IVAFE & IVIE
Jul 16th 2015, 4:03 am
#1
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Thread Starter
Joined: Oct 2008
Posts: 254
IVAFE & IVIE
I can't believe we have found ourselves in a really terrible situation.
Basically, our accountant in Italy has messed up (to put it mildly). We've been with him for about 7 years and I've asked him on several occasions over the last few years if we had to declare our overseas bank accounts and he replied no, that this was only for Italian citizens (which we aren't). So the other day, I read something online to suggest this was, in fact, something we should have been doing. I went to see him. He repeated the same mantra. I insisted. He finally checked online and to cut a long story short has realised the deep **** he has led us into.
That was three days ago. We'd already completed the 730 for FY2014, so today (the "second" deadline) the accountant added a RW for 2014 and we had to pay a 0,4% fine for being a month late. We also paid IVAFE too because my husband inherited his father's house in the UK last year so we had to put that in too.
The accountant's solution now is to do a "Voluntary Disclosure" for previous years … apparently we've got until the end of September 2015 to do that in order to receive a much reduced fine. Hooray for that! So now we've got to see a specialist consultant that will take us throughout this minefield (at a cost I hasten to add).
Has anyone had the pleasure of doing a Voluntary Disclosure? What does it entail?
Basically, our accountant in Italy has messed up (to put it mildly). We've been with him for about 7 years and I've asked him on several occasions over the last few years if we had to declare our overseas bank accounts and he replied no, that this was only for Italian citizens (which we aren't). So the other day, I read something online to suggest this was, in fact, something we should have been doing. I went to see him. He repeated the same mantra. I insisted. He finally checked online and to cut a long story short has realised the deep **** he has led us into.
That was three days ago. We'd already completed the 730 for FY2014, so today (the "second" deadline) the accountant added a RW for 2014 and we had to pay a 0,4% fine for being a month late. We also paid IVAFE too because my husband inherited his father's house in the UK last year so we had to put that in too.
The accountant's solution now is to do a "Voluntary Disclosure" for previous years … apparently we've got until the end of September 2015 to do that in order to receive a much reduced fine. Hooray for that! So now we've got to see a specialist consultant that will take us throughout this minefield (at a cost I hasten to add).
Has anyone had the pleasure of doing a Voluntary Disclosure? What does it entail?
Jul 16th 2015, 5:26 am
#2
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Joined: Apr 2007
Location: Verona/ Nr Turin
Posts: 4,678
Re: IVAFE & IVIE
I can't believe we have found ourselves in a really terrible situation.
Basically, our accountant in Italy has messed up (to put it mildly). We've been with him for about 7 years and I've asked him on several occasions over the last few years if we had to declare our overseas bank accounts and he replied no, that this was only for Italian citizens (which we aren't). So the other day, I read something online to suggest this was, in fact, something we should have been doing. I went to see him. He repeated the same mantra. I insisted. He finally checked online and to cut a long story short has realised the deep **** he has led us into.
That was three days ago. We'd already completed the 730 for FY2014, so today (the "second" deadline) the accountant added a RW for 2014 and we had to pay a 0,4% fine for being a month late. We also paid IVAFE too because my husband inherited his father's house in the UK last year so we had to put that in too.
The accountant's solution now is to do a "Voluntary Disclosure" for previous years … apparently we've got until the end of September 2015 to do that in order to receive a much reduced fine. Hooray for that! So now we've got to see a specialist consultant that will take us throughout this minefield (at a cost I hasten to add).
Has anyone had the pleasure of doing a Voluntary Disclosure? What does it entail?
Basically, our accountant in Italy has messed up (to put it mildly). We've been with him for about 7 years and I've asked him on several occasions over the last few years if we had to declare our overseas bank accounts and he replied no, that this was only for Italian citizens (which we aren't). So the other day, I read something online to suggest this was, in fact, something we should have been doing. I went to see him. He repeated the same mantra. I insisted. He finally checked online and to cut a long story short has realised the deep **** he has led us into.
That was three days ago. We'd already completed the 730 for FY2014, so today (the "second" deadline) the accountant added a RW for 2014 and we had to pay a 0,4% fine for being a month late. We also paid IVAFE too because my husband inherited his father's house in the UK last year so we had to put that in too.
The accountant's solution now is to do a "Voluntary Disclosure" for previous years … apparently we've got until the end of September 2015 to do that in order to receive a much reduced fine. Hooray for that! So now we've got to see a specialist consultant that will take us throughout this minefield (at a cost I hasten to add).
Has anyone had the pleasure of doing a Voluntary Disclosure? What does it entail?
