Tax Payback

Old Oct 5th 2020, 7:12 am
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Default Tax Payback

Hi,
I will be paying income tax on my Italian employment income, but as I will be commuting from the UK weekly I will remain a UK tax resident. Therefore I will only pay taxes on the days worked in Italy, but will have to apply for tax to be returned from the non Italian workdays as part of my Italian tax return. Does anyone know how long it takes for the tax owed to be compensated back after submitting the taxes? (So Uk tax authorities can be paid!)

or is it possible for my employer to withhold the right amount of tax based on actual workdays in Italy?

many thanks
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Old Oct 5th 2020, 9:10 am
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Default Re: Tax Payback

I'm sure someone will be along shortly and confirm this. I doubt the Italian tax authority ever pay out, they simply give you a tax credit.
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Old Oct 5th 2020, 10:16 am
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I have clients who have been waiting over 16 years for a VAT rebate, so I wouldnt hold your breath. From what you say youll be flying into Italy mon-fri and then back to the UK - HOwever if its over 183 days a year youll be resident anyway, unless your employer can juggle the paperwork creatively.
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Old Oct 5th 2020, 1:09 pm
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Default Re: Tax Payback

Thanks Modicasa. I will most likely be a UK resident, as family and house back in the UK and will be counted as the 'primary' source of residency and tax, despite me also most likely being an Italian tax resident also. Eventually UK wins, and I only pay tax for days in Italy, but somehow have to get the rebate as quickly as possible from Italian authorities.

The same has been my situation in Netherland, but the Dutch tax authorities give you a rebate monthly based on expected final tax outcome, meaning you end the year with a rebate built up already and can pay the UK tax.

Was hoping a similar system worked in Italy?
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Old Oct 6th 2020, 11:07 am
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Default Re: Tax Payback

The general rule is that where you work is where you pay tax on that income I am not sure where you get the idea of non tax days from You also have the problem of where you will actually be tax resident frankly despite your protestation that it will be the UK so you really need to get proper advice from a knowledgeable account In any event you are going to have to be submitting two lots of tax returns one to the UK and one to Italy
I was due a tax rebate of about 150 euros in 2007 but it never did arrive so do not hold your breath
One other thing to think about is your health cover ie which country will be responsible will it continue after Brexit or will you have a private policy
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Old Oct 7th 2020, 6:23 am
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Default Re: Tax Payback

You will need to calculate in which country you will be tax resident . A good rule of thumb is the 90 days out of a rolling 180 as of 31/12 /2020. If you ask for residency in Itlay you are declaring Italy to be you primary residence nad that you expect to pay tax here . If you plan on spending most of your time in the UK then you should not apply for residency . In the unpleasant event of either the UK or The Itaian tax authorities taking an interest in you they can both rule on your priciple abode based on the days spent in each country but also where you have property , wife , social life etc. Health care is also an important consideration . Italians very rarely get rebates but can get tax credits to apply to the follwing year . You need to talk to an expert who is up to date on the changes being made by Brexit .
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Old Oct 7th 2020, 7:33 am
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Default Re: Tax Payback

Thanks so much HADENOUGHPIZZA! I believe my residency will be UK based on all the criteria. Just a couple more questions as will help me be more informed.

If I rent an apartment and employed by an Italian company, am I ok not to register as a resident?

In terms of txa credit, how does that practically work. For example, if I have a credit from tax year 2021, would the credit automatically start from beginning of 2022 and I would not be paying income tax until my credit runs out? The reason I ask is that UK would want their taxes starting Jan 2022, with balance in July 2022.

Thanks again for your help,
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Old Oct 7th 2020, 8:36 am
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Default Re: Tax Payback

If you stay in Italy (currently) more than 3 months you should be applying for residency. Sorry no idea how the tax system works, but you can bet it will be even more complex than dealing with HMRC!
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Old Oct 8th 2020, 7:05 am
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Default Re: Tax Payback

If you are satisfied that you will be tax resident in the UK then you will only be filing tax returns in the UK and you should ensure that everything is ultra clear this side . After 31/12/20 as a TCN and non resident you have no right to work in Italy and your passport will be stamped each time you enter and exit Italy and although there is currently nothing clear you might actually need a visa or some other document . The 90/180 rule is at Schengen level so will include not only days spent in Italy but also days spent anywhere else in the area .

How does your Italian employer plan working this one ? If you will receive your income taxed then you'll need to include this in your UK tax returns , the DDT will not be affected by Brexit but I strongly recommend that you speak to an expert who can advise how best to appraoch things from January onwards.
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