Diddidi

Hi, wonder if anyone can help? Is there anyone who is in the situation where you are resident in Italy and paying tax locally but considered domiciled in the UK and also have an income going to a UK bank account? Just wondering how it works from a tax point of view - whether you get a UK allowance despite not being resident in the UK - and can basically split your income between Italy and UK?

philat98

Where exactly are you tax resident?

Diddidi

Resident in Italy and paying tax in Italy but also looking at an income coming from remote freelance work for a UK company.

philat98

In one of your previous posts you said you only spend 5 months a year in Italy. That would make you non tax resident.

Diddidi

That’s correct for now but am looking at changing things around this year - I need to investigate the impact before making a final decision.

mikelincs

Wherever you are tax registered you will pay tax on your world wide income, there may be double tax agreements in place to ameliorate this.

Geordieborn

The DTC is here, more than 183 days in the tax year (Jan to Dec in Italy) you will likely be liable for tax there. Last I looked the rates were high. No idea if these rates on PWC here are right, but they look it. Don't know what the INPS (national insurance) would be either, but heard they are also high....

Diddidi

Thank you for your replies so far and for the links to the documents (Geordie). So it looks like I wouldn’t be able to have income in Italy and in the UK, paying tax on the Italian income locally and tax on the UK income in the UK. I have to select one or the other and make use of the double taxation agreement. Did I understand this correctly? The challenges of working remotely!

Geordieborn

If you are in Italy more than 183 days in their tax year you will pay tax there. You probably then can advise HMRC and not pay tax there, I would write to them to confirm, or call, but I would want it in writing if it were me

HADENOUGHPIZZA

You will need to pay tax on your global income in the country in which you are resident for tax purposes and both the Italian and the UK tax authorities will be able to help you decide where that should be . To benefit from DTA rates on any part of your income you will need to disclose and document your earnings and your stays in both countries . The two exchange a fair amount of data as well .

GeorgeYoung

That's more or less my understanding too. Essentially, as I understand things, you pay tax where you live. If you split your time between two nations then there are various tests to determine your main place of residence. But ultimately, if you live the majority of your time in Italy and have residency here, I'd imagine the Agenzia would view you as being an Italian tax resident.

I work as a freelancer with clients across Europe but I live in Italy all year round so, even though some of my clients will pay me via my UK back account, that income is all declared in Italy rather than the UK.

Diddidi

Thank you again to everyone for all your responses - this has given me some options to think about so I can decide what to do next.