Viewing posts from: November 2000
Witholding tax on overseas money transfers to Italy
By Gareth Horsfall
This article is published on: 15th April 2014
I would like to bring up the subject of the 20% witholding tax on profit from investment, for Italian residents. This piece of legislation that Italy was going to introduce in February and has now postponed until July. This seemed to be one of the main causes for concern amongst attendees at the recent Tour de Finance Forum events in Italy and so I thought I would write the little that I know of it to assist in preparation for its, possible, return.
To recap, the introduction of the law was aimed at automatically stopping 20% on any monies brought into Italy, from overseas, (for personal account holders only) on the assumption that this money was ‘profit from investment’ and not other types of income. Profit from investment can be clarified as rental income on properties overseas, sales of shares, bonds, or other types of financial assets.
Of course, stopping 20% on ALL transfers into Italy would also catch those who are legitimately bringing in pension income, income from employment, banks savings etc, and therefore to avoid the fiscal authorities automatically witholding 20% on these monies a self certification, in the guise of a letter, would need to be submitted to your bank to declare that this was NOT profit from investment. If you submitted the letter then your personal details would be passed to the fiscal authorities (who we can assume would then start to track your money movements through Internationally agreed exchange of information controls)
Now it is worth noting before I continue, that in essence the law itself was a smart move from the Italian fiscal authorities, in that it would force those who do not wish to be caught in the witholding tax to announce to the Italian authorities that they are bringing money in and out of the country. Hence, they are more easily trackable. In addition, and I think this is the more likely target, it would also force those who have not yet registered assets overseas with the Italian authorities, to do one of 2 things.
1. Carry on regardless and therefore run the risk that when they are found out they could be fined anywhere from 3-15% of the undisclosed assets, and should those assets be located in black list territories then those fines are doubled from 6 – 30% of the undisclosed value. Not advisable!
2. They self certify with the bank and as such are submitting a legally signed statement of intent. Should they then fail to report income from profit, when it enters the country, they have actually ‘knowingly’ broken the law.
Of course, all this is based on the assumption that someone is not declaring assets that they have overseas and for most this is not the case. So what about those of you who are doing what you should be doing?
Then, I believe, it becomes no more than another administrative headache. What I mean is that with a self certification letter the bank will not stop the witholding tax and so income can move freely into the country as it had previously done. However, let’s assume that you do want to bring some money in from an investment overseas, which has already been declared through the correct channels. Does this mean that you have to go back to the bank and request that this one transaction is treated differently, just this time and what if this is a regular occurence?
Also, what if you fail to declare that money is coming in from overseas profits on investment but this money is, once again, already declared legally on your tax return? Are you in breach of rules and therefore subject to fines?
Finally, so as not to drag the point out too much, what if the bank mistakenly witholds the tax on pension income, for example, which you need to live on? Can you easily reclaim this back? Doubtful! Or do you have to wait up to 2 years for a tax credit?
As we can see the legislation had some trivial issues which they needed to iron out, but, fundamentally it was an interesting move. The first of its kind that I have seen in Europe, where a direct attack on profit from investment overseas has come under the spotlight. Until now the main focus has been on bank interest payments and rental incomes for homes overseas. On March 24th 2014 the 2nd phase of the EU Savings Tax Directives was submitted for final approval which will now bring monies held in overseas investments funds, OEICS, SICAVs, Unit trusts etc, in the EU and outside, into an automatic exchange of information agreement. Additionally, Luxembourg and Austria will now be subject to full exchange of information agreements as of 1st January 2015 and other dependants states, such as the Isle of Man, Jersey, Guernsey, Dutch Antilles, San Marino etc will be required to share more information with the EU.
Lastly, and most interestingly, the proposed 20% witholding tax in Italy will likely raise its head again in July this year. But, in what shape or form, I cannot say. The report from Brussels in the aftermath of the first proposals was not as you would expect, a damning of the law. But in fact they openly supported the idea and suggested different ways of looking at implementation. Can we expect to see this Italian model being the model that Europe will use in the future?
So, for those who are not quite ‘in regola’ yet, time is of the essence. The transparency agreements are effectively opening the doors to hidden assets, bank account interest is tracked, rental income on overseas properties is tracked, now investment in foreign investment funds is under scrutiny. It is only a matter of time before income payments from direct investment in shares and bonds are fully disclosed, Capital gains, i.e profit on investment, is now under scrutiny, as detailed above and that only leaves Limited companies and other more obscure and substantially more speculative investments.
