Tax on U.K. based pensions in Italy
#16
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Joined: Mar 2017
Posts: 7
Re: Tax on U.K. based pensions in Italy
Bizarrely when Brexit happens, and you are no longer an EU citizen, in theory you can applyfor elective residency, whereby you do not earn in Italy so have no taxable income here, but do fulfill the other requirements for residency. Some people say that at the moment you can still ask for elective residency, but in my experience its not been possible.
It will of course mean returning to the days of Permessi di Soggiorno and yearly trips to the questura - but financially you may gain. Its all theoretical as nobody knows what will happen.
As far as renting - make sure you get a registered contract which will allow you to claim residency.
It will of course mean returning to the days of Permessi di Soggiorno and yearly trips to the questura - but financially you may gain. Its all theoretical as nobody knows what will happen.
As far as renting - make sure you get a registered contract which will allow you to claim residency.
We'll be sure to get the right sort of contract when we are sorting out our rental property! Thanks.
#17
Re: Tax on U.K. based pensions in Italy
Thanks Modicasa, it's hard to know what the situation might be when brexit does eventually happen isn't it! We just feel that we could wait for several years for it to take full effect, so we might as well at least have the adventure of the experience of living in Italy for a while in the meantime.
We'll be sure to get the right sort of contract when we are sorting out our rental property! Thanks.
We'll be sure to get the right sort of contract when we are sorting out our rental property! Thanks.
Good luck to you both - sounds like you both have the same ideas. Keep us up to date.
#18
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Joined: Oct 2016
Location: Ex Teramo, Abruzzo
Posts: 1,217
Re: Tax on U.K. based pensions in Italy
As long as you can afford to do what you want and not be impacted by what you spend on doing it - go for it! We did so and would never regret a moment or penny of it
#19
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Joined: Feb 2008
Posts: 542
Re: Tax on U.K. based pensions in Italy
The rental income will also be taxable in Italy. There is a double tax treaty in place to ensure you do not pay tax twice (in the UK and Italy) on the same income. Therefore you can offset any UK tax paid against your Italian tax bill.
If you subsequently sell the rental property, you will have to pay UK Capital Gains Tax on the increase in value from 5th April 2015 till the date of sale. This is a new tax, which came in to force on 6th April 2015.
Brexit is unlikely to have any effect, as tax treaties are already in force and are not under the jurisdiction of the EU.
#20
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Joined: May 2010
Posts: 538
Re: Tax on U.K. based pensions in Italy
'Your UK rental income would remain taxable in the UK. You will be able to offset expenses against income so the tax to be paid is likely to be nil due to your UK personal allowance (which you would retain).
The rental income will also be taxable in Italy. There is a double tax treaty in place to ensure you do not pay tax twice (in the UK and Italy) on the same income. Therefore you can offset any UK tax paid against your Italian tax bill.'
This is all true but the problem is that the personal allowance has no relevance in Italy (and as such if no UK tax is paid the double taxation treaty is not applicable...nothing on nothing is nothing).The 'net rental income (hopefully not the gross number but a grey area) is taxable in Italy. So for example, £10000 net rental income in the U.K. Nothing to pay after personal allowance. But in Italy the £10000 should be declared and is taxable at 23% and since no UK tax has been paid nothing to offset.
The rental income will also be taxable in Italy. There is a double tax treaty in place to ensure you do not pay tax twice (in the UK and Italy) on the same income. Therefore you can offset any UK tax paid against your Italian tax bill.'
This is all true but the problem is that the personal allowance has no relevance in Italy (and as such if no UK tax is paid the double taxation treaty is not applicable...nothing on nothing is nothing).The 'net rental income (hopefully not the gross number but a grey area) is taxable in Italy. So for example, £10000 net rental income in the U.K. Nothing to pay after personal allowance. But in Italy the £10000 should be declared and is taxable at 23% and since no UK tax has been paid nothing to offset.
Last edited by Capo Boi; Apr 1st 2017 at 6:47 am.
#21
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Joined: Aug 2015
Posts: 404
Re: Tax on U.K. based pensions in Italy
My understanding on rental income is the same as Capo Boi's. I rent out a house in the UK and my Italian accountant tells me to declare that in the UK, off-setting whatever I can (fewer things are scaricabili here) and then declaring the net profit to the Italian authorities.