You accountant should have insurance that covers his mistakes. Depending on how much the fine works out, it might be worth asking him to cough up. Might take a legal letter.
Jul 16th 2015, 9:36 am
#3
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Re: IVAFE & IVIE
Hope it all goes well for you. Quadro RW is a rompiscatole.
Jul 16th 2015, 5:11 pm
#4
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Posts: 2,517
Re: IVAFE & IVIE
You need to check that you do need to pay on your husbands father's property - it may be exempt, at least since it has been inherited recently. As to the voluntary disclosure it depends what you have to disclose. if its a pretty small amount, (that the Itlaian tax office would have huge problems proving existed before this year) Id forget about it. If its a row of houses in Hampstead, its a bit different.
Jul 18th 2015, 2:36 am
#5
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Re: IVAFE & IVIE
This is a long one so bear with.
First off, I muddled my tax acronyms before: IVAFE is tax on foreign bank accounts and IVIE is tax on foreign property.
So, this week we feel like we've been to hell and back!
Our accountant, now ex-accountant, said we had to do this Voluntary Disclosure business. He even swished us along to the local bank manager to set up a meeting with a consultant in a nearby city. I then did a bit of research and found out that this kind of thing costs about £10k for just the "parcella" lawyer fees! Which is a horrible amount considering the amount of bank balance we're talking about. I just kept thinking, how can this honest mistake on our part (incompetence however, on the accountant's part) decend into such a pit of despair!
The next day, we saw a new accountant and he tells us that there is a new law that came into being on 01/01/2015 that has changed the "ravvedimento operoso" (ie, repentance) rules. This basically means there is now no deadline for making an amendment or addition to a previously filed tax return. You have to pay interest and a reduced fine on top of the amount you should have paid in the first place. To be honest, I don't understand why this wouldn't have always been the case.
You know when you find yourself in a terrible position and someone offers you a solution you just want to kiss them! I felt a bit like that. However, this all needs to be double checked to make sure it's definitely possible for US in OUR position, but I think it must be OK because I also read this:
http://www.odcec.mi.it/docs/default-...5.pdf?sfvrsn=0
I understand that Italy has come under a lot of pressure from the EU regarding its high fines and draconian and inflexible tax system ... and maybe this new law was a response to this issue.
I also learnt this week that:
- IVAFE is not just for bank accounts, but for any stash of wealth, so bonds, shares, etc count.
- it is not just a one-off declaration. It has to be done every year.
- anyone coming to live in Italy should think twice before taking "residence". Because as a resident, ie your name is on the list at the local Town Hall “Anagrafe" you are obliged to submit a tax return and complete the Quadro RW form to declare overseas "wealth".
- whether you are here for less than 6 months or not it makes no difference. If you are registered as resident, you are tax liable. End of.
- even if you only have a small amount in the UK it must be declared. Up until 2011 only accounts with €10k had to be declared but now there is no threshold.
- it's a flat fee per account, so if you're a couple it would be better to have just one joint account or if you have more than one account it would be better to consolidate them into one. This is for the EU. If the account is outside the EU you pay a percentage so it makes no odds the amount of accounts.
- basically, Italy have found a loop-hole in the "double taxation" rule. Bank balances are NOT taxed in the UK. The INTEREST given is taxed, so there is no double taxation. And houses are not taxed either in the UK. The Council Tax is a tax paid for SERVICES provided to the people in the house, which is based on a band, based on the value of the house at some point in the past. There is no actual tax on your actual property.
- if your money was in an account here in Italy it would not be subject to the same relatively high taxes. So, all in, the Italian government are trying to "persuade" you to move the money here.
A lot of people have an account in the UK merely for convenience. Like for grandparents to pay the kids birthday money into, or to use when going back to the UK to visit family and friends. Some people have accounts for pension planning or for putting money aside for a future need, like kids going to university or college in the UK, I mean we're from there in the first place so it's not strange to think that our off spring might want to go there for educational purposes.
I can kind of understand that the Italian gov doesn't want money earned in Italy going out of the country but I would like to take a guess that the money most British Expats have in the UK was from income, etc generated in the UK. I can't see there's many of us that are regularly making transfers from euros to sterling bank accounts. But I would be interested to know if my hunch is incorrect.
My question is whether or not the British government is aware of what is going on and that this unfair tax being put on British citizens' accounts and houses in the UK?
When people bought property in the UK to rent out in the past, they for sure had to make some decisions as to whether it was fiscally prudent to do so. Little did they know that the taxation policy of a completely different country would have a future bearing on that decision. I hasten to add I'm not in that position myself!
