I didn’t intend on starting this E-zine with information about the house and country life talk, but this morning I awoke to the most beautiful sunny day, the first for a while, and whilst the man is at work doing the ‘potatura’ of the olives, I just couldn’t resist taking a photo of the beautiful daises which have popped up on the land. It’s like a fresh spring meadow!

The grass is starting to grow again and I was thinking about cutting it, at least outside the front of the property, but then I thought to myself why would I want to spoil such a beautiful thing? So, for now the grass can grow and the wild flowers can enjoy their moment in the sun. As mentioned, the man is now here doing the potatura of the olive trees and thinks it will take him about 20 days! He is on his own, but seems to have a passion for it. I daren’t go and stay too close to him otherwise, I keep him chatting and I don’t want him to have to take more then 20 days given the amount of work that is required for his sake more than mine.

Anyway, that’s a short update on the property and land. I have also just returned from a short trip to the Big Apple, NYC. My son was performing in a piano competition and got invited to play at Carnegie Hall and also the Italian Cultural Institute of NYC. What an experience for a 15 year old….and he won his age group competition! We are, quite frankly, in shock. Onwards and upwards I guess.

One thing I noticed in NYC was the cost of living. Now, I will caveat the following comments with the fact that we were staying near Times Square so I imagine there is a certain % you can add to the price of goods and services for being in such a touristic spot, but the price of basic goods in America now is very high. One day I went to the 7 Eleven and bought 2 bottles of water, a container with about 20 grapes in it, a banana, 2 cups of tea and a box of biscuits and left the shop $40 (€37) less in my pocket. Compare that to a shop at the local grocery shop in Amelia this morning and I got about 3 kgs of oranges, 2 kgs of apples, 2 fennels , 2 lettuces, 1/2kg of green olives, a pineapple, some tomatoes and about 2 kgs of lemons and it cost €21 ($22). A huge difference! We also met some American family members for a day in NYC and they confirmed that it is almost more expensive to buy fresh produce and cook at home than it is to eat at a diner.

I have made reference to this in a few videos which I have on my YouTube channel, (https://www.youtube.com/@Gareth-Spectrum) but to experience it first hand was quite something. Needless to say we gorged ourselves at the diners!

I watched the whole meeting after initially seeing a few short video clips and it was quite difficult to watch, if I am honest, but to be fair to President Trump he was hammering home the message about peace and stopping the deaths on both sides. I am not exactly sure what President Zelensky’s objective was but it certainly didn’t sit well with the Trump team. In the end I presume that America will get what it wants. It’s doubtful it won’t and if Pres. Zelensky has managed to garner support in the UK and France and the wider but it remains to be seen how they can spport Ukraine either financially or militarily without the US.

Whilst I don’t like Donald Trump in the slightest, if he manages to stop the wars, killing (on both sides) and find some sort of peace deal, then that has to be good for everyone, in my opinion.

There is also the tariff war which appears to be now in full swing; I saw that he announced the other day that the Taiwan Semiconductor Manufacturing Company had committed to investing  $160 billion in a new production facility in the US. Also, Trump reiterated in his recent address to Congress that if companies want to avoid tariffs on goods into the US then all they need do is relocate production to the US itself. Therefore, it would seem like the message is clear and I expect more businesses to relocate production /invest in the US as a result. It will likely stimulate US small and mid sized companies and US consumers are more likely to turn to home produced products than those more expensive products brought in from abroad.

So, moving on from my travels, country experiences and President Trump , in this E-zine I am  dedicating it to the new rules on inheritance tax which were introduced by the UK government in October 2024. (Please accept my apologies that it has not been sent until now, but there have been a number of clarifications which we have been waiting for, but which are yet to transpire.  The UK government is seeming more like the Italian one every year with announcements which have not been fully thought through and which then get slowly modified and tweaked as the years go by, only for there to be numerous potential pitfalls which could lead to legal cases, until matters are clarified).   

