phil123

Capo Boi

The Italians have taken taxes from me due to the newish laws of IVIE and IVAFE, this is not linked to my direct UK earnings. However as the basic rate of tax in the UK is 20% and in Italy its 23% they also wanted the difference in tax ie. the 3% for all my UK earnings over the years I have been here.

In some respects I was badly advised at first but have decided to put it all behind me and move on. It seems to me the Italian government is hell bent on screwing the last euro out of anyone and keep coming up with dafter ways of taxing individuals.

We did consider appealing against the taxes but were told by the Tax Offices if we lost the appeal we would be liable to pay the full amount as opposed to the deal they offered us, so why bother, the chances of being successful were 10%.

modicasa

However Capo Boi is correct. If you work or earn money in ITaly - eg by renting a house - then it is taxable in Italy and not the UK - even though the Double Tax Treaty applies - it is up to you to pay the taxes in Italy and then sort it out with the UK and not vice versa. Not Phil's case, but very common that home owners rent out the house in Italy and because they recieve rent from UK holidaymakers in sterling, pay the tax in the UK. Not advisable.

sunnysider

Interesting post Capo Boi.

Yes, I, as an outsider, I was under the impression that you aren't exactly at liberty to choose your tax residence - it's determined by certain things including the number of days you are in Italy.

Sorry nevertheless to hear about your situation Phil.

Possible that the Entrate were reading all this?

I agree totally with you that Italy seems to think up crazy taxes on a whim and so alienates even honest foreigners. The whole thing is beyond a bad joke.

The only reason I can think of for some of them are that they are intended as a crash integration course - you very rapidly come to despise the Italian state as much as many many Italians. The Entrate should maybe issue a certificate to this effect.

Note - In UK waiting for Europe to sort this out - have heard a rumour by the way (I think there's another thread for it on here) that the "witholding tax" may have been suspended.

Capo Boi

phil123,

I'm feel sorry for you. It's a shame that you now want to leave.

IVIE & IVAFE are indeed new wealth taxes. I don't think many people saw them coming.

The 20 & 23 percent rates are a problem as you say leading to more tax being due. Also the UK operates a personal allowance system whereas Italy operates a personal deduction system. It's quite possible for these not to correspond and where tax would not be due in the UK for example, it could be due in Italy. Since no tax was then paid in the UK there is nothing to claim back under the double taxation treaty.

Modicasa, I fully agree with your post.

sunnysider

Sorry to be a pain, but just to check I have got something right.

Could someone just remind me of the import of:

IVAFE

I don't mean the full jargon, just the basics.

It's an annual tax of a certain percentage on foreign bank deposits held by Italian tax residents.

Correct?

If so, what percentage?

Any already legislated mechanism for the percentage to increase (I gather there is with IVIE)?

Is there any corresponding annual percentage levy on the Italian bank deposits of Italian tax residents?

If not is this legal under EU law?

As it seems curious.

Standard note for Entrate - I am in the UK, UK tax resident, have been all my life, all money earned and taxed in the UK.

nicktonight

Re: Taxing foreigners' property
"If you are paying tax in the UK you don't have to pay tax in Italy on UK earnings or property, it is all agreed in the EU wide double taxation agreement"

As everyone has said above this is not true: in Italy you have to declare your English rental earnings which are integrated into your global income and then taxed.You are allowed to deduct any tax paid in the UK but as UK rental income is often below the personal allowance after deduction of expenses you end up being taxed in Italy.

The IVIE and IVAFE are not that painful as the first is 0.76 % of the lower (I hope) council tax band value of the house and the IVAFE? is 0.15% of all your other assets outside Italy. You have to factor in the price of a commercialista as well to fill in your tax form for you. Say €1000 a year extra maximum for someone with a house and some savings in the UK including price of getting your tax form filled in here.

IMO these are certainly not a reason for not becoming a resident here as they are easily compensated by the savings you make in other things such as rent - rental prices are continually falling everywhere. My patrone di casa offered me a €100 reduction in rent yesterday to keep me here

phil123

Nick, IVIE is calculated on the property purchase price of the UK property, say for example a rental property cost £150,000 you then have to pay at present £1125 per year, this is calculated at .76% however we were told this figure would increase to 1%.

http://www.oliverpartners.it/ivie-and-ivafe/

Capo Boi, about the deductions, all deductions that we received in the UK for our rental property, the Italian tax people did not recognize them as being correct, we had to pay the difference to the Agenzia Entrate.

nicktonight

Hi Phil
IVIE is calculated on Council tax evaluation as you can see from the table at the end of this document

http://www.agenziaentrate.gov.it/wps...10f7ad8102fe77

Concerning the deductions - the Italian law is as folloWs "Il reddito imponibile in Italia per gli immobili detenuti all'estero e dati in affitto, nel caso in cui il fabbricato sia assoggettato a tassazione anche all'estero, è determinato decurtando gli affitti delle spese relative all'immobile che la legislazione locale ammette in deduzione, senza alcuna ulteriore deduzione."
Which means that you can deduce all the deductions that are allowed by GOV.UK

sunnysider

That's what I understand Nick, though it took me a while to come to that understanding, and a lot of agony/grief as, unless I'm very much mistaken, it took the Entrate quite some time to figure out just what it's own law meant with regard to those curious non Italian folk.

A follow up question.

The council tax/ratable value is in bands/ranges of course.

What point within the band do you choose?

What point within the band, more to the point, does the Entrate actually accept without giving you the third degree?

Am particularly interested of course in answers from those with practical experience of this. Theory and Italy are problematical bedfellows I fear.

all the best

37100

Per il calcolo dell'IVIE nel caso di immobili posseduti in Inghilterra in regime di leashold, la base imponibile è data dal valore medio


Con la Risoluzione n. 75/E del 6 novembre, l'Agenzia delle Entrate ha precisato, con riguardo all'imposta sul valore degli immobili all’estero (Ivie), che, per gli immobili situati nel Regno Unito e posseduti in regime di leashold (istituto che attribuisce un diritto all’utilizzo dell’immobile solitamente per un prolungato periodo di tempo, dietro il pagamento di un corrispettivo), si deve assumere come base imponibile il valore medio della fascia attribuita all’appartamento ai fini della Council tax, l’imposta municipale sulle abitazioni. Per l’applicazione della Council tax, infatti, non esiste un valore catastale cui fare riferimento e che, come precisato dalla circolare 28/E/2012, andrebbe preso in considerazione per determinare l’Ivie

Loopy12

The thing is Phil123, I'm not worried about the double taxation agreement - my income is low enough I don't actually lose any tax in the UK even if I continue to fill in UK tax forms indefinitely...its Italy which is going to rob me blind.

I became resident to reduce the purchase tax which was ridiculous as a non-resident. Anyone know how long I would need to be resident to fulfill that requirement?

Loopy12

I thought IVIE was calculated on the taxable value of your home in the UK, or the purchase price and you could deduct the council tax you have paid from that bill? (i.e. zero deduction if its rented out and your tenant pays your council tax)

highlander1

You are so right, is it worth the hassle ? Just for the extra cost of living in Italy, one can really rent and not have any bother. Before expats arrived there were hundred of thousand property abandoned, maybe Italy ( and Spain and Portugal ) would like to revert back to that.
Does someone believe that Renzi will change anything...? ... Dream on !

37100

No, Loopy12. AdE clarified that Council Tax is not deductable.

highlander1

20 % tax stopped today.

Italy just discovered that it made another of their crazy and illegal piece of legislation.

http://www.ilsole24ore.com/art/notiz...l?uuid=ABxlFjx