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2020, here we come…

By Gareth Horsfall - Topics: BREXIT, Italy
This article is published on: 6th January 2020

06.01.20

This is the start of a new decade and it will surely bring fresh challenges for all of us, but there is much to look forward to as well.

Climate change is constantly being talked about, we can look forward to a reduction in single use plastics from 2021 in the EU, electric car sales are showing the highest growth in numbers, our current model of economic growth is under question and more focus is being placed on corporate welfare of customers, employees and ecological footprint. In addition, technology is bringing about massive disruptive change to old industries who have had their feet under the table for too long. This is not all without serious challenges but if we work together we can get the results that we need for the benefit of everyone, no matter which side of the political spectrum we might sit on.

My biggest lesson over the last decade

We can’t expect everyone to agree with us about everything. Brexit has been an exponentially steep learning curve for me, one which I have learnt alot from: Tolerance more than anything, but also challenging norms and preconceived ideas. I also learnt that illness is the most democratic thing of all: it spreads regardless of money, age, sex or political views.

My resolutions for 2020

(I make them once a decade)

I aim to reduce my use of social media massively to avoid any influence from fake news (If Sig. Zuckerberg won’t regulate it, then I am afraid I won’t use his platform as much), to read alot more books, try and understand more the people who have differing views from myself, attend a Salvini rally at some point (this is a strange one, but I attended a Sardine manifestazione in December 2019 and I wanted to get a balanced view, so committed myself to attending a political rally of Salvini – watch this space), continue to reduce plastic (Oh my god, how hard is that in Italy), eat less meat and maintain a healthy lifestyle.

And on those bombshells, I would like to wish you first and foremost the best health, and also happiness for the next decade.

Happy New Year 2020

My next article ‘8 reasons to be wary of yourself in 2020’ will be released shortly.

Political shock in the UK

By Gareth Horsfall - Topics: Currencies, Italy, sterling, UK General Elections, United Kingdom
This article is published on: 13th December 2019

13.12.19

Dear Readers of my articles

I am writing you a very short email today after what appears to be somewhat of a political shock in the UK. I will refrain from further comment until I have had time to let things sink in and I can discuss possible financial consequences in a rational manner.

However, where one loses another gains, as the saying goes, and one of the fortunate consequences of this vote in the UK is that it will bring, I think, short termed optimism and bear favourably on pounds sterling. I doubt this will continue as the reality of leaving the EU strikes home once again, and let’s not forget that a NO Deal scenario is now a real possibility again.

My point is that as I write this GBP: EUR has bounced to 1:21. If you have money in GBP and you need to convert to EUR you might be staring at a very favourable rate. I am not making any assumptions on where it will go during the course of the day, weeks ahead or even months, but compared to the last few years the exchange rate is quite attractive for sterling conversion to euro.

It was predicted that this would happen after a Tory majority win, so take advantage where you can.

Enjoy the day ahead as news comes in and we start to find out what the future holds for UK politics.

DETRACTIONS FOR INCOME TAX PURPOSES IN ITALY

By Gareth Horsfall - Topics: Income Tax, Italy, Tax, tax tips
This article is published on: 4th December 2019

04.12.19

I am often asked which expenses can be detracted from income in Italy. These serve to reduce your potential tax liabilities.

Unlike a lot of countries where allowances are offered on a certain amount of income each year (e.g. the UK and the first £12500), Italy does not offer any such allowance, but instead uses a complicated system of detractions and deductions of certain living expenses. That list covers a multitude of items, such as eco bonus for re-construction work to your home, funeral expenses and medical expenses.

A new criteria that has been imposed as of 2020 is that a number of these must now be paid only by traceable means of payment (bonifico, bancomat or credit card). If they are not paid with one of these methods then they are not deductible.

The following table, taken from an article in Sole24Ore is a good reference tool to see which expenses can be deducted, at what % of the total cost and whether they can be paid in cash or not.

I hope you find it useful. If you are not claiming for any that you might be eligible for then I would advise you have a conversation with your commercialista about them.

