Margaret heather

Does anyone have any experiences, advice about dealing with the Agenzia d'Entrate. They appear to be taxing us in error but are oblivious to our HMRC backed argument.

Pulaski

What is your "HMRC backed argument"? ..... In almost all cases, outside of a few narrowly defined exceptions, your income, including pensions, is taxed where you live/ are tax resident, irrespective of where the income is paid or received.

Margaret heather

We are in receipt of Teachers Pensions which are classed as British government pensions and can therefore only be taxed in the UK. ( See Double Taxation Agreement) The only people who can be taxed on their government pensions are those who are residents in the 2nd country and are nationals of said country. We are residents of Italy but not nationals.

Pulaski

Ok, yes, I agree, that (government pension) is a valid and relatively common exception.

BTW Welcome to BE. ..... Please take a moment to review the forum rules, which are also linked in the top-level menu bar above.

Margaret heather

Any ideas , other than going to court, as to how we can persuade our local tax office that they are wrong. They have reduced the amount they say we owe considerably but have given us a deadline within which to pay it.

Pulaski

Sorry, I know a fair bit about international taxation, but very little, well nothing really, about the adminstration of the tax regime in Italy.

Hopefully one of the regulars, with a similar situation to yours (government pension), will be along to advise you shortly.

Margaret heather

Thank you!

philat98

Read this. Its a bit out of date.
https://www.spectrum-ifa.com/hands-off-my-pension/

Listen Very Carefully

When you completed your tax return did you make it clear that it was a UK government pension? Also be aware that a double taxation agreement is a misnomer it should be referred to as a tax agreement because it is quite possible to be taxed in both countries. What should happen is that having declared your pension you get an allowance in Italy based on the tax you would have paid if the pension was fully taxed in Italy.In practice this usually means that you would not pay any tax in Italy however it depends on the actual amount of your pensions and of course any other income you may have and its source
Did you get a commercialista to submit the form or did you do it yourself?

Pulaski

Agreed. ..... The usual overall result is that you pay the tax rate of the country with the highest applicable tax rate - either paying all the tax to the country where the income/ pension originates/ that country has the first bite at the tax cherry (if the tax rate there is higher), or part to the originating country and part to the country where you live and most of your tax is paid (if the tax rate there is higher).

That said, if you have little other income in the originating country, and a personal tax/ zero rate band there, then you will pay little tax there and very likely have some tax to pay at your marginal rate (the highest rate, on the "last" of your income) in the country where you are tax resident.

Capo Boi

Has your UK teacher's pension been taxed in the UK or are you receiving it gross?

Geordieborn

Surely not possible to receive it gross!
Anyway, The first thing I would ask myself is would I really want to argue the point with HMRC, let alone AdE with my Italian knowledge. Listen Very Carefully has to my mind likely got it right pointing out that under the DTA that paid in tax (in the UK in your case) can't be taxed again, but the difference can be. That said, it may well be there are other factors issues regards any calculation. Problem is, are you prepared to work to work it all out and argue the point? I would at least look at the first years charged as it's likely you would not be liable from day one.

Capo Boi

Remember the UK personal allowance is not applicable in Italy. So it is easily possible for no UK tax to be payable but for Italian tax to be due. I also go along with LVC’s post.

Pulaski

Nobody, except possibly you, is suggesting arguing with anyone. You just need to find out what the rules are, then make sure that you, or your accountant, is applying them.

The key is almost certainly in the tax treaty, which I think gives primary taxing authority to the UK in this case. But the resulting net income and tax credit figures then get dropped into the Italian tax computation, likely, IMO, leading to some more tax being due in Italy. ..... It is not simply a matter of saying "My British teachers pension has been taxed in the UK, no more tax can be due in Italy."

And it is certainly possible (though it doesn't apply in this case) that a tax treaty can prescribe that a teachers pension is paid gross and taxed only in the country where the recipient lives now.

modicasa

I would go to a good fiscalista. IN my experience its pointless for a mere mortal to argue these things with the AdE.