Top side Smudger

Hi,

I have a fairly specific question about tax residency that my own research and even a chat with a UK based accountant couldn't resolve. I wondered if there was someone who has experienced the same situation and might be able to offer some advice.

I'm living in Italy and I will be moving back to the UK in late March. My question is related to my tax residency status for the period between 1 Jan 2018 and 6 April 2018.

The situation is this:
I'm certain that from 6 April 2018 I will be tax resident in the UK. So, for FY18/19 I will be tax resident in the UK and for FY17/18 I am not. I will not even have to concern myself with split year status due to the timing of my return, this has been confirmed by the aforementioned accountant.

Italy and the UK have different tax years (Italy the calendar year and UK the financial year). My undersanding of the tax residency rules in Italy (i.e. in the country for less than 183 days = not tax resident for whole year, in the country for more than 183 days = tax resident for the whole year) means that I will not be tax resident in Italy for the whole of 2018.

If all of the above is correct, this would appear to mean that for the period 1 Jan 2018 to 6 Apr 2018 I will not be tax resident anywhere. Is this possible and correct? And if not, what is in fact the situation?

Thanks to anyone who might be able to offer a steer on this.

Regards,
Top side Smudger

Stuck in Auckland

You are not returning to Italy? or retaining property?

Would appear straight forward regardless of different tax years

Italy up until time of leaving. Therefore partial tax year return required.
UK from date of arrival, perhaps partial return if income earned prior to April 5 2018.

I am about to retire spending time (less than 90 days) in US, Europe, Asia and Australia/NZ. That did somewhat confuse my accountant in working at tax residency.

Top side Smudger

Thanks for your response.

No, I'm not returning to Italy and nor will I have any property in Italy.

And yes, it does appear straightforward, but I have learned from past experience not to assume anything is as it seems when it comes to issues of tax!

It just seems odd to me that due to the different tax years, and the different ways of determining tax residency in the two countries, that I might be officially tax resident nowhere for 3 months.

Perhaps I'm just worrying too much!

MidAtlantic

You are worrying too much. Just think about it, people move residence between the UK and other European countries all the time and they manage to survive without issues.

Stuck in Auckland

Where are you assuming non tax resident?

You become tax resident in UK when you arrive, you leave tax residency in Italy when you leave. Complication is if you return before a certain time, which is where a few accountants from a top 4 got caught out in the late 90's.

Tax residency is not the same as tax years.

Top side Smudger

This is actually the crux of my question, because the tax residency rules in Italy, from what I can tell, do not follow that logic.

Basically, it goes like this:

If you are in the country for less than half the year, you are not considered to be tax resident for that entire year.

If you are in the country for more than half the year, you are considered to be tax resident for that entire year.

As far as I can tell it is not simply a question of being tax resident up until the point that I leave, hence the doubt that I have.

Stuck in Auckland

That's not inconsistent with other countries.

But to clarify what it means is 182 (6 month) rule is on time in country regardless of tax years. It determines a tax status, which is referred to in most double tax agreements - where a set of rules determine tax status between countries.

Once tax status is determined its then applied to tax years in determining proportion of income etc.