Sterling after Brexit

By Gareth Horsfall - Topics: BREXIT, Currencies, Elections, Italy, UK General Elections
This article is published on: 3rd December 2019

03.12.19

In this article I want to look at what has happened to sterling since Brexit and the outlook. In 2015, when the world seemed a lot more secure, GBP v EUR was trading over 1.40 and life seemed good. Anyone holding GBP based assets and incomes would find that their money went a long way. Today it is trading at 1.17.

With all this confusion it inevitably causes some uncertainty. This seed of uncertainty has shown itself nowhere better than in the continued daily swings of GBP v EUR.

It has been a while since my last E-zine. I am sure that it won’t go unnoticed that this E-zine is coinciding with the UK general election on December 12th. At the present time the Conservatives are polling for a small majority, but it would seem to be anyone’s guess as to the ultimate result.

A RECENT HISTORY OF STERLING
Around the start of 2016, after the Brexit fuse had been lit, sterling started to fall as the Leave campaign gained ground and the markets reacted nervously to a potential Leave outcome.

sterling history

Immediately after the Referendum, June 24th 2016, when the result was announced, GBP fell the most against a world basket of currencies since the introduction of free floating currencies in 1970. On June 24th 2016 it had it’s largest ever one day fall of 13%. To put this into context, when George Soros famously ‘broke the Bank of England’, and made billions by betting against sterling in 1992, resulting in its subsequent ejection from the exchange rate mechanism, sterling only fell by 4.3%. In 2009 at the height of the financial crisis sterling lost 16% but over an 11 trading day period between 8-23 September 2009. The Brexit effect was huge.

I remember calling some currency brokers in the City of London early in the morning of June 24th 2016 and asking what was happening on the trading floor. The only responses I got were “fortunes have been made this morning!” and “it’s chaos over here”.

Roll on 2019 and as you will see from the charts below, since 2017, after the drop, sterling has traded within a range of values and has only experienced a ‘relative’ peak around the middle of this year.

STERLING CHART 2015 TO 2019

STERLING CHART 2015 TO 2019

STERLING CHART 2017 TO 2019

WHAT DOES THE FUTURE HOLD FOR GBP V EUR?
In my travels around Italy to talk to clients this is the most asked question. Since the highs of 2015, there has been an approximate 20% loss in the value of your GBP assets and incomes. For anyone living on a fixed income, i.e. pensions or living from assets, this is starting to have an effect. In the past year the number of clients asking to top up their income from their assets has increased. This withdrawal effect represents a net reduction in your overall asset base, when that money might have been spent on future medical needs, inheritance for children, or just for future living costs.

Therefore, it is no surprise to me that I am asked frequently for my opinion on the matter, and additionally whether you should be thinking about converting assets into euro, to hedge against further falls.

MY RESPONSE
I have been speaking to asset managers in London and currency specialists over the last year about this subject to try and get a feel for the ‘word on the street’. I can tell you that the theme has always been the same and nearly all asset managers say the same thing. Sterling is desperately undervalued if we measure it against the fundamentals such as productivity of the economy, GDP v debt etc. Very simply, this means that when compared against all measures, sterling should be trading quite a bit higher against the Euro. The uncertainty surrounding Brexit is depressing the value more than anything else, rather than the actual event itself.

The rational thinking is that the currency markets, at this point in time: 3 years after the vote, are desperate for an outcome, whether that be a deal or remain (we cannot exclude no-deal, but for now it appears to have been put to rest). If we are to assume that the Conservatives win a majority (no matter how small) then there could be a bounce in sterling in anticipation that Boris Johnson’s deal is likely to be passed in parliament and provide the certainty that the financial markets are desperately searching for. The deal being passed ‘could’ create conditions for ‘another rimbalzo’ in the price of sterling. My guess is that it would bounce quickly after any decision was taken, although these are only educated guesses.

caution

You may now be thinking, ‘how much would it likely rise?’. Well, if I knew that then I would be a very rich man indeed. In all honesty, no one can say for sure. I am not a betting man but I wouldn’t be looking to place any sizeable bets on it even if I were.

I remember that at The Spectrum IFA Group annual conference in January this year in Portugal, we had a speaker, David Coombes from Rathbones Asset Managers. He gave his outlook for sterling based on the 2 parameters he had set for the fund he manages. In the event of no deal he had GBP/EUR at 0.9 and in the event of a return to remain he placed GBP/EUR at 1.4. He went on to say that for any scenario in between you can pick your own point.

