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Old Dec 10th 2017, 7:41 am   #31
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Default Re: Tax Advice - working for a UK Ltd company and in Italy

There is no tax free amount in Italy unless you are on a very low income. Under the present rules you will pay 1% of your worldwide patrimony pa to the Italian state, in addition to income tax. Dividends (Im pretty sure) are classed as earned income so fall within the usual tax brackets
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Old Dec 10th 2017, 8:21 am   #32
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Default Re: Tax Advice - working for a UK Ltd company and in Italy

I thought an Italian contratto di collaborazione was mentioned somewhere but I can’t find it now, but I just wanted to mention that you can earn up to €5,000 only in this way. More than this and you need a VAT number.

Don’t forget you’ll be paying tax in Italy on your UK accounts and any property you might own too.

Since you ask, the fines are very high if you (or your accountant) forget to declare something. It’s not worth it.

Just a thought for the experts out there: why not just set up an Italian company instead? Surely there are Italian professionals that do work in the UK on a similar basis? Then you just send clients an Italian invoice?

Last edited by Donna Noble; Dec 10th 2017 at 8:56 am.
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Old Dec 10th 2017, 11:23 am   #33
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Default Re: Tax Advice - working for a UK Ltd company and in Italy

Yes you are right, the work that I shall be doing in Italy will be a contratto di collaborazione but I shall be earning more than €5000 in the year.

In the UK, from what I've understood overall from the Expats is:

1. Corporation tax to be paid in UK for Ltd company
2. Pay myself a salary £950/month from business account
3. Pay income tax in the UK, as this is where the work was performed
4. Any dividends that I wish to take out/ money that is left in account at the end of the year I pay dividends on in Italy
5. I pay 1% tax in Italy on my worldwide income, so say I make €50,000 from the two sources, I'd pay €500.

Re setting up an Italian company, I cannot do this. The company has to be in the UK purely in light of the work that I am carrying out.

Is what I have written about sound about right?
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Old Dec 10th 2017, 11:39 am   #34
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Default Re: Tax Advice - working for a UK Ltd company and in Italy

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Originally Posted by rzm View Post
Good morning!

You can see how complicated this is!

I have another question. If I declare my worldwide income in Italy as I am resident here, can I state that I have paid my taxes for the Ltd company in the UK as all the work for that company was carried out in the UK and I can have a file evidencing this i.e. Court date hearings, client meetings, visiting clients in prison etc? ....
I fear you are still confusing your corporation with "you". The two are separate legal persons, taxed differently - the company is a British registered company, registered in the UK, resident in the UK, and taxed in the UK. It will have to pay employer NICs on the proportion of your salary paid for work performed in the UK.

Then there is "you", who will be doing some work in the UK, and some in Italy, and being paid a salary, and some dividends. You will potentially be subject to income taxes in both countries, because you are working in both countries.
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Old Dec 10th 2017, 11:58 am   #35
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Default Re: Tax Advice - working for a UK Ltd company and in Italy

You won’t be allowed to earn more than €5.000 on Co.Co. Maybe €6k you’d get away with but not more. You’d have to open a VAT no. here. If you find a way around that please share.

I think you might have misunderstood what the 1% tax is about. This is nothing to do with your earnings but an extra tax on the bank accounts and property you own.

Your UK income of 950 a month, that you pay UK income tax on (although your personal allowance 11.500 means that technically owe zero to HMRC) must also be declared in Italy - even if it has be “subject to tax in the uk”. You declare the total amount earnt and tell the accountant the tax paid (zero). You’ll have to show them your letter from HMR. That amount will then re-taxed in Italy at Italian tax rate, then the amount you paid in UK off set. The figures will be converted from pounds to euros. So on your first 10k you’ll be paying 2,300. Italy has the right to re-tax the amount - read double taxation agreement.

