Investimento immobiliare in Toscana
Moving to Italy
Procedure for UK Residents.
The situation is reasonably straightforward if you are moving permanently abroad: you should inform the UK Inspector of Taxes at the office you usually deal with of your departure and they send you a P85 form to complete.
The UK Tax Office will usually require certain proof that you are leaving the UK, and hence their jurisdiction, for good Evidence of having sold a house in the UK and having rented or bought one in Italy is normally sufficient You can continue to own property in the UK without being considered resident, but you will have to pay UK taxes on any income from the property.
If you are leaving your UK company to work for an Italian one then the P45 form given you by your UK employer and evidence of employment in Italy should be sufficient.
You may be eligible for a tax refund in respect of the period up to your departure in which case it will be necessary to complete an income tax return income and gains from the previous 5th April to your departure date It maybe advisable to seek professional advice when completing your P85; this form is used to determine your residence status and hence your UK tax liability you should not fill it in if you are only going abroad for a short time.
Once Inland Revenue are satisfied that you are no longer resident or domiciled in the UK, they will close your file and not expect any more UK income tax to be paid.
If you are moving abroad temporarily, then other conditions apply. You are not liable for UK taxes if you work for a foreign employer on a full-time contract and remain abroad for a whole tax year (6 April to 5 April) as long as you spend less than 183 days in a year, or 91 days a year averaged out over a four-year period, in the UK If you are considered a UK resident and have earned money working abroad then taxes paid abroad are not deductible.
If you spend one part of a year working abroad and the rest in the UK you may still be considered non-resident for the part spend abroad, the so-called split tax year concession; this only applies to someone abroad for a lengthy period of time.
Italy has a double taxation agreement with the UK, which make it possible to offset tax paid in one country against tax paid in another.
While the rules are complex, essentially, so long as you work for an Italian employer and are paid in Italy then you should not have to pay UK taxes, as long as you meet residency conditions outlined above.
For further information see the Inland Revenue Publications IR20 Residents and non-residents, Liability to tax in the UK which can be found on the website www.inlandrevenue.gov.uk.
Procedure for US Citizens.
The US Internal Revenue Service (IRS) expects US citizens and resident aliens living abroad to file tax returns every year Such persons will continue to be liable for US taxes on worldwide income until they have become permanent residents of another country and severed their ties with the USA.
If you earn less than a certain amount abroad in one tax year then you do not need to file a tax return The amount 2002 was $7,200 for a single person; other rate are apply for pensioners, married persons heads of household etc...
Fortunately, the USA has a double taxation agreement with Italy so you should not have to pay taxes twice on the same income In order to benefit from the double taxation agreement you need to fulfil one of two residence tests: either you have been a bona fide resident of another country for an entire tax year, which is the same as the calendar year in the case of the USA, of you have been physically present in another country for 330 days during a period of 12 months which can begin at any time of the year. Once you qualify under the bona fide residence or physical presence tests then any further time you spend working abroad can also be used to diminish your tax liability.
As regards foreign income, the main deduction for US Citizens is the "Foreign Earned Income Exclusion", by which you do not pay US taxes on the first $80,000 of money earned abroad (as of 2002; the amount has in recent time gone up by $2,000 every year).
Investment income, capital gains etc are unearned income.
If you earn in excess of the limit taxes paid on income in Italy can still be used to reduce your liability for US taxes either in the form of an exclusion or a credit, depending on which is more advantageous.
The same will apply to Italian taxes paid on Us income.
The rules for US taxpayers abroad are explained very clearly in the IRS booklet, known as Publication 54, and can be downloaded on the website www.irs.gov.
The situation is reasonably straightforward if you are moving permanently abroad: you should inform the UK Inspector of Taxes at the office you usually deal with of your departure and they send you a P85 form to complete.
The UK Tax Office will usually require certain proof that you are leaving the UK, and hence their jurisdiction, for good Evidence of having sold a house in the UK and having rented or bought one in Italy is normally sufficient You can continue to own property in the UK without being considered resident, but you will have to pay UK taxes on any income from the property.
If you are leaving your UK company to work for an Italian one then the P45 form given you by your UK employer and evidence of employment in Italy should be sufficient.
You may be eligible for a tax refund in respect of the period up to your departure in which case it will be necessary to complete an income tax return income and gains from the previous 5th April to your departure date It maybe advisable to seek professional advice when completing your P85; this form is used to determine your residence status and hence your UK tax liability you should not fill it in if you are only going abroad for a short time.
Once Inland Revenue are satisfied that you are no longer resident or domiciled in the UK, they will close your file and not expect any more UK income tax to be paid.
If you are moving abroad temporarily, then other conditions apply. You are not liable for UK taxes if you work for a foreign employer on a full-time contract and remain abroad for a whole tax year (6 April to 5 April) as long as you spend less than 183 days in a year, or 91 days a year averaged out over a four-year period, in the UK If you are considered a UK resident and have earned money working abroad then taxes paid abroad are not deductible.
If you spend one part of a year working abroad and the rest in the UK you may still be considered non-resident for the part spend abroad, the so-called split tax year concession; this only applies to someone abroad for a lengthy period of time.