Going further in my own assessment of things, I personally think that if a deal is passed, or remain wins (in my dreams), then sterling is going to rise, but by how much I wouldn’t like to say. However, we must remember that ‘getting Brexit done’ is a illusion in itself. Passing a deal in parliament is only the start. The UK then has to formally leave the EU and start negotiating trade deals around the world. Some will likely fall in place very quickly, Canada, Australia, South Africa, maybe even the USA, but the deal with the EU and important future trade deals with India, China etc will likely take years and may not be as good as Brexiteers might hope for.

To give you an example of how difficult these trade deal negotiations might be, let’s take the example of Switzerland versus China and their trade deal which they struck in 2013. Everyone is aware of the rapid growth of the Chinese economy and how almost every nation in the world would like to strike a free trade deal with China to access the billions of growing middle class individuals and a rapidly growing consumerist economy. Switzerland is one of very few countries outside the Asia Pacific region to do so. However, Switzerland had to make some large sacrifices to get that deal, mainly that the Chinese negotiated FULL and free access to the Swiss economy for a period of 10 years during which time Switzerland would have only very LIMITED access to certain sections of the Chinese economy. The Swiss deemed this to be a good deal! It just goes to prove that deal making around the world is not going to be as easy as the Leave campaign would like us to believe.

Any protracted deal making phase may well be a negative effect for sterling and after any initial bounce on the back of some certainty, you might see sterling enter a volatile period once again, certainly as the unravelling from the EU also takes effect. I don’t buy into Project Fear and think that the UK will find its way in the world outside the EU, but like any divorce it will get messy for some time. The question is for how long and what impact will this have on the currency.

MY ADVICE
In summary, if you have money in sterling and ask me for advice, I will say that you should not convert it into euro right now. I will caveat that with the fact that neither I nor the best currency expert in the world can tell you what will happen, but it is a reasonable assumption that sterling will rise when the next steps of Brexit are resolved one way or the other. What happens after that is anyone’s guess. If you need to convert to euro then I would suggest doing so in tranches, or holding on until after Dec 12th to see what happens. Then pick your time, keep an eye on the rate and convert on the peaks.

(I am adding this note after having completed this E-zine. Our rep from Currencies Direct, our preferred currency exchange partner, called me about 5 minutes after completing this text and we had a chat about GBP expected movements in relation to the elections. She said that they are thinking that GBP v EUR could bounce to the mid 1.20’s if Boris Johnson wins the election with a majority. This is not a prediction, merely a hypothesis!)

The attack on cash in Italy

By Gareth Horsfall - Topics: Italy
This article is published on: 8th October 2019

08.10.19

There are 17 different regulations for the use of cash in Italy, from the €15000 limit on shopping for foreign tourists to a €1000 limit on money transfers. 20 years of regulations of cash in a country where it is estimated that 86% of transactions are completed with the use of cash.

But changes may be afoot if this coalition gets its way.

THE PROPOSED CHANGES
The M5S and PD government are, like any good Italian government, looking at ways to rebuild this country’s coffers and balance the books. I say this with a modicum of tongue in cheek, because although that is all they ever seem to talk about, whether they ever get the chance to do anything about it before the coalition falls apart and another set of politicians comes in and changes the proposals yet again is anyone’s guess. But let’s give them the benefit of the doubt this time round.

The following proposals are ones which might seriously affect the way you do business or conduct your life in Italy.

The Italian coalition government are looking at how they can incentivise the use of traceable means of payment, i.e. bancomat, credit cards and bonifico, and increase their usage in line with other Northern European countries. To do this they are looking at monetary incentives in the way of a discount in the rate of IVA (VAT) on products and services or imposing penalties on high levels of cash withdrawals at the ATM.

Under the proposals, if you pay by electronic means instead of paying by cash then you could be eligible for a discount of 2% on IVA. However, if you pay by cash then the IVA will increase by 1%.

Using the example of paying cash in a restaurant, you would get an IVA discount of 2% on the 10% normally charged if you paid by card i.e. 8%, or alternatively an IVA rate of 11% if you paid in cash. A nifty move, if it ever comes into force, and one which could certainly catch many people out. If these proposals are implemented by this government or any other, then it might be time to review how you make and/or receive payments to think about benefitting from this discount.

