Is UK ISA and SIPP taxable in Italy?
#1
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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!
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!
#2
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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.
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 9:52 pm. Reason: Addition about uk impact
#3
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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.
#4
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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
more info here:
https://taxsummaries.pwc.com/italy/i...ersonal-income
PSG
#5
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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?
#6
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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
more info here:
https://taxsummaries.pwc.com/italy/i...ersonal-income
PSG
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)
#7
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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
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
#9
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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 10:19 am.
#11
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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.
#12
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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%)
#14
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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'm going to study these links again, thanks Geordieborn !
PSG