Italy has a double taxation agreement with the UK, which make it possible to offset tax paid in one country against tax paid in another.
While the rules are complex, essentially, so long as you work for an Italian employer and are paid in Italy then you should not have to pay UK taxes, as long as you meet residency conditions outlined above.
For further information see the Inland Revenue Publications IR20 Residents and non-residents, Liability to tax in the UK which can be found on the website www.inlandrevenue.gov.uk.
Procedure for US Citizens.
The US Internal Revenue Service (IRS) expects US citizens and resident aliens living abroad to file tax returns every year Such persons will continue to be liable for US taxes on worldwide income until they have become permanent residents of another country and severed their ties with the USA.
If you earn less than a certain amount abroad in one tax year then you do not need to file a tax return The amount 2002 was $7,200 for a single person; other rate are apply for pensioners, married persons heads of household etc...
Fortunately, the USA has a double taxation agreement with Italy so you should not have to pay taxes twice on the same income In order to benefit from the double taxation agreement you need to fulfil one of two residence tests: either you have been a bona fide resident of another country for an entire tax year, which is the same as the calendar year in the case of the USA, of you have been physically present in another country for 330 days during a period of 12 months which can begin at any time of the year. Once you qualify under the bona fide residence or physical presence tests then any further time you spend working abroad can also be used to diminish your tax liability.
As regards foreign income, the main deduction for US Citizens is the "Foreign Earned Income Exclusion", by which you do not pay US taxes on the first $80,000 of money earned abroad (as of 2002; the amount has in recent time gone up by $2,000 every year).
Investment income, capital gains etc are unearned income.
If you earn in excess of the limit taxes paid on income in Italy can still be used to reduce your liability for US taxes either in the form of an exclusion or a credit, depending on which is more advantageous.
The same will apply to Italian taxes paid on Us income.
The rules for US taxpayers abroad are explained very clearly in the IRS booklet, known as Publication 54, and can be downloaded on the website www.irs.gov.
Real Estate taxes in Italy
The majority of those buying a house in Italy will have only two taxes to pay: the ICI and the IRPEF, for which you can consult a local accountant or commercialista.
A commercialista is a qualified professional registered in the local Albo dei Dottori Commercialisti who will take care of all your taxes, for a fee. Case e Ville real estate agency can suggest a commercialista in order to help you.
The ICI is the Imposta Comunale sugli Immobili, or property tax, which is levied by the local borough council Comune, and calculated according to their own criteria within minimum and maximum limits imposed by the state, and in proportion to the valore catastale or rateable value of the property. It is payable in two instalments - normally at the post office - in June and December. When you buy your property you - or your commercialista - must report it to the Comune in a dichiarazione ICI. It is an unpopular new tax, which seems cheap to foreigners, averaging about €1.000 per year per property, with a reduced rate for primary residences.
The IRPEF tax is the Imposta sul Reddito delle Persone Fisiche, literally tax on the income of physical, as opposed to juridical, person i.e. income tax, levied at between 23% and 45% at the time of writing. Whether you are resident or non-resident, your property is regarded by the state as having a rendita catastale, literally a land registry (notional) income, which is taxable, even though it is yielding no actual rent. All habitable property must be registered in the urban building register, catasto edilizio urbano, which gives it a rateable value. IRPEF is payable in two instalments, June and November, the form required for it is: modello di pagamento unificato F.24.
Both ICI and IRPEF are payable on-line. The IRPEF is under the control of the Revenue Ministry, Ministero delle Entrate, who have as enforcement officers not only the Tax Police, Guardia di Finanza, but also the Carabinieri.
A commercialista is a qualified professional registered in the local Albo dei Dottori Commercialisti who will take care of all your taxes, for a fee. Case e Ville real estate agency can suggest a commercialista in order to help you.
The ICI is the Imposta Comunale sugli Immobili, or property tax, which is levied by the local borough council Comune, and calculated according to their own criteria within minimum and maximum limits imposed by the state, and in proportion to the valore catastale or rateable value of the property. It is payable in two instalments - normally at the post office - in June and December. When you buy your property you - or your commercialista - must report it to the Comune in a dichiarazione ICI. It is an unpopular new tax, which seems cheap to foreigners, averaging about €1.000 per year per property, with a reduced rate for primary residences.
The IRPEF tax is the Imposta sul Reddito delle Persone Fisiche, literally tax on the income of physical, as opposed to juridical, person i.e. income tax, levied at between 23% and 45% at the time of writing. Whether you are resident or non-resident, your property is regarded by the state as having a rendita catastale, literally a land registry (notional) income, which is taxable, even though it is yielding no actual rent. All habitable property must be registered in the urban building register, catasto edilizio urbano, which gives it a rateable value. IRPEF is payable in two instalments, June and November, the form required for it is: modello di pagamento unificato F.24.
Both ICI and IRPEF are payable on-line. The IRPEF is under the control of the Revenue Ministry, Ministero delle Entrate, who have as enforcement officers not only the Tax Police, Guardia di Finanza, but also the Carabinieri.