It is worth noting that one of the speakers on our Tour de Finance Forum events was Andrew Lawford from SEB Life International. He was explaining how it is perfectly possible to keep assets outside Italy, but be compliant with the laws of Italy, and remove the need to keep abreast of these changes in Italian law by employing the use of an insurance wrapper in which to house your assets. It acts like a tax efficient account whereby SEB Life International, in this case, will act as a witholding agent to ensure you do not pay more tax than you need to and that they become legally responsible for reporting the assets correctly.
It removes the worry of reporting error, keeps monies out of Italy and most importantly, whilst the money is held in the wrapper, it is never subject to Italian income or capital gains tax. Only at the point of withdrawal (partial or full) would any Capital Gains tax liability only, (not income tax) occur, which would be paid automatically on your behalf.
Finishing up on the new legislation, in whatever form it takes, will likely be no more than an administrative headache for most, but for those who, as yet, may have undisclosed assets, then more difficult decisions lie ahead. If you think anyone else might find this article useful, please do feel free to pass the information on and if you would like to speak about this or any other financial matter as an expat living in Italy, then plese get in touch.
A successful start – Le Tour de Finance, Italy
By Gareth Horsfall
This article is published on: 3rd April 2014
The Tour de Finance Forum (Italy) events in 2014 got off to a flying start with 2 events in Umbertide and Bagni di Lucca, respectively. Both events were well attended with approximately 30 attendees.
The events were a change from the norm, using the Forum style rather than powerpoint and structured presentations. Thank fully, the change of format worked incredibly well and both particpants and speakers alike gave credit to the new format.
The speakers on the day were Judith Ruddock (Studio del Gaizo Picchioni), Andrew Lawford (SEB Life International), Rob Walker (Jupiter Asset Management) and Peter Loveday (Currencies Direct) covering topics such as the latest rules on residency in Italy and tax returns, to tax efficient investment structures and will the Euro and Europe survive.
All in all the new format was more engaging and the content delivered in an easy to understand and manageable style.
We will be looking to hold further Tour de Finance Forum events in the autumn of 2014, in the Lucca and surrounding area and Le Marche.
We hope to see you there!
The Tour de Finance Forum 2014 – Italy
By Gareth Horsfall
This article is published on: 4th March 2014
The Tour de Finance 2014 is back, but this time I have given it a twist!.
Every year we bring a group of financial experts on the road in Italy to talk directly to expats about the financial considerations and concerns that they are facing.
In 2014 we are returning to Bagni di Lucca and Umbertide based on the interest shown and attendance in 2013.
We will be returning on the:
26TH MARCH 2014 Umbertide at Ristorante Pomarancio
27th MARCH 2014 Bagni di Lucca at La Cantina delle Pianacce
Start time: 10.30am for coffee and sweets until approx 1pm with a FREE buffet lunch, wine and an opportunity to meet your fellow expats.
(I would like to add that due to increased demand for our services, we are receiving requests from all over Italy and so we want to extend the Tour de Finance into other parts of the country. So we will not be returning to these same locations for at least 1 year as the Tour de Finance is planning to expand to others areas of Italy in the autumn 2014.)
BUT, this time the format will change!
We are doing away with the Powerpoint presentations and structured presentations!
After reflecting on your feedback from previous events, I have decided to change the format to a FORUM style event. I want to avoid presenting all the information that ‘we think you should know’ and actually try and deliver the information that you want to know. Typical questions that I often hear from people include:
- What are the likely implications of the recent implementation and then withdrawal of a 20% witholding tax on profit from investments held overseas, for Italian residents?
- Are there opportunities to reduce my Inheritance tax liabilities in Italy?
- What risk is there of losing all my money when I invest and how can I avoid this completely?
- Are there any tax allowances/credits available to me as a resident in Italy?
So I, Gareth Horsfall (Spectrum IFA group (Italy) will pose questions to the panel for approx 30 minutes, followed by a refreshment break and then a further 30 minutes for questions from the audience.
It really is an opportunity to put the experts ‘on the spot’
The Panel of experts will include:
- Judith Ruddock: Studio Del Gaizo Picchioni. Cross border tax specialists and commercialisti.
