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.

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....

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.

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!

A very interesting article (in Italian) Residenza Fiscale

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.

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.

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

Yes, we have to pay for tv licence and can only see Italian tv....as no broadband etc here !

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.   

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    

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

V

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.

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.