However, despite this we have a fair idea of what the new rules entail and of which I will detail below.

(thanks to Jessica Zama at Russell Cooke solicitors in the UK and Barry Davys, my colleague in Spain,  who provided their summaries of the changes as well). 

BACKGROUND

The UK has an Inheritance Tax system where the estate of the deceased is assessed based on worldwide assets if they were considered ‘domiciled’ in the UK at the time of death. The term domicile and its meaning has been the important factor to consider up to now, and in the UK it has a different meaning to “resident” or “residency”.

Domicile in the UK is different from the Italian “domicilio”, which is akin residence. The test of where one is tax-domiciled is to establish the jurisdiction in which an individual is most connected to, and would be very much influenced by where that person intended to live the rest of their life. If, upon a death, a person was considered “deemed domiciled” in England by the HMRC, inheritance taxes in England (“IHT”) would be applicable on that individual’s worldwide assets. This would be regardless of where the deceased was physically resident at the date of their death.

This meant that even if you left the UK 30 years ago to live in Italy, if HMRC for any reason considered that you were most closely connected to the UK and therefore “deemed domiciled” in that country, your estate would not only be taxed on your worldwide assets in Italy, or in whichever country you are resident at the time of death, but also in the UK, where inheritance taxes are far higher.

This concept has caused much confusion over the years and not least caused issues for professionals who could not give their clients a straight answer when providing estate planning advice, as to whether they would be considered deemed domiciled upon death. HMRC could not provide any guarantees as to what the final decision would be upon death.

• UK based assets £325,000 jointly owned (ISA’s, investment accounts)

Under the new rules, Mr and Mrs Bloggs can return to the UK and if death occurs within 10 years of the return the following will apply.

• UK assets assessed for UK IHT fall within the UK nil rate band. Tax due £0
• Assets outside the UK NOT ASSESSED under the residency basis €1,483,000

The savings from NOT having these assets taxed in the UK would be a whopping £593, 200. (£1,483,000 * 40%)

And here is the icing on the cake

Complete more than 10 consecutive years outside the UK, then return to the UK and be unfortunate enough to pass away in the next 10 years and your estate will get the following additional benefits (on top of being IHT exempt on non-UK assets):

• If you and your spouse were both long term non-resident, you will receive the spousal allowance – 100% IHT free transfer of your assets to your spouse, if directed by your Will
• Each spouse receives an IHT allowance of £325,000 with only UK assets above this amount being taxed
• If you have a main residence and your total individual wealth is less than £ 2 Million you will get the main residence relief of £175,000

If you pass away outside of the UK and your beneficiaries are in the UK, they will pay no UK IHT if you have met the long term non-resident criteria. This is because your non-UK assets will not be taxed in the UK. As the UK government taxes your estate, not the beneficiary receiving the bequest, no IHT will be payable.

And because you live in Italy, your UK based beneficiaries will be assessed on their residency and as they are outside Italy they will not have to pay Italian IHT on non-Italian assets.

*** An additional note about invested assets is probably worth a mention here. One of the criteria for determining UK deemed residency for IHT purposes under the new rules is something called UK-situs assets. i.e those assets which you hold in the UK. The obvious asset to mention here is property. Owning UK property could mean you fall within the scope of the new residency rules as UK resident for IHT purposes. However, less obvious things could also fall under this rule, i.e having assets managed in the UK by a UK based financial adviser and/or asset manager or even having an active bank account in the UK.

Whilst we are waiting for further clarification on these points it is thought that these could fall into the realm of ‘grey area’ awaiting a legal judgement. Hence, for this reason we would recommend that wherever possible you start to move your banking and/or invested monies across to EU licensed and authorised financial professionals to be managed, if you are intending on a long-term or permanent move away from the UK.

Buon Anno 2025

Happy New Year to everyone! I hope that you are reading this feeling relaxed and rested. Who knows what 2025 will throw at us from a political and financial point of view, but the most important thing is our health (physical and mental) and making sure we all keep communicating with one another.