- Andrew Lawford: SEB Life International. He will be facing questions about tax efficient savings vehicles for Italy and ways to potentially reduce your Inheritance tax liabilties.
- Rob Walker: Jupiter Asset management, Private Clients. He will be free to take questions on world markets, from the current state of emerging markets to how to generate income from your money.
- Peter Loveday: Currencies Direct . He will be taking questions on how to save money on International currency transfers and how they work.
I hope you will register your attendance. And I hope that the FORUM event will avoid all the boredom of powerpoint presentations and make the morning much more interactive for you.
If you would like to register for this event then you can do so by sending your full contact details to
info@spectrum-ifa.com or call Gareth Horsfall on 0039 333 6492356.
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
Investing for a higher Income
By Gareth Horsfall
This article is published on: 18th February 2014
Investing for a higher Income
Investing for income, rather than capital appreciation, is as old as investing itself but its relevance becomes more noticeable in times of low bank interest rates. (Or historically low as the media likes to keep reminding us).
It offers an additional lifeline for those who need to live from the interest from their savings and not just accumulate for a point in the future. The relevance is bigger for those who are not working and do not have a regular income due to ill health, out of work or in retirement.
To elaborate this theme, I have written in the past how an investment should be considered to behave like a garden. It should be well cared for, maintained, trimmed, fed and watered otherwise it becomes out of control and the weeds take over. In no time the tendered beauty and joy of a well cared for garden, diminishes.
Well, I would like to expand on that concept further to explain the purpose of investing for income.
For most of our working lives we try to accumulate capital, save from the very money that we earn to amass the assets that we will one day live off in retirement. But during this time, you may be unaware that you are actually investing for income as well. Its just that the income is being reinvested back into your account to make the capital appreciation quicker. The difference is that when you reach the point when you want the income, you invest in those assets which pay the better levels of interest and have it paid out instead of reinvested.
If we think about it another way, it is the equivalent of the garden. A beautiful cottage style garden that you cultivate from seed and over many years that you carefully tend to. The flowers bloom each spring, and you diligently tend to the plants as they grow, check for problems, apply pest control methods, trim the flowers to put on your kitchen table and enjoy the joy that it brings for you and the family over the years. During this time you may have a small vegetable plot. (the equivalent of an income). But during your working years you have to invest in earning a living and this may prevent you from expanding the vegetable plot, after all you earn enough money to buy vegetables from the supermarket instead of growing them. The garden provides joy and pleasure but only a small amount of income.
When you finish working and your income level may drop, you now have more time to spend on the part of the garden that can provide you with more of the supplemental income.
But, there are 2 types of vegetable plot, those that provide and those that don’t. The difference relies heavily on the soil. The fertility of soil in which you plant those veggies. If your soil becomes too abused it will stop producing. (Note, Westernised economies and the reason for low interest rates). So you have to look at either changing the type of vegetables you plant (crop rotation) or changing the soil. Both can be as effective as one another.
This is the basic concept of investing for income. If one area is not providing sufficient rewards, then it is time to look elsewhere. (Note, bank interest rates are so low that to maintaina standard of living it is necessary to look at other forms of income producing assets)
Example
I would like to talk about Vodafone for a moment and in particular shares in Vodafone. We all know the name but you may not know the significance of Vodafone as an income producing share.
The talk of shares in companies scares alot of people, but Vodafone is a good example of a reliable company that rewards it shareholders with good dividends (income) for being an investor. At the time of writing, if you invested in Vodafone stock today, you would be rewarded with an interest rate of 5.13%. And Vodafone also has a long history of paying income to its investors and more importantly a rising income.
