Suspended – 20% tax on overseas transfers into Italy

By Gareth Horsfall
This article is published on: 20th February 2014

Suspended – 20% tax on overseas transfers into Italy
 
The witholding tax of 20% on overseas transfers into Italy has been suspended.

No sooner had the law regarding the 20% withholding tax on transfers from overseas been introduced, than it is suspended.  Until July 2014.
 
The main isssue with the law was one of distinguishing between transfers from abroad that were ‘profit from investment’ and those that were income from other sources, such as pensions. And if you made an auto certificazione’ with your bank to state that you were not bringing money into the country, from profit on investment, then would you have to sign another auto cetificazione when you did? and what happens if you forgot but still declared the asset on your Unico’?  These are just some of many questions which needed answering.  In the end the law was just another example of very badly thought out policy which really should have been planned more carefully.   (Interestingly I have just seen a report that the EU has not condemned the law but says that it needs more thought, essentially)
 
Athough, the more I think about the law itself, as a way to catch those who were not making accurate declarations, the more I admired it.  But once again it came down to implementation and even the best laid ideas are doomed to failure without adequate planning and thought.
 
That all being said it now seems that, at least for the meantime, Italy will be resorting back to the, what now seems the almost historic, share of information agreements with co-operating countries.
 
As you may or may not know the EU has an open share of information agreement. Some UK rental property owners found this out to their chagrin in 2012 when the Guardia di Finanza went knocking on doors asking why rental income from a UK property (which interestingly was already being declared and tax being paid in the UK) was not being declared on the Italian tax return.  Some of the fines which I heard of were astronomic.
 
Luxembourg and Jersey have now signed up to a free exchange of information on interest payments, in the EU, from 1st January 2015.  Austria will likely follow as the 1st January 2015 marks the entry into force of the mandatory exchange of information agreement across Europe.
 
The Isle of Man and Guernsey have already agreed a full and open share of information agreement with the EU on income from interest and so the information on offshore bank account holders is fully reported.
 
And the USA has already entered into agreement with Italy under its FATCA law (Foreign Account Tax Compliance Act) which allows for a free exchange of information on resident individuals in either country.  In fact there is a new acronym doing the rounds: GATCA.  Global Account Tax Compliance Act.  
 
One of the most interesting points about the Italian move to withhold 20% at source was that it was an open attack on profit from investment..  The share of information agreements, to date, have been mainly focused on interest from savings.  Could this mean that the EU is about to enter the next phase of tracking down mis-reported incomes and/or gains from investment. Probably!  The mandate has been clear since the implementation of the EU Savings Tax Directive that ultimately the EU will have an open information policy across all EU states on all incomes and profits from savings and investments.  We may laugh at the inadequacies of the Italians to implement a law, which on the surface of it seemed ridiculous, but it would not surprise me to see this being the first of many steps throughout the EU to open the information exchange channels even further and to exchange information on almost every financial asset you can think of.
 
As I have said many times before, if you are a resident in Italy, now is the perfect time to be planning to stay ahead of the game.   Many things can be done now to limit losses, limit potential fines, and plan efficiently for tax and it needn’t be painful or frightening.
 
If you have income and assets in Italy or overseas and want to know how to potentially reduce your tax liabilities and plan more effectively, whilst ensuring you are ‘in regola’, then you can contact me on gareth.horsfall@spectrum-ifa.com or call me on 3336492356

Minimum reporting threshold for funds held abroad – clarified

By Gareth Horsfall
This article is published on: 27th January 2014

If 2013 was the year for confusion about how to report assets held abroad then, at least, in 2014 the Italian Government is offering some further clarity.

As of 2014, there will no longer be any minimum threshold when reporting assets held abroad. Previously, any amount below €10000 in investments and €5000 in cash deposits was not expected to be reported. From 2014 all amounts, no matter how large or small, will be expected to be reported on the RW form as of 31st December.

If you would like to know about this or, other taxes that apply to Italian tax residents, how to plan to reduce your own Italian tax liabilities, or want to know how you can find new sources of revenue to supplement that which the Government keep stealing away, then you can contact me on gareth.horsfall@spectrum-ifa.com or call me on +39 3336492356. We are here to help.

Legge di Stabilita 2014

By Gareth Horsfall
This article is published on: 1st January 2014

Legge di Stabilita 2014
 
There have been some interesting points from the new economic laws introduced in 2014  The main ones that might affect you are below, and for some of you, you might wish to hold your breath..
 
Rentals – Goodbye Cash
From 2014 owners of properties in Italy, which they rent, will be expected to have the rent paid only through trackable methods of payment. i.e through a bank account. (I assume that means Italian or overseas bank as long as it is trackable)  Penalties of sanctions against both parties (renter and owner) can be made if they are not adhered to and subsequently found out.  The only thing that seems to be excluded is public buildings, such as Case Popolare.    I have not seen nor found the supposed sanctions that they intend to impose for non compliance and neither can I find information on how they intend to police it.
 
Daylight robbery
In 2014 the imposa di bollo on securities and deposit/bank accounts in Italy will continue at €34.20 per account. Great news I hear you say!  Maybe, but then a new rate of IVAFE (the tax on overseas assets) has been announced of 0.2% on the amount (at 31st Dec) that will replace the previous 0.15% in 2013.  
 
 
Minimum reporting threshold for funds held abroad
If last year was the year for confusion about how to report assets held abroad then, at least, in 2014 they are offering some further clarity.
 
As of 2014, there will no longer be any minimum threshold when reporting assets held abroad. Previously, any amount below €10000 was not expected to be reported, but from 2014 all amounts, no matter how large or small, will be expected to be reported on the RW form as of 31st December.
 
Those are the main points that will be affecting you in the years to come.  Certainly for anyone with any financial assets the increased bollo is a blow.  As always seems to be the case in Italy, at the moment, most of these taxes are self defeating in that they pull more money into the Government coffers and pull it away from the pocket of those who could spend it and create future economic growth. Incentives are being offered to business owners and start ups to stimulate business growth in Italy, but, honestly, at the current levels of taxation it is impossible to see why an entrepreneur would want to set up in Italy when the chances of success due to tax and red tape burden are so great.
 
The sad truth is that it is going on all over Europe to reduce National debt levels and will continue for some time to come.  We will all have to swallow the bitter pill for the time being and just plan to be more effective and reduce tax liabilities where possible.