ATM WITHDRAWALS
The second way that they propose to fight the black market of cash payments is to apply a tax on monthly cash withdrawals from ATM’s, or the sportello, where withdrawals exceed €1500 per month. A 2% tax would be applied if you superseded this limit. Equally, the proposal seeks to reward those who use electronic means of payment with a 2% tax credit directly into their account. How they will calculate this is still being disputed.

It remains to be seen how the proposals with be implemented, but both are currently being considered seriously with a view to adding an amendment to the recently approved raft of measures in the Legge di Bilancio 2019. Don’t get caught out if they come into force!

These proposals and rules are changing almost daily at the moment and just this morning I have seen another, which should come into force, and which will allow deductions for income tax purposes, e.g. scontrini at the farmacia or the Ecobonuses for house renovations, ONLY if they are paid by bancomat, credit card or bonifico.

In short, they are trying to disincentivise the use of cash as much as possible. This comes with a promise that if sufficient revenue is generated for the state, then the rate of IVA will not increase in 2020 and 2021 (as is proposed) and they will also look at tax deductions for individuals and families. The mind boggles.

Tax breaks in Italy

By Gareth Horsfall - Topics: Italy, Tax, tax advice, Tax Relief, tax tips
This article is published on: 7th October 2019

07.10.19

I have been writing these articles for 10 years this year, after sending out my first one in 2009. Looking back at the very first one just the other day, I saw how it had developed and how the concepts I discuss have changed dramatically. This got me thinking about the way that the world has changed as well during this time. Last Friday I joined the Global Climate Strike in Rome. There were about 250,000 students, protesters and concerned people; marching to spread our concern for how we treat the world we live in. It certainly got me thinking about how politics is going to have to change significantly in the coming years to meet the needs and desires of these disgruntled voters.

Which leads us nicely to the new coalition government in Italy and their changes in the Legge di Bilancio which were approved on the 30th September. In the Legge there are many new rules that will come into force from 2020, some eco based (but not enough) and a number which may affect you. Below I have selected a few of the changes in the tax law which might interest you.

1. If you are in the market for a new car, then incentives will be given, up to €6000 for purchasing a new electric, hybrid, small gas or small diesel car.

2. BUT, if you buy an SUV or an ‘auto lusso’, then you will taxed up to €3000.

3. Anyone who is working online might be caught in the trap set to try to tackle evasive tax practices by the big tech companies. Italy is following the French lead and introducing a tax of 3% on web based business revenues generated in Italy.

4. The flat tax of 7% for retirees moving to, and getting residency in Italy is fully approved from January 2019. The main caveat is that you must move to a village of no more than 20,000 inhabitants in any of the following regions:

Sardinia, Molise, Abruzzo, Puglia, Basilicata, Calabria, Sicilia

Other terms and conditions apply, so check carefully before assuming you automatically qualify.

5. Income tax deductions will be available for anyone who carries out invoiced home renovation, purchases eco domestic appliances, completes seismic work on their house, purchases sun curtains for balconies or buys mosquito blocks for doors, amongst other property related deductions. The following article (in Italian) provides a nice summary (once again conditions apply, so make sure you check the small print or speak with a commercialista before going ahead).

www.theitaliantimes.it/economia/proroga-bonus-ristrutturazioni-mobili-verde-ecobonus-legge-di-bilancio_011019/

However, please remember that this work must be ‘invoiced’ work and paid for by electronic means. If you pay for it in the black or in cash (even if invoiced), then it is not deductable. Although paying in the black is illegal, it will often mean you can negotiate a discount on the full price. Whilst this might make paying in cash may seem attractive, it won’t afford you any income tax deduction so may turn out to be more disadvantageous.

6. The canone RAI (TV licence fee) has been reconfirmed as €90 per annum. No price increase will be applied, at least for this year.

7. And the pièce de résistance … if you thought that IMU and TASI were hard enough to get your head around, the latest news is that they are going to be unified. No prizes for anyone who can come up with the new acronym. TASIMU???