I can imagine after a few years of paying this tax many might think it would be better to just move the money to their Italian account.
I'm interested in hearing what others think about this....
First off, I muddled my tax acronyms before: IVAFE is tax on foreign bank accounts and IVIE is tax on foreign property.
So, this week we feel like we've been to hell and back!
Our accountant, now ex-accountant, said we had to do this Voluntary Disclosure business. He even swished us along to the local bank manager to set up a meeting with a consultant in a nearby city. I then did a bit of research and found out that this kind of thing costs about £10k for just the "parcella" lawyer fees! Which is a horrible amount considering the amount of bank balance we're talking about. I just kept thinking, how can this honest mistake on our part (incompetence however, on the accountant's part) decend into such a pit of despair!
The next day, we saw a new accountant and he tells us that there is a new law that came into being on 01/01/2015 that has changed the "ravvedimento operoso" (ie, repentance) rules. This basically means there is now no deadline for making an amendment or addition to a previously filed tax return. You have to pay interest and a reduced fine on top of the amount you should have paid in the first place. To be honest, I don't understand why this wouldn't have always been the case.
You know when you find yourself in a terrible position and someone offers you a solution you just want to kiss them! I felt a bit like that. However, this all needs to be double checked to make sure it's definitely possible for US in OUR position, but I think it must be OK because I also read this:
http://www.odcec.mi.it/docs/default-...5.pdf?sfvrsn=0
I understand that Italy has come under a lot of pressure from the EU regarding its high fines and draconian and inflexible tax system ... and maybe this new law was a response to this issue.
I also learnt this week that:
- IVAFE is not just for bank accounts, but for any stash of wealth, so bonds, shares, etc count.
- it is not just a one-off declaration. It has to be done every year.
- anyone coming to live in Italy should think twice before taking "residence". Because as a resident, ie your name is on the list at the local Town Hall “Anagrafe" you are obliged to submit a tax return and complete the Quadro RW form to declare overseas "wealth".
- whether you are here for less than 6 months or not it makes no difference. If you are registered as resident, you are tax liable. End of.
- even if you only have a small amount in the UK it must be declared. Up until 2011 only accounts with €10k had to be declared but now there is no threshold.
- it's a flat fee per account, so if you're a couple it would be better to have just one joint account or if you have more than one account it would be better to consolidate them into one. This is for the EU. If the account is outside the EU you pay a percentage so it makes no odds the amount of accounts.
- basically, Italy have found a loop-hole in the "double taxation" rule. Bank balances are NOT taxed in the UK. The INTEREST given is taxed, so there is no double taxation. And houses are not taxed either in the UK. The Council Tax is a tax paid for SERVICES provided to the people in the house, which is based on a band, based on the value of the house at some point in the past. There is no actual tax on your actual property.
- if your money was in an account here in Italy it would not be subject to the same relatively high taxes. So, all in, the Italian government are trying to "persuade" you to move the money here.
A lot of people have an account in the UK merely for convenience. Like for grandparents to pay the kids birthday money into, or to use when going back to the UK to visit family and friends. Some people have accounts for pension planning or for putting money aside for a future need, like kids going to university or college in the UK, I mean we're from there in the first place so it's not strange to think that our off spring might want to go there for educational purposes.
I can kind of understand that the Italian gov doesn't want money earned in Italy going out of the country but I would like to take a guess that the money most British Expats have in the UK was from income, etc generated in the UK. I can't see there's many of us that are regularly making transfers from euros to sterling bank accounts. But I would be interested to know if my hunch is incorrect.
My question is whether or not the British government is aware of what is going on and that this unfair tax being put on British citizens' accounts and houses in the UK?
When people bought property in the UK to rent out in the past, they for sure had to make some decisions as to whether it was fiscally prudent to do so. Little did they know that the taxation policy of a completely different country would have a future bearing on that decision. I hasten to add I'm not in that position myself!
I can imagine after a few years of paying this tax many might think it would be better to just move the money to their Italian account.
I'm interested in hearing what others think about this....
Jul 18th 2015, 3:47 am
#6
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Location: Central Italy
Posts: 3,729
Re: IVAFE & IVIE
"even if you only have a small amount in the UK it must be declared. Up until 2011 only accounts with €10k had to be declared but now there is no threshold".
Are you certain about that?
Reading this article from Sept 2014...
