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Is UK ISA and SIPP taxable in Italy?

Is UK ISA and SIPP taxable in Italy?

Old Oct 19th 2021, 6:31 pm
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Question Is UK ISA and SIPP taxable in Italy?

Hi all. I am planning to move from UK to Italy (Monza) soon. My wife is Italian, from Genova, and she has already moved back so I am just trying to catch up. I want to minimise any possible tax bill before I officially become an Italian resident (likely 3 months after I move)

Most of my money in the UK is in either cash ISA, stocks & shares ISA or SIPP. If you are unfamiliar with these, the ISA (individual savings account) is tax free although I have already paid tax on any earnings. Contributions to the SIPP (self invested personal pension) are tax deductible, plus when you come to take your pension you can take a 25% lump sum tax free. This is according to the UK rules.

My question is, when I am an Italian resident do the proceeds of these investments become taxable in Italy, and if so is there anything (legal) I can do about it? I believe there is a double tax agreement between UK and Italy so you don't get taxed twice, but I don't know what happens with things that are tax free in the UK. I don't really want to lose 28% of my life savings to the taxman!

Many thanks!
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Old Oct 19th 2021, 10:42 pm
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Default Re: Is UK ISA and SIPP taxable in Italy?

First off you always need an official source of information on these issues. There is a DTA with the UK and Italy (link here), long and complex, and if you are becoming resident permanently in Italy (more than 183 days) it may not help for too long. I'm not up to date of this, but I would look up "IVAFE" for your finance questions. I found with most of these things that if you search (using English) there many results out there (in English). Most are finance companies trying it on toy get your business, but many have some useful information leading to more searches. Don't know if it is up to date either, but this is one I found some time back - good luck!

Forgot to add that one of my concerns would be the impact on the UK side e.g. ISA you can keep, but can't invest any more. I would check out the rest.

Last edited by Geordieborn; Oct 19th 2021 at 10:52 pm. Reason: Addition about uk impact
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Old Oct 19th 2021, 11:11 pm
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Default Re: Is UK ISA and SIPP taxable in Italy?

Originally Posted by Geordieborn
Forgot to add that one of my concerns would be the impact on the UK side e.g. ISA you can keep, but can't invest any more. I would check out the rest.
Thanks. Yes for the UK part the rules say you can keep your existing ISA but not put any more money into it or open a new one, and you can keep a SIPP and probably still contribute to it but you can't claim the tax back. The ISA remains tax free as far as the UK government is concerned but the rest seems to depend on your country of residence.

Obviously its not official advice but I was hoping that since many people in the UK have an ISA, that someone could tell me from personal experience whether they got taxed on it in Italy. I have already done a lot of searches but not found an answer. Also I don't know if Brexit has an impact and the rules may have changed from January 2021?

Death and taxes, as they say.
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Old Oct 20th 2021, 4:40 am
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Default Re: Is UK ISA and SIPP taxable in Italy?

I've always taken the view that firstly all assets should be declared. An ISA is an asset and as it is a 'savings account' it would be taxed as such at (something like) .76% of it's value.

more info here:

https://taxsummaries.pwc.com/italy/i...ersonal-income

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Old Oct 20th 2021, 12:02 pm
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Default Re: Is UK ISA and SIPP taxable in Italy?

The PWC link indicates not much has changed, therefore you stand to get hit hard in tax if you have a low to modest income as there is little or no tax allowance there in Italy. It might be worth looking at the type of residency/visa you can currently get to see if there is anything more tax favourable. If you are not aware, the tax year there is Jan-Dec, so it matters when you become liable (after 183 datys) as liability may not be until the next full year?
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Old Oct 20th 2021, 1:51 pm
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Default Re: Is UK ISA and SIPP taxable in Italy?

Originally Posted by PSG2014
I've always taken the view that firstly all assets should be declared. An ISA is an asset and as it is a 'savings account' it would be taxed as such at (something like) .76% of it's value.

more info here:

https://taxsummaries.pwc.com/italy/i...ersonal-income

PSG
I couldn't agree less with the above. I think you'll find that the 0.76% relates to property only. The capital in savings and/or equity accounts is not taxed as such, though there is a modest flat-rate levy to be paid on many accounts (I can't remember exactly how much, but I think it's around €35 per year).

