

"many years" Am I mistaken this for some other tax then? Thought it only came in around a year ago and then was in retrospect to a previous year? I've now seen the "other link" i.e.  THIS POST are these not one and the same subject/tax?  confused

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Post by stevegwmonkseaton on Wed Feb 05, 2014 6:09 pm

Ok Admin, the devil is in the detail. I now see you are saying you have always had to declare that you have property. But you also seem to indicate the fact you don't complete an Italian tax return (e.g. because you pay tax in the UK or don't earn/have investments) is irrelevant and you should if you have property in the UK regardless if you are not due to pay Italian taxes?

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Post by Admin on Wed Feb 05, 2014 6:50 pm

Absolutely the case from 2012 onwards. You would need to consult an accountant for prior years. The situation the people in Marche find themselves in implies a tax return should have been done for those years too. Some definitely should have been doing a tax return and others it is not so obvious.
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Post by stevegwmonkseaton on Wed Feb 05, 2014 6:58 pm

Admin wrote:Absolutely the case from 2012 onwards. You would need to consult an accountant for prior years. The situation the people in Marche find themselves in implies a tax return should have been done for those years too. Some definitely should have been doing a tax return and others it is not so obvious.

Thanks Admin, fortunately we were not resident there for the earlier years (and likely won't be in future - far too barbaric)  Smile

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Post by ghiro on Wed Feb 05, 2014 7:23 pm

stevegwmonkseaton wrote: Great way to get investment in the country - scare everyone away...





Spot on (as ever) Steve.  Smile

When we bought 8 years ago life was simple.  We paid our IMU & rubbish tax.  We had access to oodles of cash so didn't worry about IVA on building works etc.  La vita was indeed dolce!

Then we were told that although we couldn't get Italian TV, because we got UK TV on a satellite dish, we needed an Italian TV licence.  We ignore that to this day.

Then we were told we needed to pay tax in Italy on the money we could earn by renting out our house - even if we didn't!  We also ignored that!

Although we spend more than 3 months/year in Italy nobody here/there knows that.  There's no passport check on road frontiers and no record is kept at Pisa airport.  So that's also not been an issue.

But Admin has scared the sh*t out of us today (I know she's only being kind and helpful really and we all appreciate it).  20% on money transfers!  Shocked  Shocked   Tax on your UK home!  Shocked  Shocked

Seriously if the environment gets too hostile in Italy we'll sell up and move to somewhere else or, perhaps, spend the money from the house on a few nights of luxury in the Splendido in Portofino!  Smile
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Post by Gala Placidia on Wed Feb 05, 2014 7:46 pm

I am afraid that Italy is not the only country with these new "measures". It is an epidemic! Life used to be quite simple... those days are gone. Too many public servants wanting to justify their positions, and we pay for that!
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Post by modicasa on Thu Feb 06, 2014 10:17 am

If you are resident in Italy then you should complete a tax return whether or not you have property abroad.

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Post by modicasa on Thu Feb 06, 2014 10:32 am

Ghiro the law on tv lilcences is cruel, but the same as in the UK:  if you have an 'apparatus' that is capable of receiving a tv signal then you must pay the licence.  Whether you turn it on or not.  
As a typical Italian coda, they have decided that tablets and phones are not eligible for the licence even though they are an apparatus that is capable.... etc, but a tv that is used exclusievly as a computer monitor is eligible --- and so on and so on.

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Post by stevegwmonkseaton on Thu Feb 06, 2014 10:41 am

modicasa wrote:Ghiro the law on tv lilcences is cruel, but the same as in the UK:  if you have an 'apparatus' that is capable of receiving a tv signal then you must pay the licence.  Whether you turn it on or not.  As a typical Italian coda, they have decided that tablets and phones are not eligible for the licence even though they are an apparatus that is capable.... etc, but a tv that is used exclusievly as a computer monitor is eligible --- and so on and so on.

Thanks for the info on having to complete a tax form Modi (no wonder the country is in a mess). But not quite the case on the UK TV licence front Modi. In the UK you do not need a licence even if you have a TV, it is only illegal to watch whilst not having a licence. Interesting that you say phones and tablets are not a device that needs a licence, this I'm sure will change if they wish to persist with their antiquated policy. I believe Lax said here or elsewhere that this entire area will change over the next few years. Italy will simply fall further behind if it fails to change and/or continues with its backward thinking legislation.

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Post by stevegwmonkseaton on Thu Feb 06, 2014 10:57 am

modicasa wrote:If you are resident in Italy then you should complete a tax return whether or not you have property abroad.

Modi thanks for this. Do you know if this is "resident" or "tax resident", from what I have read the former is required after 3 months continuous living in Italy, whilst the latter is 168 days or more in a year (tax year?).

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Post by Gala Placidia on Thu Feb 06, 2014 11:21 am

I found this link that gives some good definitions Italy basis of taxation
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Post by modicasa on Thu Feb 06, 2014 11:27 am

Steve you have asked the question that ITaly doesnt recognise!  The answer is tax resident, but for most comunes residence (more than 90 days) is the same as tax residence, and they make no difference between the two.  There is a black hole between the 90  and 183 days that no Italian bureaucrat has been able to explain.

Yes and you're right about the tv licence too - I should remember having worked for the BBC where it is/was a sackable offence to not have one.

