New Tax Rules Hitting Expats in Italy Hard
The old system required assets such as overseas property, savings accounts and shares to be declared if they had a value greater than £8,400.
However, under the new system this minimum boundary will be thrown out. Which means that those with really small savings in their UK bank accounts, will have to join those with really big savings in their UK bank accounts, and declare those savings to the tax authorities in Italy.
The good comes with the bad
This new situation has given rise to both good and bad news. Expats will not suffer from any additional taxes on their smaller assets. The problem that does arise is one which includes substantial fines if assets are not declared. The foreign asset monitoring return form must be completed and returned by September 30 each year, in order to declare all assets held outside Italy.
The changes that have been enforced by Italy’s fiscal monitoring regime, also require Italian tax residents to state any cash or investment transfers that are going into or out of Italy. This too had a minimum threshold of £8,400 which has been removed. The implication of this change is that any foreign transaction that is made will have to be reported, the size of the transaction being irrelevant.
Say goodbye to the IMU, and hello to the service tax
However, there is a silver lining to this cloud, and it comes in the form of the municipal real estate tax (IMU) being scrapped for 2013. This is good news for homeowners, who will escape this additional expense. But the good news does not stretch to those individuals who have second homes or even holiday homes, these people will find that they will have to pay the IMU. The IMU will be replaced in 2014 by the service tax, which will bring together all the current local taxes. No one really has the time to pay each individual bill. Which is why it makes more sense to pay everything in one go, in one bill.
Pier Paolo Baretta, Italy’s Deputy Economy Minister, confirmed that service tax will be taking over from the IMU next year. This one change doesn’t bode well for British expats in Italy who are currently renting property, or are being provided some form of housing by their employer. The IMU is a bill that is paid by the owner of the property. But the service tax will have to be paid by the tenant. To relay more bad news, inevitably if the service tax is not paid fines will be handed out. So in one form or another, the tenant will find themselves digging into their pockets.