Important - Declaring your foreign property on your Italian Tax return

First topic message reminder :

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.

The rules (90 and 183 day) are unambiguous and written in Law and cannot be argued even by the Italian bodies. However the point made about proof of the fact is another matter that could be argued. The fact there is little or no border control I think these days is irrelevant, as is keeping evidence of where you are. It is more than likely known where you are by the usage of utilities alone if you have a house in Italy, If not that then credit card use in either country is certainly another obvious factor. Then there is the mobile phone, it only has to be switched on to be tracked as registered with a network and provide a location. Far fetched, I don't think so, rather simple in this day and age, even if it is way past "1984". We were warned, he simply got the actual year wrong....

how depressingly true!

Does anyone know if expenses such as mortgage interest are deductible in relation to rental income from UK property (as is the case in the UK system) for Italian residents? I read somewhere online that this is the case but when speaking to a commercialista today, he didn't seem to think so.