Changes to Italian tax regime to hit hard on expats
|Published:||24 Sep at 6 PM|
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Previously, rules stated that only assets worth more than £8,400 needed to be declared to the Italian tax authority, but the threshold has now been scrapped. Any expat with even a small savings account offshore or in their country of origin must report it to the authorities.
At the present time, there are no plans to tax expats on their overseas holdings, but stiff fines will be issued if disclosures are not made. The tax return itself is likely to cause problems.
A monitoring return form containing all details of any foreign assets held needs to be filed at the same time as the Italian tax return itself, due on 30 September every year. In addition, the €10,000 reporting limit for investment or cash transfers in and out of the country has also been scrapped.
All individuals, whether expats or nationals, will be obliged to declare all transfers, however small, and there are fears this may affect the regular pension payments made to retirees in the country. The upside of the changes is that the controversial 2013 real estate tax to be paid by home owners has also been scrapped, with the exception of second homes and holiday villas.
The real estate tax is expected to be replaced in 2014 by a service tax comprised of the total of all local taxes, aimed at allowing local municipalities the freedom to set their own tax rates, although it will be calculated on a national basis. The changes will hit expats renting their homes or provided with a property by their employer as, with the new service tax, the occupant will be liable rather than the owner.
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Absolutely right - already we have been receiving requests from cliets based in Italy to look at how they can 'avoid' the new regime. The Italian government is shooting itself in the foot on this one - people will relocate!