See the table below for the facts
|
Year ended
31 March
|
Interim
Dividend
|
Final
Dividend
|
Total
Dividend
|
Growth % |
| 2010 |
2.6600 |
5.6500 |
8.3100 |
6.95 |
| 2009 |
2.5700 |
5.2000 |
7.7700 |
3.46 |
| 2008 |
2.4900 |
5.0200 |
7.5100 |
11.11 |
| 2007 |
2.3500 |
4.4100 |
6.7600 |
11.37 |
| 2006 |
2.2000 |
3.8700 |
6.0700 |
49.14 |
| 2005 |
1.9100 |
2.1600 |
4.0700 |
100.00 |
| 2004 |
0.0535 |
1.0780 |
2.0315 |
20.00 |
| 2003 |
0.7946 |
0.8983 |
1.6929 |
14.99 |
| 2002 |
0.7224 |
0.7497 |
1.4721 |
5.00 |
| 2001 |
0.6880 |
0.7140 |
1.4020 |
5.01 |
| 2000 |
0.6550 |
0.6800 |
1.3350 |
4.95 |
The thing to note is that from the 10 years till 2010 Vodafone increased its dividend 231.98%. If this were the equivalent of bank interest, assuming bank interest started at 3% in 2000, then you would be receiving 6.959% interest on your bank interest in 2010. (The dividends have also been increased through 2010 to 2013 as well !!, so the rate today would be even higher). All this through 2 stock market crises (the tech boom and bust of 2000 and more recently the financial market collapse of 2008/2009). It should be noted that the underlying stock price has increased during this time as well.
I am not recommending that you go online today and buy Vodafone stock. With all investments of this type it comes with risks, management of the business, future profitability of the business and ability to continue to pay dividends, profit warnings, market sentiment, to name a few. However, you can minimise your risk of investing in this way by investing through a fund that specifically invests, manages the risk and can pay out the income.
The point of this blog post is to reiterate the point that if you feel that bank interest is not satisfactory for your living requirements, or you have a tax bill because of being resident in Italy and need supplementary income to pay it, or you just need some more income to make life easier then there are alternatives to leaving the money in the bank or investing in Government Bonds (the historical investment choice of type for the ‘average’ Italian).
If you would like to know how to build a portfolio of income producing assets or would like to discuss any other ways of improving your current financial situation then you can contact me on gareth.horsfall@spectrum-ifa.com or call me on 3336492356.
20% withholding tax on all transfers from abroad into Italy
By Gareth Horsfall
This article is published on: 1st February 2014
As of February 1st 2014 banks in Italy will be obligated to withold 20% of the amount relating to transfers coming into personal accounts from abroad. The 20% will be witheld at source, by the bank, unless an exclusion has been applied to declare that the money is not profit from financial transactions being made abroad.
The witheld tax will be assumed to be an advance tax on ‘profit from investment’ and that the tax will need to be declared and paid on it anyway on the end of year on the RW form. The tax will be witheld every 16th of the month following the transfer and the accumulated amount can be used as a deduction against your end of year tax bill.
(Profit from investment includes ‘interest from savings, income from property (i.e rentals, gains from the sale of property etc. This is what they are trying to target!!!)
Even if an exclusion is filed for and granted (at the bank) your name and details will be submitted to the Agenzia delle Entrata. In addition, you have until the 28th February following the year of the deduction (28th February 2015) to apply, to the bank, for an improper application of the witholding tax and request a refund.
The exclusion will be granted by production of a self certification in the form of a letter sent to the bank. It is likely that this self certification will cover a full tax year, in which the remittances were made, but as yet the rules are unclear.
As you can imagine the banks have been caught a little bit on the hop and are not really ready for the implementation of this little piece of legislative wonder. However, if you are remitting funds into Italy in the form of pensions, bringing cash in to renovate a house, income from running a business abroad etc then you must go and speak with your bank manager about how to self certify that the funds have not been generated from profit on investments abroad.
The main aim of the witholding tax is obviously to flush out those who are avoiding paying tax on assets overseas. The government is very cleverly avoiding the necessity of tax collection through third party intermediaries and instead going directly to the source of remittances into the country, the banks and other financial institutions. Since the banks are wholly unprepared for this it could mean a messy period whilst it gets sorted out. The banks are likely to be inundated with self certifcation letters and the hope is that they can administer this without problem.
As an example of the chaos, it is unclear at the moment whether remittances under a SEPA transfer will be subject to the witholding tax although it is just a matter of time before that is resolved.
