jonwel

Since October 2014 I've been receiving a small British contribution for my pension and since 1 August 2016 I've also been receiving the Italian part from INPS.
I've now received a letter from INPS saying they've heard from the DWP how much I'm getting and (among all the bureaucratic phraseology) they seem to want to tax the British part. Presumably they'd like to subtract from the Italian part what they think I should be paying on the British part, probably 20%, which I would then have to get back, if too much, when I make my annual declaration.
I've got 90 days to appeal and I'll be moving in that direction but if in the meantime someone knows something about this I'd be grateful!

Cheers everyone and Happy New Year!

Geordieborn

It may well be a little more complex than you think if you are not aware of how calculations of pensions are carried out under the EU regulations! It was a very long time ago now, but for my sins I had to get to know these calculations for all the then EU countries. I’m totally out of touch with this now, but in those days Italian pension age would be around 5 years earlier than a UK state pension. What should have happened is the Italian authority would ask you when claiming if you had any foreign insurance and if so take it into account when calculating your Italian pension. They then should have reviewed that pension when your UK pension became due. This is where it becomes a bit more complex and depend on things like whether or not you have been receiving a 100% Italian pension? Sorry if you are aware of all this and I’ll not expand on it until you put me right as it could well be just a tax thing…

ononno

Been there, done that, got the t-shirt. If I were you I'd hand any correspondence from INPS over to your ragioniere or local CAF. Anything from DWP is easily handled by your good self.
Happy New Year everybody, and a warm welcome to the pensioners.

Serrano

I assume from the way you describe the situation that you are tax-resident in Italy. If that is the case then your entire income world-wide will normally be taxable in Italy. Thus on the British part - which will not have been taxed, becasuse you are not resident there, and in any case it presumably is less than the £10K personal allowance - you will be required to pay tax.

Or have I missed something?

Oh yes, I have. Happy New Year!

jonwel

Thanks all three for your replies! One thing that raised my hopes was that the form E210 UK gives a table of 4 lines, from 6.6 to 6.9.
6.6 Monthly amount where appropriate for etc etc. This states the monthly amount that I actually receive from the UK
6.7 Part of the amount awarded on the basis of voluntary insurance. Left blank
6.8 Monthly amount before deduction of taxes etc. Left blank.
6.9 Monthly amount due (amount paid after deduction of taxes etc. Same figure as in line 6.6.

Now if the British authorities didn't know what tax rate to apply (because I'm resident in Italy), why did they put my entitlement in line 6.9 (after tax) and not line 6.8 (before tax)?

I'll let you know how things go!
Thanks again!

Geordieborn

I think Serrano has it spot on! The fact you have an E210(UK) means your UK pension has been calculated under the EU regs and not just sole UK legislation. If you have no other income, then they would assume no UK tax in any case as pointed out by Serrano as it will be covered by your UK tax allowance. I think the bad news will be the % tax payable in Italy - is it only 20%? By the way you should also have had a E210(IT) as they should have calculated what the pro-rata pension would be using your UK contributions. However it hardly ever makes much difference and if you have the max Italian pension % it would certainly make no difference. Probably not the best New Year news to get, but here is hoping the rest is better - Happy New Year to you and all ...

37100

Because it is a HMRC form and as far as they are concerned you have fulfilled any UK tax implications with them even though you haven't (or have?) actually paid tax?

As Ononno said, the CAAF is your go to for this.

Capo Boi

I've got to say that I think Serrano is spot on as well. If you are resident in Italy then you are taxable on your world wide income. The UK personal tax allowance is irrelevant under Italian tax rules. It is the gross U.K. number that applies. If you have been taxed in the U.K. on your pension then under double taxation rules then you should be able to offset this against any Italian tax due (at least most of it). If you have not been taxed (as the suggestion here is) then I'm afraid, you may have further tax to pay in Italy. The whole crux of the matter is that Italy similar to most other European countries operates a system of tax deductions (e.g. for certain medical expenses, for number of children etc.) rather than a 0% tax band which is what the personal allowance effectively is. Further, the starting tax band in Italy is 23% not 20% as in the U.K. Best wishes though. Argue like mad and try to find some of your expenditure that is tax deductible.

jonwel

Thanks to all for the further replies! Yes, it'll have to be the CAAF and I'll also ask for information from the DWP.
The 0% tax band used to exist in Italy, but it was abolished, presumably to allow a reduction in taxes for the rich...

Serrano

Just one more small point - you should really have been declaring your pension from the UK since 2014 to the AdE. If not then technically you are liable for payment and surcharges, possibly a fine as well. But since it seems to be a small amount and undeclared over a short period I wouldn't lose any sleep over it, though you ought to consider coming clean about it. A comercialista may be best for advice on this.

Geordieborn

What I find a little odd is the fact it's a letter from INPS and not the AdE, I would have thought Italy was not that joined up?

jonwel

I've been wondering about that! The fact is that I've never received any documentation from the DWP, like the Italian CUD, that I could attach to my declaration as proof of payment and all I'd have would be my estratti conto, with a variable figure depending on the exchange rate. In addition, the fact that the DWP has now sent INPS a record of my entitlement since October 2014 may well amount to the official statement. However, my commercialista is a friend, somewhat disorganised, and when he made my 2014 and 2015 declarations I did actually send him details of what I'd received, based on my bank statements, so perhaps he did take it into account. I'll have to ask him (he's got my declarations).

PS Seen Geordieborn's post now. Yes, it may indicate that this is normal practice and it hasn't become "sensitive" yet. It's INPS wanting to act as sostituto d'imposta.

jonwel

Good news! My pension receipts for 2014 and 2015 were taken into consideration as "lavoro dipendente" and duly declared and taxed in my modello UNICO. The only difficulty is that the AdE/INPS won't know what these taxes represented, so I'll have to provide documentation to convince INPS not to act as sostituto d'imposta, which would mean paying double taxes and then having to claim them back.

There are other complications to deal with, but I'll let you all know about those in good time!

jonwel

Panic over! I finally managed to talk to someone from INPS. It turns out that the whole thing is about nothing at all. All it is, is that if you need to claim a supplement to bring your pension up to the minimum, the pension from abroad will be taken into account. The INPSman said that obviously wasn't my case. So why did they send me the letter? "Oh, it's something we send to everyone". Yeah, making people s**t themselves over nothing.
Taxes don't come into it. INPS send pensioners a CUD, but that only covers what they receive from INPS, not from abroad. What I get from the DWP I declare directly to the AdE, INPS doesn't come into it and they don't act as sostituto d'imposta, so there's no danger of double taxation. I'm doing the right thing already, paying less with a little help from my tax consultant friend (useful friendship to have!).

Lorna at Vicenza

Glad you got things sorted and that the panic is over. Shame it wasn't avoided in the first place.