nicktonight

Hi 657, my own experience is as follows: INPS will pay you a pension, according to the amount of contributi, if you have lived in Italy for more than 4 years once you have passed retirement age. The amount they pay, at least for the gestione separata is about 5%/contributi per year. You can use your codice fiscale to register on the INPS website and check out how much contributi you have paid and your pension rights ("Entra in myINPS"). To register they send you half a code by post and the other half by telephone. I'm not sure if you need an italian address though. If you come back and live in Italy I think you wlll have to claim your UK pension through INPS. The whole system is very compicated and you will have to use an agency de "disbrigo pratiche amministrative" or "patronato" . I used the CGIL trade union office. It only cost about 10 Euros and they are extremely good. If you go back to the UK I suppose you must request your Italian pension from the UK. You will pay far far more tax on your rental income + pension if you live in Italy than if you live in the UK. Your rental income will be taxed in the UK and then again in Italy with deduction of the tax paid in the UK. Tax is paid in Italy from the 1st Euro at about 23% if you include local taxes.
It may be worth checking if there are not some Italian towns that offer tax exemptions/reductions to foreign pensioners who come and live here.

657

Many thanks for the useful information. I had a feeling that tax would be higher in Italy.

Geordieborn

This might be worth a look for general information on the tax rates and the "7% for 5 year " scheme, if it ever came in.... But remember what has been said, there in no allowance deduction before paying tax. That's a big difference if you end up paying 23% on a UK allowance of £12,000...

657

What would be the tax arrangement if I return on an elective residence visa after the UK has left the EU? Surely double taxation would no longer apply?

The visa requires applicants to demonstrate an income of €31,000 per year for a single person.

Geordieborn

I think one of the recent links indicated things would stay the same and I certainly expect most things to do so, apart from the freedom of movement we currently have.

Ruby2

[QUOTE=657;12897221]What would be the tax arrangement if I return on an elective residence visa after the UK has left the EU? Surely double taxation would no longer apply?/QUOTE]

The DTA is not connected to EU membership.

HADENOUGHPIZZA

The DTA between the UK and ITALY will not be effected by Brexit as it is an agreement made between the authorities of the two countries and is not regulated by the EU . You will be considered resident for tax by the authorities if you are in Italy more than 90 out of 180 days . The DTA is to ensure you don't get taxed twice on the same income . The two countries provide each other with a considerable level of information .

657

One more thought on this. The last time I worked in Europe was in Italy. However, I did spend 6 weeks in the UK before coming out to the Gulf 11 years ago.

During that time in the UK I signed on and 6 weeks of national insurance credits were paid for me. Many years later, I paid 46 weeks of backdated voluntary contributions to make up a full year of UK national insurance.

Based on that which country should pay my pension? If it depends on where I last worked, would that be UK (with 6 weeks of unemployment benefit and national insurance credits) or would it be Italy?

Also, if it is Italy, would it be worth giving up my offshore status and returning to the UK to work for a short period of time before drawing a pension in order that it switches to the UK?

Currently, if I keep paying voluntary contributions my UK pension forecast will be for 34 years (1 year short of the maximum), therefore should I just disregard the 10 years of INPS contributions paid in Italy? Are they more trouble than they are worth?

Geordieborn

The UK will pay your pension regardless of where you last worked, it has absolutely nothing to do with it. From what you have said your UK pension will be better under the UK alone calculation. Regards Italy, not knowing their rules I can't say one way or the other regards payment there based on Italian insurance, but you seem to be sure you fail some condition. If that condition is satisfied using your UK contributions, then they should do so. The only issue I see is regards it being worth your time. What Italy should do is combine your Italian and UK contributions, disregarding any years/contributions that overlap and calculate how much that would give you for your Italian pension, this would then be reduced pro-rata. So with 34 UK and 10 Italian you have 44 years. Assuming you need 50 years for an Italian full pension, that would give a theoretical combined Italian pension of 44/50 x the value of the full 50 year pension. This would then be reduced by 10/50. As you can no doubt see it can result in very small pensions at times, but as far as I'm aware they HAVE to pay these, but can have options to do so such as the UK pay yearly. Only you can decide if it is worth the effort. But what I would say is that if it is anything like the UK in Italy, even a small pension may have bigger benefits e.g. bus pass, winter fuel etc...

657

Thanks again Geordieborn. Your advice is always very thorough and very much appreciated. I also dropped a line to the local CGIL to see if they have any input.

657

Going back to the issue of income tax on UK-based rental income.

In the UK, I am currently being taxed at a rate of 20% on an annual income of roughly £29K GBP (32K Euro).

Taking into account my tax-free allowance of £12,500 this equates to £3,320 per annum.

How would Italian income tax (IRPEF) be calculated on this?

The current rates are:

0-15,000 Euro = 23%
15,001-28,000 Euro = 28%
28,001 - 55,000 Euro = 38%

Would I be expected to pay 38% tax on all of my income?

Or, would the tax rates be applied successively i.e 38% only on what I earn between 28K-32K Euro?

Also, should I bite the bullet and return to Italy is there an initial tax-free allowance? (Would the UK's tax-free allowance be recognized?)

Thanks again for any advice.

modicasa

"What Italy should do is combine your Italian and UK contributions" - Unofrtunately not, INPS tell me.

nicktonight

Hi 657: in italy you would pay 23% of €15000 + 28% of €13000 + 38% of €4000 = total €8610 tax + local taxes of about 3%. If you have UK rental income you will also have to pay a property tax on your UK home (See other forum posts on this subject). You will also have to pay someone to do your tax return for you as it is very complicated here.

657

Thanks again for the helpful replies.

A return to Italy is looking less likely due to the higher rates of taxation. I will look into relocating to a country with a relatively cheap cost of living and then make a number of trips to Italy in the course of the year.

If staying for 3 or 4 months are visitors obliged to register with the anagrafe?

Geordieborn

This is wrong on the part of INPS. If in the south, then I'm not surprised as they were always useless! I would get UK DWP to submit a claim on your behalf, they may have to chase INPS for a long time, but they WILL get a response. If they do not award a pension you will have the right of appeal, right up to the EU courts, they won't want to go there I asure you.