CarrieW

Hi Andrea, thanks for the research .
Our baby will be born in Italy and we do not have a UK address so I think we are not going to be able to claim in the way you have suggested.

NI contributions are still being paid into the UK system by my husband, but I think it will be just too much hassle to try and get a claim agreed. We are now hoping that my husband's employers will stump up the money instead, as it is down to them we are in this situation, and we were not supposed to be financially disadvantaged by the move to Italy.

Thanks everyone for your feedback though on this one.

Carrie

Mitzyboy

I'm pretty sure that its illegal to claim child benefit if you are resident in another country. Under normal circumstances you shouldn't be paying tax in the UK if you reside in another EU state, and its possible you could become subject to tax in both countries as after the 6 month rule you are considered a tax resident.

chris120

Not strictly true, it depends on what is being taxed, unearned income (bank & BS interest, dividends, CG tax, probably pensions, rental income etc.) are all taxed in the UK if they are paid out in the UK - regardless of where you are resident.

jdr

What happens when the Italian taxman finds out about your worldwide assets ?

chris120

It’s not a case of "if he finds out" as a resident of Italy (same applies in UK as well) the obligation is on the individual to tell the tax man what their financial status is. You need to file a self assessment tax declaration each year where you should declare your world wide income. As I said before, unearned income is generally taxed in the country of origin (i.e. if you rent out your house in the UK you will have to fill out a UK self assessment form as well and the tax on the rental income will be paid in the UK). There is a double taxation agreement within the EU such that you will not be taxed twice on any given income. Fundamentally, apart from specific exceptions (e.g. PEPs in the UK), you cannot have a tax free income in the EU, if you don't comply there is a good chance you will get away with it but if you do get caught you will pay the back tax plus a fine which is a multiple of the tax you avoided.
I am not a tax professional so if your situation is complex you really need to have your tax filed for you by a commercialista.

Mitzyboy

I'm just a bit confused Chris, as although some of what you say is my understanding also, the basis of the double taxation treaty is not that clear cut. If you have property in the UK when you live in Spain for instance you pay tax on it in Spain and the double taxation treaty ensures you don't pay on it in the Uk also. Thats the same in most EU countries and I'm not sure why Italy would be any different. You are responsible for paying your taxes in the country you are tax resident in .... its not actuall an option to choose to pay it in the UK (although HMR&C will be happy to take it) and you may indeed render yourself to double taxation by doing so as if your country of residence discovers these UK incomes, they will wish to take tax also.

For me, byy paying my taxes in Spain, I actually have paid NO tax this year at all. The allowances are better here for me. So paying tax in the UK would be a more expensive option

chris120

If your unearned income in the UK is below the UK tax free allowance the tax payable is zero.
If you use an agent to rent your house out in the UK he should be withholding the tax every month on behalf of the UK tax agency. At the end of the year you normally get a rebate. You can avoid this by making a non resident declaration.

chris120

I forgot to say above that a lot of unearned income tax is already paid in the UK and you cannot get it rebated. For instance the tax on company dividends.

Mitzyboy

Yes for sure, but the income from your rental in the UK is then liable to tax in Italy isn't it as you are resident in Italy. Your unearned income in the UK, even though it is below the tax threashold in the UK, still contributes towards your total tax base figure in Italy doesn't it.

TestaRossa

Can I just say that this thread has gone a bit off topic? If I wasn't subscribing to the thread I wouldn't now know it has gone into taxation! It's not a complaint about going off topic, more that maybe a new thread needs to be started so others interested in the tax situation will be able to see the advice being given? Child Benefit isn't going to get someone reading that needs to know about tax!

Mitzyboy

Yes you're quite right, sorry. I confirm that as a non UK resident you will not be legally allowed to claim UK child benefit. Some do, by keeping a UK address but it is benefit fraud.