Are you a resident in Italy and what taxes apply to you? | Spectrum IFA | Independent Financial Advice for Expats
"A very simple to understand and acceptable €34.20 per annum is applied to each bank account or deposit account that you own overseas with an ‘average’ balance of €10,000 in it, each calendar year. This includes fixed deposits, current accounts, short term cash deposits, CD’s etc. The charge is the equivalent of the ‘bollo’ which is applied to all Italian bank accounts each year."
Are you certain about that?
Reading this article from Sept 2014...
Are you a resident in Italy and what taxes apply to you? | Spectrum IFA | Independent Financial Advice for Expats
"A very simple to understand and acceptable €34.20 per annum is applied to each bank account or deposit account that you own overseas with an ‘average’ balance of €10,000 in it, each calendar year. This includes fixed deposits, current accounts, short term cash deposits, CD’s etc. The charge is the equivalent of the ‘bollo’ which is applied to all Italian bank accounts each year."
Jul 18th 2015, 4:35 am
#7
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Joined: Oct 2008
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Re: IVAFE & IVIE
OK, I think I see the confusion.
Clarification: ALL accounts must be declared on a quadro RW whatever the balance for "monitoring" purposes.
However it is also true that the tax for a UK account will be only applied if the average balance over the year was more than €5,000 which is £3,500 (today's rate). Quite annoying if you opened a no fees guaranteed account.
Clarification: ALL accounts must be declared on a quadro RW whatever the balance for "monitoring" purposes.
However it is also true that the tax for a UK account will be only applied if the average balance over the year was more than €5,000 which is £3,500 (today's rate). Quite annoying if you opened a no fees guaranteed account.
Jul 18th 2015, 5:28 am
#8
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Re: IVAFE & IVIE
I can't find the link now, but here's another piece that says the same...
IVAFE 2015: cosa cambia e come funziona | Fiscalità in pillole 9Forex Strategico | Mobile Version
Maybe it is different each year? I've got to report my missing RW for 2012 and 2013.
But I have just read that from 2015 the threshold will be €15k! Which would be even better.
IVAFE 2015: cosa cambia e come funziona | Fiscalità in pillole 9Forex Strategico | Mobile Version
Maybe it is different each year? I've got to report my missing RW for 2012 and 2013.
But I have just read that from 2015 the threshold will be €15k! Which would be even better.
Jul 18th 2015, 5:57 am
#9
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Joined: Aug 2010
Location: Palermo Sicily
Posts: 375
Re: IVAFE & IVIE
Hi Donna Nobile
To cheer you up I think you are worrying a bit too much so please do not rush into buying expensive advice.
I know one does tend to become paranoid about the Italian Tax authorities but IMHO you have plenty of time if not months to send in your revised tax forms and the penalties are not going to be very high anyway. No-one is going to come and check up on you in a hurry. These two taxes have only existed for 3 years so you have just two years to catch up and the sums involved are very small: 0.1-0.15% of your total financial assets outside Italy for 2012 and 2013 + the fixed tax of about €32 for each account with more than €5000 on average over the year + 0.76% of the council tax band value of any property you have in the UK. Your commercialista just has to prepare one form with the sums for the two years and if he can't do this for you for a small sum then I'm sure you will be able to find one who can. The fact that your commercialista was still unaware of these taxes in 2015 is a very bad sign - perhaps you should change anyway.
I suggest that you write a list of your accounts + the balance on the 31st of December of each year and the address and council tax band of any house you might have in the UK - give them to a good commercialista and he will prepare your F24.
Obviously the above reasoning would not apply to someone who was renting out a property in the UK and not declaring the rental income as in this case the AdE can go back 4 years and the rental income is subject to much higher tax rates
To cheer you up I think you are worrying a bit too much so please do not rush into buying expensive advice.
I know one does tend to become paranoid about the Italian Tax authorities but IMHO you have plenty of time if not months to send in your revised tax forms and the penalties are not going to be very high anyway. No-one is going to come and check up on you in a hurry. These two taxes have only existed for 3 years so you have just two years to catch up and the sums involved are very small: 0.1-0.15% of your total financial assets outside Italy for 2012 and 2013 + the fixed tax of about €32 for each account with more than €5000 on average over the year + 0.76% of the council tax band value of any property you have in the UK. Your commercialista just has to prepare one form with the sums for the two years and if he can't do this for you for a small sum then I'm sure you will be able to find one who can. The fact that your commercialista was still unaware of these taxes in 2015 is a very bad sign - perhaps you should change anyway.
I suggest that you write a list of your accounts + the balance on the 31st of December of each year and the address and council tax band of any house you might have in the UK - give them to a good commercialista and he will prepare your F24.