As far as ISAs etc are concerned, they will not be considered as tax-free. But remember that any discussion of tax on ISAs here would relate to increase in value (i.e. interest, or profit for a Stocks & Shares ISA). The capital would not be taxed (under current legislation, though there is always the theoretical possibility of a wealth tax in the future - in either country)
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Old Oct 20th 2021, 1:59 pm
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Default Re: Is UK ISA and SIPP taxable in Italy?

Hi, lurking here from Portugal where I have previously researched ISA and SIPPs from a Portugues tax authority point of view. Appreciate that the rules may be different by jurisdiction .. but the principles may be the same. Also, have found that well known companies that offer advice on tax advantages matter never mention this sort of detail.

So from a Portuguese perspective, and if you are tax resident, both ISA dividends and capital gains are taxable. The SIPP is a bit murky, but the tax lawyer advice I got was that Company contributions and hence income from these is not taxable but any income from personal contributions was taxable, but no tax on crystallised SIPP "capital gains".

Possibly might help? Cheers

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Old Oct 20th 2021, 11:07 pm
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Default Re: Is UK ISA and SIPP taxable in Italy?

Thank you all for the info, I need to go through this in detail but right now its late and I need sleep!
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Old Oct 23rd 2021, 11:16 am
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Default Re: Is UK ISA and SIPP taxable in Italy?

Originally Posted by PSG2014
I've always taken the view that firstly all assets should be declared..

PSG
This is correct. All foreign assets, (shares, unti trusts, savings accounts) must be declared. Each account has a fixed tax of 34.5 Euros and you pay a tax of 0.2 % on the total amount in all accounts. This tax is called the IVAFE. The Italian tax authorities are extremely active (I have often been asked to provide justifications including UK tax statements) and everyone is considered to be dishonest unless they can prove otherwise. Keep a justification of the capital gains you have in your account on the day you become an Italian resident so that you don't have to pay tax on them when you cash your account in.

Last edited by nicktonight; Oct 23rd 2021 at 11:19 am.
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Old Oct 24th 2021, 5:50 am
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Default Re: Is UK ISA and SIPP taxable in Italy?

Thanks nicktonight............for the clarification,

I think €34.50 is roughly the annual cost of most Italian bank accounts, so it seems reasonable?

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Old Oct 25th 2021, 8:36 am
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Default Re: Is UK ISA and SIPP taxable in Italy?

Originally Posted by nicktonight
This is correct. All foreign assets, (shares, unti trusts, savings accounts) must be declared. Each account has a fixed tax of 34.5 Euros and you pay a tax of 0.2 % on the total amount in all accounts. This tax is called the IVAFE. The Italian tax authorities are extremely active (I have often been asked to provide justifications including UK tax statements) and everyone is considered to be dishonest unless they can prove otherwise. Keep a justification of the capital gains you have in your account on the day you become an Italian resident so that you don't have to pay tax on them when you cash your account in.
Thanks for that. Just to make sure I understood you correctly, 34.5 euro is an amount not a percentage? The 0.2% on the amount in all accounts, do you mean on the value of the account or on the gain? On cash accounts I presume that would be the interest paid in a given year (virtually zero at the moment) and for shares, unit trusts etc it would be on any dividends paid, and you pay capital gains only when you sell. Is this the only tax on foreign assets or you also get hit for income tax? Its very confusing because I thought there was a double tax agreement between UK and Italy to prevent you getting taxed twice.
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Old Oct 25th 2021, 10:12 am
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Default Re: Is UK ISA and SIPP taxable in Italy?

As I said, do a search (in English) on IVAFE and you will come up with the likes of this here , then check a few more, and best try to find an official Entrate site here to confirm the rate (I think it's the same 0.2%)
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Old Oct 25th 2021, 4:37 pm
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Default Re: Is UK ISA and SIPP taxable in Italy?

I had an insurance policy which matured when our eldest turned 18. I remember crying when the Italian tax bill came......and the gains from the policy was not taxed in the UK.
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Old Oct 26th 2021, 5:49 am
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Default Re: Is UK ISA and SIPP taxable in Italy?

Originally Posted by Geordieborn
As I said, do a search (in English) on IVAFE and you will come up with the likes of this here , then check a few more, and best try to find an official Entrate site here to confirm the rate (I think it's the same 0.2%)
I am constantly amazed how little I know about the Italian Taxes, I've had a number of 'debates' with a commercialista or two on their interpretations of these rules. and they do differ at times (most annoying !)

I'm going to study these links again, thanks Geordieborn !

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