Watch out for your uber-rich neighbours

By Gareth Horsfall - Topics: Italy, Tax
This article is published on: 18th May 2019

18.05.19

As the rest of the world is starting to talk more frequently about closing in on the uber-rich and making them pay more tax, Italy has gone the other way.

2 years ago Italy introduced a new ‘flat tax’ regime designed to attract the super rich into the country. Anyone can register under this regime whereby they pay a one-off payment of €100,000 per annum to the tax authorities and become resident in Italy without the requirement to declare any of their other worldwide incomes, gains or assets.

Whilst the uptake for this tax regime was slow, Italy has now started to market it more aggressively overseas and they have seen a 30% increase of requests to register, year on year, mainly from the UK (che sorpresa! The super rich are leaving the country with the threat of Brexit) along with Americans, North Europeans and Russians. They now get to keep their money and live ‘La Dolce Vita’

Providing a way out for the uber-rich has never been more popular!

We need to talk about China…

By Gareth Horsfall - Topics: Investments, Italy
This article is published on: 17th May 2019

17.05.19
  • There are more Christians in China than Italy and the Vatican combined
  • By 2030, China will add more new city-dwellers than the entire U.S. population
  • By 2025, China will build enough skyscrapers to fill TEN New York-sized cities
  • America’s fastest “high speed” train goes less than half as fast as the new train between Shanghai and Beijing (150 mph vs. 302 mph)
  • China has more pigs than the next 43 pork producing countries combined
  • China’s economy grew 7 times faster than America’s over the past decade (316% vs. 43%)

If you hadn’t already guessed, this article is about the economic powerhouse: China. Listed above are some interesting facts just to whet your appetite. However, given the current market turmoil surrounding Donald Trump and his China tariffs, I thought it would be a good idea to clear up some of the myths surrounding China, with the help of our friends at Blackrock Asset Management.

5 Myths about China’s economy

Economic growth is unsustainable

There is still lots of room for growth
The Chinese economy has been growing quickly for more than 20 years, and hit a peak of 14% in 2007, according to the World Bank. But things have started to slow in the last few years. Growth cannot continue indefinitely and China does have a problem with high levels of personal, corporate and government debt. However, even at today’s slower pace of growth at approximately 6% per annum, China will continue to grow more than twice as fast as many developed economies. China has seen growth of 6-10% over the past 7 years. Even a basic level of growth is enough for the financial markets to grow and for domestic reforms to be pushed through.

High debt means that China is high risk

China is actually reducing debt at a good pace
Many Chinese companies hold a great deal of debt and Chinese corporate debt has reached 165% of GDP, according to an IMF report. (Ireland, Netherlands, Belgium and Sweden have higher corporate debt to GDP ratios!)

The Chinese government is serious about addressing the high levels of debt and has signalled that corporate debt restructuring is now high on the agenda. Whilst this is a positive move for the economy it causes investors to worry about whether the Chinese authorities will be able to engineer a soft landing. Policymakers have been practical in their approach to reducing debt by making structural changes on one front but also ensuring that there is sufficient liquidity to avoid any stress. It sounds like good financial planning to me. Pay down your debt but maintain a good cash level in case of emergencies.

China also has a very high level of personal (retail) investors in its financial markets, and with such a high percentage the Chinese government is more likely than most governments to intervene should there be any danger of sharp falls in equity markets. Economic hardship can trigger social unrest, and the Chinese authorities do not like civil unrest!

Increased protectionism in the US will hit China hard

Despite what Donald Trump would like to make us believe China is an increasingly important player in global trade
The US-China relationship and some kind of trade war seem inevitable especially under the Donald Trump regime. This will affect international markets, without a doubt. However, despite all the noise over tariffs, the ambitious Belt & Road initiative is still in progress. This is China’s way of boosting trade and stimulating economic growth across Asia by building a massive amount of infrastructure to connect it to other countries. In addition, the US has walked away from the Transatlantic Trade Partnership and this offers China the chance to play an even bigger role in terms of trade integration in the region. This basically means that whilst America is battening down the hatches, China is opening itself up, making more allies and expanding its global reach of power.

BlackRock believes that trade tensions between the US and China will continue for a further period but does not think it will escalate into a full-blown trade war, although it does remain a risk.

