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Taxation of UK rental income in Italy

By Gareth Horsfall - Topics: Exchange of Information, Income Tax, Italy, Property, Tax, taxation of rental property, UK property
This article is published on: 19th March 2017

Since the recent exchange of information between HMRC and the Italian tax authorities on UK rental property owners, I have been asked the question whether rental income (when taxed principally in the UK) will be taxed again in Italy as an Italian resident.

Rental income from properties is dealt with according to the law of the state where the property is situated. This means that you can deduct your expenses in the UK, in entirety and in line with UK law, and then the NET income is declared to HMRC in the UK.

When it comes to the Italian tax declaration the NET UK rental income needs to be declared, along with the tax paid in the UK.

This income is put together with any other income you may have for the year, to be declared in Italy,and a credit is given for the tax already paid in the UK, and the tax is calculated on the normal IRPEF rates (income tax rates in Italy).

In short the NET UK rental income position is what needs to be declared in Italy.

Given the recent clampdown on people who are not declaring their UK rental income in Italy, as Italian residents, this information should help to ease any thoughts of having to pay tax twice.

Of course, all this applies to properties held in other countries as well and not just the UK.

The bottom line is get your affairs ‘in regola’ because it is unlikely to cost you any more than it would in the UK, and you can sleep easy knowing you have done the right thing.

Article by Gareth Horsfall

Gareth HorsfallIf you live in Italy and or have financial interests in Italy you can contact Gareth Horsfall directly on: gareth.horsfall@spectrum-ifa.com to request more information about how he may be able to help you. Alternatively you can complete the form below and a message will be sent to him. If you would like to read more about Gareth's work you can follow his blog on tax and financial planning in Italy HERE

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