Obviously the above reasoning would not apply to someone who was renting out a property in the UK and not declaring the rental income as in this case the AdE can go back 4 years and the rental income is subject to much higher tax rates
Last edited by nicktonight; Jul 18th 2015 at 6:23 am.
Jul 18th 2015, 5:33 pm
#11
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Re: IVAFE & IVIE
According to my sources It was 10-000 now it is 5,000 practical if not legal lower limit.
Jul 18th 2015, 9:47 pm
#12
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Joined: Feb 2011
Posts: 68
Re: IVAFE & IVIE
- anyone coming to live in Italy should think twice before taking "residence". Because as a resident, ie your name is on the list at the local Town Hall “Anagrafe" you are obliged to submit a tax return and complete the Quadro RW form to declare overseas "wealth".
- whether you are here for less than 6 months or not it makes no difference. If you are registered as resident, you are tax liable. End of.
I'm interested in hearing what others think about this....
- whether you are here for less than 6 months or not it makes no difference. If you are registered as resident, you are tax liable. End of.
I'm interested in hearing what others think about this....
Is it just the honest people who declare their mistakes who are penalised? I know lots of others here who are registered as resident, they claimed tax relief when they purchased, pay Prima Casa, spend less than 6 months here and don't declare their foreign accounts. Others have lived here for more than 5 years and don't complete a tax return at all, and yet they seem to get away with it.
Why don't they get caught? It's not always their/our fault, duff information is handed out daily on forums (not this one) and by professionals, even the commercialista's get it wrong, but as we all have to register with the Agenzia Entrante, wouldn't it be so much better if someone were to tell us what to do
Jul 18th 2015, 11:13 pm
#13
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Re: IVAFE & IVIE
Thank you to everyone so far for your advice and kind words because yes, it is a worrying situation and it gets you thinking about the future and looking on line too much and talking constantly about it and forgetting to get the kids tea.
I am also very grateful to nicktonight for his optimistic attitude and calming words. Nicktonight, I read a past post from you from about feb 2014 where it said the tax on bank accounts is a fixed amout PLUS a percentage of the balance ... Can you clarify that that is just for non-EU Citizens?
So, about what I said before about the UK Government ... Do they know what's going on? Especially regarding the property tax? Are they cool with that? There was a flurry of articles in the UK papers back in 2013 regarding wealth tax on a countries citizens (but does this mean residents too?) it seems that Germany would be very in favour of a country like Italy taxing it's citizens wealth in order to balance the books, since German feels it's been bailing out the rest of the EU.
So, where does it say that one day, when the sh*t hits the fan, Italy wont have one of those one-off stealth taxes, like they did 20 years ago, but this time it will include all the assets of UK citizens resident in Italy, that they now conveniently have a record of? It happened in Cyprus recently.
Just reading about the EU's position on rights and ownership of our personal bank accounts! Interesting stuff.
Yes, Caprihana, I ask myself the same question! Why do some people seem to just get away with it and to not actually give damn whilst us honest Joes spend sleepless nights worrying!
Jul 19th 2015, 5:53 am
#14
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Location: Palermo Sicily
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Re: IVAFE & IVIE
Hi Donna nobile - the fixed amount on a bank account is the €34.20 per annum charge and the percentage is the 0.2% (at the moment although this has been changing every year) of the balance on 31st December of the year in question. A UK account with €5000 in it will be taxed €34.2 + 10 Euros (feel free to correct my arithmetic)
Although this tax is low I agree with you that it is a major cause for concern that the AdE are just gathering information that they will use in future to make a grab on peoples assets to pay off the country's large debt. It's difficult to see how they can pay off the debt otherwise and expats are sitting ducks.
Although this tax is low I agree with you that it is a major cause for concern that the AdE are just gathering information that they will use in future to make a grab on peoples assets to pay off the country's large debt. It's difficult to see how they can pay off the debt otherwise and expats are sitting ducks.
Last edited by nicktonight; Jul 19th 2015 at 6:01 am.
Jul 19th 2015, 4:58 pm
#15
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Joined: Dec 2009
Posts: 2,517
Re: IVAFE & IVIE
Inherited property is treated very differently from other property in ITaly. As this law was introduced to trap Italians who export money, it wasnt designed as a grab all - and it not youor fualt if someone diesand leaves you a castle. In ITaly for example inherited property is not shared with your spouse, it isnt eligibile for capital gain, and so on. As you have 12 -18 months to sort out the succession I would be surprised if the state insisted on IVIE inthe first year - but its a guess. Just as a footnote to Nicks - Paypal accounts also now technically are classed as bank accounts and are due the 34 euro charge.