It is difficult to get accurate economic data about China

There are more ways than one to skin a cat, so are there more ways than one of digging for money
Investors worry about the accuracy of economic data that comes out of China. This is where technology can come to our aid in the guise of satellite imagery. It can provide an alternative source of up-to-date information. For example, it is possible to form a picture of the ‘metalness’ on the ground as a way to measure the number of new factories being built, or existing ones expanded. This information helps to verify the data from the Chinese government. It is also much faster than relying on quarterly valuations.

Surprisingly, this information is so detailed that the economic activity of individual companies can be compared. Big Brother is watching you!

China has a liquidity problem

The tide may be beginning to turn
The inclusion of China in the Emerging Markets financial Indices is already starting to see more funds flowing into China. Going forward, more Chinese shares are likely to be added to the indices, driving even more money into the region.

China already makes up 32.7% of the Emerging Markets Index and will continue to take a larger proportion as China continues to deregulate its capital markets and make them more accessible to foreigners. If China achieved full market inclusion in the Emerging Markets Index, it would account for 50% of the total index of ALL emerging markets and it could eventually account for 30% of the emerging markets bond indices.

The strength of the US dollar together with the extended period of quantitative easing has held money in the US, but that trend is now changing with funds starting to flow back into Asia from the second half of 2017.

There is also a forthcoming Stock Connect scheme, linking the Shanghai and London Stock Exchanges, which will also give foreign investors greater and easier access to the shares of companies listed in mainland China.

All these developments, together with the broader structural reforms being carried out within China, may increase liquidity and as these five myths are debunked, the Chinese stock market may start to get the increased international attention it deserves.

As a client of The Spectrum IFA Group, China and other emerging markets will make up a proportion of your portfolio. Whilst the financial markets are highly volatile, the growth of investment is higher than in other developed markets. Yet, it is not a question of whether you should invest in volatile financial markets or not, but more the question of how much you should allocate to them based on your own personal circumstances and attitude to risk.

The asset managers we work with take care of those decisions on your behalf, so you don’t have to.

The Spectrum IFA Group: A corporate partner, a generous friend

By Spectrum IFA - Topics: Belgium, corporate responsibility, France, Italy, Spain, Spectrum-IFA Group, Switzerland
This article is published on: 16th May 2019

16.05.19

As a small NGO, Street Child EU is always on the lookout to build relationships with corporate partners as a means of strengthening our long-term fundraising ambitions. We are always grateful when, after approaching an organisation, they take the time to contemplate our vision and give consideration for the potential benefits of our projects. Yet, even with our proven track-record, this is a competitive industry, and securing regular funding is a painstaking and uncertain process. Thankfully, every so often, we encounter a corporate organisation that immediately identifies with our philosophy and subsequently demonstrates an admirable commitment to transforming our ambitions into reality – The Spectrum IFA Group is one such case.

Over the years, this Financial Services Organisation, has shown an unwavering dedication to providing hope to some of the world’s most marginalised groups and disadvantaged children, their donations to Street Child thus far reached 14,000 € . Street Child’s relationship with The Spectrum IFA Group stretches back to 2016, when they provided us with a generous donation for our Girls Speak Out programme. This project was set in the difficult context of post-ebola Sierra Leone and Liberia. Our mission aimed to support at least 20,000 girls to access and sustainably remain in quality education. When The Spectrum IFA Group provided us with 3,750 € we could immediately family business grants for the Street Child team in the capital of Sierra Leone, central Freetown. This meant that 65 individual caregivers were given the means to protect and nurture the vulnerable children in their care. The grant also enabled an extra 65 girls and 65 of their siblings to attend school – totalling 130 children for whom education had previously been out of reach. Moreover, the donation has had a wider impact of providing an additional 195 family members with access to an increased income. Overall, this has been a great source of optimism in the community, wedging open a door of opportunity for future generations of children in Freetown.

In 2017, The Spectrum IFA Group once again willingly answered Street Child’s call to action by providing support for our Breaking the Bonds Project in Nepal. Street Child was implementing an ambitious plan to reverse the effects that decades of discrimination have inflicted upon the Musahar community. With a donation of 5,000 € we made great strides in our efforts to free Musahars from bonded labour and disrupt this cycle of poverty. The donation has enabled 27 Musahar girls to complete our livelihoods support program which, through a careful combination of business skills training and life skills workshops, has given these Musuhars the resources and skills needed to propel them towards economic independence. In 2018, The Spectrum IFA Group reiterated their support for the Musahar community by donating an extra 3,000 € to the cause.