It’s a shame you can’t just move all of this to Italy. You’d be paying more tax but saving a lot of time and money and hassle. I wonder what Italian international lawyers do. Surely they prep all in Italy and then go on business trips to meet clients etc. But I see the problem if you’re obliged by UK legal rules to act otherwise.
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Old Dec 10th 2017, 12:04 pm   #36
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Default Re: Tax Advice - working for a UK Ltd company and in Italy

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.... I think you might have misunderstood what the 1% tax is about. This is nothing to do with your earnings but an extra tax on the bank accounts and property you own. ....
It is a capital tax on the value of assets owned, and the UK has no comparable tax, which is why Rzm misunderstood.
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Old Dec 10th 2017, 12:24 pm   #37
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Default Re: Tax Advice - working for a UK Ltd company and in Italy

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It is a capital tax on the value of assets owned, and the UK has no comparable tax, which is why Rzm misunderstood.
I agree. Rzm should search IVIE and IVAFE for more info. There’s a lot on this forum for starters.
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Old Dec 10th 2017, 3:46 pm   #38
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Default Re: Tax Advice - working for a UK Ltd company and in Italy

I do not own any properties.

Perhaps I will understand better with an example:

Let's say my UK company makes £30,000 (all work done in the UK) and in Italy I make €10,000.

How would I calculate my tax return?
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Old Dec 10th 2017, 4:05 pm   #39
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Default Re: Tax Advice - working for a UK Ltd company and in Italy

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I do not own any properties. ....
"Property", not "properties".

I don't know all the things that might be subject to Italian capital tax, but the sorts of "property" which might be subject to the annual Italian tax on their capital value might include things such as: vehicles including aircraft and boats, tools and equipment, jewelry, bank balances, investments (equities and bonds), .... and, yes, real estate, meaning "property" in the British vernacular.
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Old Dec 10th 2017, 4:07 pm   #40
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Default Re: Tax Advice - working for a UK Ltd company and in Italy

I have none of the above 'property' (thank you for correcting me) except for my business bank balance.
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Old Dec 10th 2017, 4:20 pm   #41
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Default Re: Tax Advice - working for a UK Ltd company and in Italy

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I have none of the above 'property' (thank you for correcting me) except for my business bank balance.
You own a British corporation, which is every bit as much an investment as a holding of shares in British Telecom.

I suspect that you will at least have to pay Italian capital tax on the balance sheet value of your corporation. .... Which may be little more than the bank balance plus year end receivables, less payables if any.
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Old Dec 10th 2017, 6:16 pm   #42
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Default Re: Tax Advice - working for a UK Ltd company and in Italy

Only about the earning side cos I don’t know owt about corporations:

These are the tax rates from before:


23% 0 - 15,000

27% 15,001-28,000

38% 28,001-55,00

41% 55,001-75,000

43% 75,001 and over

Total earned income 40k
I’m working with on 1€ to 1£:

3450 on first 15k
3500 on next 13k
4560 on next 12k

So total of 11.5k tax to pay on 40k

+ local taxes and accountant fees.

That 10k earned co.co still needs to be looked at.

Would be grateful if someone could check my figures!!!!!
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Old Dec 10th 2017, 7:49 pm   #43
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Default Re: Tax Advice - working for a UK Ltd company and in Italy

Ouch, that calculation made my eyes water. It even makes France seem rather reasonable.

Just wondering about social security contributions on the Italian income, is that included somewhere or is it negligible? SS contributions are what hurts most in France.
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Old Dec 10th 2017, 8:45 pm   #44
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Default Re: Tax Advice - working for a UK Ltd company and in Italy

This was a very crude calculation and amounts to just over 25% income tax. Yes, there are detractables; mortgage interest 19%, chemist receipts, sports clubs for kids, eco-incentives 50% etc but I think you need to be more “invested” in a country before being able to take advantage of those. But these change yearly and I’m not up to date.

The OP is coming from a low taxation nation. Looking at other EU countries, Portugal and Spain have roughly the same or higher tax rates as Italy.
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Old Dec 10th 2017, 9:12 pm   #45
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Default Re: Tax Advice - working for a UK Ltd company and in Italy

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or is it negligible
Ha!..... No way from what I've read, glad we are retired!
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