So, in this January 2025 Ezine I just wanted to just follow up on my year with you. After sending out my last few Ezines, and writing about our new house and move away from Rome in 2024, many of you have written back to congratulate us and offered many words of support and also wisdom because I know that many of you have also been through, or are continuing to go through a similar experience. I have to say that I wake every morning now feeling fresher and more mentally alert than before. I even started my year this morning (2nd Jan) with some early morning outdoor exercise (no need for the closed gym anymore) to get back into the normal health and fitness regime that I follow (after all the panettone and other goodies during this period).

I wanted to thank you all for your words and thoughts of support in 2024 and thought this E-zine might be a good opportunity to send you some fotos and afterwards to provide some of my own thoughts about the year ahead from a financial and economic point of view (my own thoughts, I must add!)

Below are some pictures from my house adventures in 2024.

The house as it is now – day and night.

The living room, then and now: 

My wife has got quite handy at sunrise and sunset shots as well: 

Then I am sure you will all be happy to see me doing some hard manual labour for a change:

*From left to right: 
My first decespugliatore experience (in 38 degs!), picking pears, excavating a random pipe which led to nowhere, re-laying the same pipe which now goes somewhere!

And my famous ‘trinchea’ for laying the new pipes, which is now filled in and working like a dream! 

And finally, our famous kitchen which was finally installed 100% on the ‘Virgilia di Natale’ and we were able to make Xmas dinner in it. (Thankfully, as I didn’t fancy trying it on the camp stove in the outhouse).

My job over the next few months, apart from ongoing work, will be to get all the necessary papers together to present to my commercialista and take advantage of the Bonus Edilizia for 2024.  In the end we probably maxxed them all out, playing with the main one of 50% on most works, bonus eletrodomestici and then the other detractions such as the cost of the estate agent.   The paperwork will be a mission in itself but I have been quite good at documenting and filing everything as we went along so its just a case of putting it altogether for the commercialista.  (I can’t advocate enough for keeping good and regular records if you embark on this kind of journey as the paperwork requirements to take advantage of the bonuses are quite something).

THE YEAR AHEAD

And so, as my thoughts now move away from building to ongoing maintanence, I thought I would share some of my thoughts for what I see from 2025 and to touch on some of the things which are probably in everyone’s mind. (I should add that, as usual, I will be attending the Spectrum IFA Group annual conference again around the 22nd January and will be reporting back on the opinions of the people at the investment coal face, as they see it).

It is easy to write him off as a lunatic, and certainly I suspect the Canada comment was really a way to wind up Justin Trudeau, but Greenland would be a much more strategic and important asset for the USA, because of the Arctic shipping corridor which Russia is already utilising to it’s advantage. Rising arctic temparatures now mean that it is open for the whole of the year. (Goods shipped from East Asia to the UK could save up to 10-12 days in shipping time over the traditional Suez Canal route and save over 40% in costs!). Donald Trump is probably very aware of this and would prefer that Russia does not get power and control of this route.

However, the BRICS economic community are not going to be phased by this because they are unlikely to be ready to launch any common currency for quite some time and can always wait 4 years until Donald Trump is no longer in power. (Countries and economic unions have a much longer time outlook than a US Presidential term).

One thing which I hope he will achieve is his desire to put an end to the Ukraine Russia war.   I am not sure what form this will take, but will likely mean Ukraine ceding already lost territory to Russia in exchange for calling a ceasefire to the war.   Whilst I may not agree with the outcome,  it will stop a war which seems more like a killing ground than anything else and has only demonstrated that Russia is significanlty more advanced militarily than we may have thought.  The recent dropping of their ballistic Oreshnik bomb, as a warning to NATO, was a bit of an eye opener given that reports seem to confirm that it travels so fast that Western/NATO allies have no system to effectively intercept such a weapon.   On that basis it’s better that Russia never has a reason to use it, in my opinion.