This organisation has always been interested in receiving project updates from the field, and we have always happy to oblige with photographs and case studies. They have kindly used these materials to show off during presentations at company events, encouraging even more donations by The Spectrum IFA Group’s staff. It is important for us that our corporate partners show off the projects they have funded with this kind of pride. It is important that corporate organisations engage with NGOs out of a genuine interest in social progress and The Spectrum IFA Group clearly does so.

All to often corporate partnerships cannot stand the test of time, but the relationship between The Spectrum IFA Group and Street Child is strong and looks set to stay. We have already shared positive initial conversations in relation to our new project in Afghanistan and furthermore, an extra 2000 € donation already indicated for a new Musahar project. We are tremendously grateful for the trust and support The Spectrum IFA Group has continuously offered us. Our experience with The Spectrum IFA Group is a testament to the fact that the NGOs and Corporate organisations can positively bridge the gap between these differing industries in order to pursue a common goal.

1

Soti, a Musahar in Nepal has benefitted from business skills training to establish a steady income for herself and her children.

2

In Central Freetown, Sierra Leone, Aminata been supported through the Girls Speak Out programme. She can now attend School regularly and has aspirations to one day become a teacher

*Note: The names of individuals have been changed to protect their privacy and identity

New Tax Laws in Italy

By Gareth Horsfall - Topics: Italy, Tax, tax advice
This article is published on: 14th March 2019

14.03.19

If you have been reading my previous articles, you may have read about tax breaks that are in the pipeline for Italian residents.

They have been proposed by Matteo Salvini and his party La Lega. The proposals that are the most interesting from my point of view are the following:

FLAT TAX OF 7% FOR RETIREES MOVING TO ITALY

This was introduced into the ‘Legge di Bilancio 2019’. In short, anyone who moves to Italy and is in receipt of a pension income from abroad, can benefit from a flat tax of 7% on their income for a period of 5 years after becoming resident, based on the criteria that:

a) you must establish residency in one of the following regions, Sicilia, Calabria, Sardegna, Campania, Basilicata, Abruzzo, Molise e Puglia,

b) the town/village must have less than 20,000 registered inhabitants.

c) you must NOT have been resident in Italy in the last 5 full tax years prior to taking the offer.

d) you can opt out of the regime if you feel it does not fit your circumstances.

The idea is to re-populate the southern regions of Italy which have been decimated over the last 20 years due to lack of employment opportunities and mass migration to the large Italian cities and Northern Europe. The aim is to try and draw in foreign money and also Italians abroad who may wish to move to Italy in retirement.

CHANGES TO THE INCOME TAX BANDS

From calendar year 2020 there are proposals afoot to reduce and simplify the current income tax bands. Currently there are 5 tax bands in Italy:

On the first $15000 23%
€15001 – €28000 27%
€50,000 – €75,000 41%
+75,000% 43€

The initial proposal was to reduce the rate of taxation to 15% on the first €65000 of income and then 20% above. Whilst that has been introduced in 2019 for self employed people on a partitia IVA, the proposal on personal income has been scaled back somewhat since the initial proposals, mainly due to concerns over balancing the books. The latest proposal doing the rounds is to reduce the number of income tax bands, but the rates do not move much:

On the first €28,000 23%
€28,000 – €75,000 33%
€75,000 43%

An income of €28000 per annum gross would amount to an annual saving of €520pa.
An income of €50000 per annum gross would amount to €1620pa

These are not figures that are going to change many people’s lives in a big way, but something is better than nothing. However, all this is hypothetical at the moment as we wait to see the final proposals and implementation of the law. It is unlikely that we will know more at this point since Salvini is quite likely to force another general election this year in lieu of his gaining popularity and the demise of M5S. Since the flat tax was his proposal, if he becomes PM, then further changes could be in the pipeline. Watch this space!

So, all in all I don’t see any great game changers for you or me, but who knows. At least we have the sun, sea, mountains, food and ‘la dolce vita’.