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Post by stevegwmonkseaton on Thu Feb 06, 2014 11:42 am

modicasa wrote:Steve you have asked the question that ITaly doesnt recognise!  The answer is tax resident, but for most comunes residence (more than 90 days) is the same as tax residence, and they make no difference between the two.  There is a black hole between the 90  and 183 days that no Italian bureaucrat has been able to explain.Yes and you're right about the tv licence too - I should remember having worked for the BBC where it is/was a sackable offence to not have one.

Yes or course you are very polite and right, my error, it is "183 days" rule....

The question of the status of pensions is probably better looked at in this UK-Italy DTA LINK not for the faint hearted as it's 30 pages of legal (official) documentation. Page 18 covers ARTICLE 18 about pensions - they are classed as earned income. Of course you are right in saying that getting some Italian authorities to accept that might be a little more difficult. Perhaps tracking down the Italian equivalent document would be helpful....

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Post by Gala Placidia on Thu Feb 06, 2014 11:50 am

modicasa wrote:Ghiro the law on tv lilcences is cruel, but the same as in the UK:  if you have an 'apparatus' that is capable of receiving a tv signal then you must pay the licence.  Whether you turn it on or not.  As a typical Italian coda, they have decided that tablets and phones are not eligible for the licence even though they are an apparatus that is capable.... etc, but a tv that is used exclusievly as a computer monitor is eligible --- and so on and so on.

France also charges the yearly licenc, but they do not care about the TV set or other type of receivers. If the home has had an antenna or dish of any type installed (and they register everything), you have to pay.
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Post by Admin on Thu Feb 06, 2014 3:38 pm

Modi - well said. The problem in Italy, as ever, is that you may or may not have the relevant EU law on your side but the Agenzia delle Entrate and it's agents will have a view and believe me no amount of paperwork you believe backs you up will change it. In Italy the taxman is correct unless you can prove otherwise: ie the onus is on you to prove you are innocent.

Therefore the concept of resident and tax resident is irrelevant. If you have taken your residency out in the comune then as far as the comune, tax office etc are concerned you are tax resident. Just try arguing your way out of that!
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Post by Gala Placidia on Thu Feb 06, 2014 6:03 pm

A very interesting article (in Italian) Residenza Fiscale
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Post by modicasa on Fri Feb 07, 2014 5:57 am

Thanks for the article Gaia, it just further proves the interminable catch 22 of residence.  If, as the article says, you are tax resident is you are resident in the comune, or live in Italy more than 183 days a year, it completely ignores the legal requirement to take up residence if you are in Italy for more than 90 consecutive days.  Therefore according to the article, you will be tax resident if you follow the law after 95 days, which is completely at odds with the requirements for tax residency.
And once we sstart on domicilio versus residence - this is a concept that the UK HMT hold dear to their hearts, and will prove domicilio if not residence to get people to pay tax, so while you may be tax resident abroad, if the UK can prove domicile they will also tax you.   To my mind the current state of affairs should indicate the following.  If you dont have the intention of totally selling up and moving lock stock and barrel to Italy, stay resident in the UK.   At least for the next few years until we see how things are going to pan out.

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Post by Gala Placidia on Fri Feb 07, 2014 6:55 am

Good advice, Modi. Each person buying property should carefully analyze his/her personal situation. Preferably with the assistance of a qualified advisor. Internationally, residency between 90 and 183 days used to be considered "temporary residency"  and taxes would only apply if you were generating income in the particular country during your permanence. I am afraid that those concepts are quickly disappearing in the current "money grabbing" exercise. Also, "taxation treaties" were supposed to protect people... I'm afraid that the "spirit of the law" has changed. It would be important for people intending to buy holiday homes and rent them while they are not being used, to think twice at the potential benefits/disadvantages of doing that. Taxation, maintenance and other costs, etc may make that option unviable. But each case is different. People should get qualified, sensible advice.
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Post by modicasa on Fri Feb 07, 2014 7:06 am

I think you are absolutely right when you say 'the spirit of the law has changed'  From now on things will get ugly.

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Post by Angela Fuller on Fri Feb 07, 2014 7:09 am

Yes, we have to pay for tv licence and can only see Italian tv....as no broadband etc here !
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Post by Vicino on Fri Feb 07, 2014 8:18 am

Angela Fuller wrote:Yes, we have to pay for tv licence and can only see Italian tv....as no broadband etc here !
No broadband at all ??! Crikey Charlie !

Hmmm..............It got 'worse' yesterday, the satellite that was temporarily holding the UK terrestrial channels since 2012, is now in the real, actual process of migrating ALL of it's channels to the new Astra 2E (I think it is !). Yesterday all of the BBC TV & radio channels moved and are no longer available and they will 'shortly' followed by ITV, Ch4 etc.  Crying or Very sad 

On a slightly brighter note.................search for 'digital divide' 'le marche' or check this link

http://www.scoop.it/t/le-marche-another-italy/p/4005679899/2013/08/05/telecom-italia-launches-digital-divide-project-in-marche

I understand Fidoka is one of the 'players' so MAYBE (!!!!) we could be getting up to 20mb via wi-fi soon   Laughing 

If you have an OK connection anyway, you could try http://www.filmon.com/tv/live which provides access to UK TV ?

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Post by Angela Fuller on Fri Feb 07, 2014 9:09 am

Thank you Vicino.....will look into it but think it is a no-goer.....We are surrounded by oak trees and not in sight of a transmitter....all in all, not good.
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