The whole idea seems rather counter productive to me, in that 20% on an amount remitted into Italy is not the same as 20% on the interest on funds that have been legitimately held abroad as savings. Ultimately, the funds being remitted into the country are less than before and hence less funds to spend and use in the economy. I have my sneaking suspicion that this is merely a way to generate more information for the Agenzia. For those who are declaring their assets and incomes correctly and are ‘in regola’ it will be mostly a form filling exercise, lodging these forms with the bank and ultimately, the legislation will be of little concern. The only benefit being that the Agenzia has more ways of matching assets held abroad versus remittances from abroad and amounts declared on the RW (end of year tax declaration) and ensuring that 1+1+1=3
If you would like to contact me to discuss possible financial planning opportunities around this, or any other matter you can do so on gareth.horsfall@spectrum-ifa.com or call me on +39 333 6492356.
Property rentals in Italy – goodbye cash 2014
By Gareth Horsfall
This article is published on: 29th January 2014
From 2014 owners of properties in Italy, which they rent, will be expected to have the rent paid only through track-able methods of payment.
The money will need to be paid by bonifico / bank transfer. (I assume that means Italian or overseas banks as long as it is track-able) 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 or other similar public buildings.
Obviously, this move is intended to ensure that all monies from rentals (holiday or long term rentals) are being declared properly in Italy How it will be policed is another matter, but if the last 2 years are anything to go by they will surely find a way, or at least target a select few which will create a panic that will bring the masses into line.
If you are concerned about this or another other financial planning issues regarding the latest taxes in the Legge di Stabilita 2014, then you can contact me on gareth.horsfall@spectrum-ifa.com or call me on *39 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.
Rental Income from properties overseas and how to declare it in Italy
By Gareth Horsfall
This article is published on: 25th January 2014
One of the questions I am asked regularly is how income from property held overseas is taxed in Italy. Is it exempt from Italian tax because tax has been paid on it overseas first and is it subject to the same taxes as Italian rental income?
I would like to dispel any myth and confirm that you do have to pay Italian tax on the profit from any rental income on properties held overseas as a resident in Italy. (if it was really ever in doubt. Out of interest the arrangement is reciprocal, and any if you were resident in another country with rental property in Italy then it need to be declared as well).
The best way to organise your rental income
The law for Italian tax residents states clearly that the net profit (after expenses) from property overseas, must be declared in the Italian end of year tax return. The net profit is then assessed as income, added to the rest of your income for the year and tax paid at your highest rate of income tax (that could be as high as 43%).
Let’s not forget the IVIE tax as well which is 0.76% of the property council/cadastrale/rateable income (whatever you choose to call it) value of the property.
If tax has been applied in the country of origin, it is the law in Italy to declare the funds here as well and so annual declarations need to be made.
As an aside, it is relevant to note that in 2012 I received a deluge of enquiries from people who had been contacted by the Guardia di Finanza who had obtained information from HMRC (UK tax authorities) about people who have/had rental properties in the UK, were legitimately declaring tax in the UK, but who had failed to then declare that income in Italy. In some cases they were fined substantial amounts for merely this simple mistake.
However, all is not lost because there is a way to limit your Italian tax liabilties. If the property income is declared in the country of origin and all the costs are deducted from the income, still within the country of origin, then ONLY the net profit needs to be declared in Italy. In some cases it might also be necessary to declare the rental income in the country of origin even when that country no longer requires you to, for example the UK. If you have rental income under the basic allowance of approx the first GBP 10500 of income and therefore the UK no longer requires a declaration, it may still be wise to insist on making a declaration because the UK allow for multiple expense offsets for tax purposes. By following this process you are showing the Italian authorities your expense declarations and therefore it is acceptable for Italian tax purposes.
You may in some cases be able to reduce your net profit to zero.
To clarify, any rental income from properties held overseas must be declared in Italy, for Italian tax residents. This is the NET income (after expenses). And this net figure is added to your other income to determine at which rate of income tax it is assessed in Italy.
Depending on why you are investing in property overseas the advantages/disadvantages can work in 2 ways: .
- If you have high expenses for the property then it can work in your favour as a capital appreciation investment. (assuming the value of the property goes up). Less income means less tax.
- The downside of this arrangement is that someone with low expenses and high net income (maybe living from the income in retirement) will be assesed at their income tax rates in Italy (IRPEF) which could go as high as 43%
If you are concerned about your tax situation in Italy and would like an initial meeting to assess your liability then we are here to help. In addition, there might be other more tax efficient and less costly ways to produce income and grow your money. If you are interested in exploring these then you can contact me on gareth.horsfall@spectrum-ifa.com or on cell 333 6492356
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.
