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Tax increases – June window of opportunity

By Daniel Shillito - Topics: Italy, Tax, Uncategorised
This article is published on: 9th June 2014

Taxes on money invested or held in cash at the Bank will increase by 30% from July 1 this year.

The problem: the Italian government, under the strain of regular budget deficits, a very large public debt with increased interest costs, and with international pressure to reform, is continuing to look for ways to increase revenue from taxes and reduce costs.

From July 1 this year the tax deducted by your bank or other financial intermediary, or simply the tax that you pay at year end on any interest income, capital gains and dividends, will increase to 26%, up from 20% today.

That’s a substantial increase in any country, and follows a 60% increase in the same tax which occurred in 2013.

This is not good news for anyone. Especially for those who have paid all their income taxes on their previously earned income all their life, whether here or in another country, and are now required to pay increased taxes on those earnings that are being saved for retirement.

Some might say this is a government disincentive to save for the future, when personal savings are a critical component for any economy, to reduce the pressure of the significant cost of State pensions.

What can you do about it?

There is a way to either prevent this tax impact from affecting you or to lock-in the current rate of tax before the increase applies.

If your investments are structured in a fully Italian compliant, tax-effective way, you may not be impacted by the tax changes at all.

Such strategies will be particularly useful for people in the following situations;

  • those saving and investing for the future where your investments are held by an Italian bank in your own name – and taxes are about to rise.
  • those with declared assets abroad
  • those with undeclared assets abroad that need to be brought into the tax reporting requirements of individuals resident in Italy undeclared assets might be subject to penalties under a Voluntary Disclosure arrangement
  • those of you with more than 20,000 euros sitting in the Bank earning low interest and then paying tax on the interest (soon to increase to 26% tax).
  • In some ways there is now greater incentive to maintain investments internationally

There is a small window of opportunity to act now, in JUNE 2014, before the tax increase occurs, with regard to your savings and investments either here or abroad.

You can potentially save €6,000 for every €100,000 if you bring forward gains you were going to realise in the short term anyway; or establish a tax effective structure for your investments today that does not subject you to these tax increases.

This is the window. Can you take advantage of it? If you would like to know more, fill in your details below or send me an email. Your personal affairs will always remain private and confidential.

Article by Daniel Shillito

Daniel ShillitoIf you are based in the Milan area you can contact Daniel at: daniel.shillito@spectrum-ifa.com for more information. If you are based in another area within Europe, please complete the form below and we will put a local adviser in touch with you.

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