I suspect the situation in the Middle East, Israel and Gaza and Syria will not get any better in 2025.  I can’t see any reason why anything will change there, sadly.  More of the horrific images coming from Gaza and human rights abuses on both sides.    I was taken a bit by suprise by the falling of the Assad regime in Syria, not more so than by an ex-Al Qaeda second in command, who is now a western ally.   Somehow I don’t see that ending well.

This time I have seen reports of Donald Trump requesting 5% of GDP or he may withdraw the USA from NATO.  This would seem to be a significant worry for the EU, and rightly so because ultimately any defense/borders/war with Russia are going to have to be funded/managed by the EU and no longer by the USA.   Additionally, USA Tariffs on goods and  increased defense expenditure are going to have a significant impact on EU member states.   Already with the increased gas prices that we are paying (DT will also de-regulate energy exploration and production in the USA so they can start drilling and mining and become more resource independent again) many businesses are moving to the US or to places like Dubai to benefit from lower costs and /or lower taxation.  This is a long-term serious problem for the EU and the bureaucrats in Brussels are going to have to step up to the plate.  In the very short term I see this as having a serious economic impact but could lead to an economic boom time in the EU, especially in defense, as it relies less on the USA for support in the medium term.

There is so much more to say here and I could make some more predictions.  The fun thing is that none of this will not define your investment returns in 2025.  Would you have predicted that in 2024, whilst Russia was at war with Ukraine, Israel/Gaza were was committing their deeds, the fall of Syria and the re-election of Donald Trump, would produce of return on the US stock market of over 20%?   The analysts predict a return of around 14% on the US stock market in 2025.

He overlaid this onto the investment markets explaining that there are events of which we are ignorant, even to go as far as saying we have no knowledge whatsoever, until such time as they become evident, normally because of problems occuring in their respect markets:  think mortgage backed securities (2008/9), Long Term Capital Management (Russian debt crisis 1998)  The point is that we can never measure, prepare or be cognisant of these things before they happen, but they inevitably have significant consequences and create more stress for investors.   The good thing is that they come along rarely and they pass, and we move on.

As always we need to remain diversified, manage costs where we can and have the right people managing our money to get us through such events.

In this E-zine I have shared some thoughts about what will happen politically and economically in 2025, but I remain postive for the year ahead from an investment focus.     Good luck to all of us for the year ahead.

From the new house in Amelia….. Auguri alla Befana !!!!

Checking your Italian tax return – it might save you money!

One of the things I help my clients with is taking a look at their tax returns and making sure that the section Quadro RW (declaration of overseas assets) is prepared correctly.

Over the years I found numerous incorrect entries from commercialisti and got them corrected, saving some clients thousands in tax. However, to be fair to commercialisti they are often bombarded with information which is in English and on statements which they don’t know how to interpret. It is no wonder they sometimes get it wrong and we can’t expect them to understand non-Italian portfolio or cash transaction statements. However, that’s no excuse and either we or they have to be more attentive.

So, here’s one tip for checking your own Quadro RW.

You will find in that section that there are lots of little boxes, in which various values need to go. In box No.3 you will find the title.

‘codice individuazione bene’

This is nothing other than the number which you (or your commercialista) must select to identify the type of asset that you hold abroad, but clearly it’s not much good if you don’t have the list of identifier numbers. So, here, below, I have included a list of all the different codes:

Each number relates to the different type of assets you may hold. No 1 being conto correnti e depositi, which is current accounts and deposit accounts. However, be aware that there are different interpretations because National Savings Certificates or money market accounts, for example, will not fall into this category in Italy even though they may seem as though they should based on our interpretation.

A good start is to get a copy of your Unico tax return and check that the numbers are inserted correctly. You can work the figures out as well, but an asset declared incorrectly i.e bank account instead of stock portfolio, could end up costing you!

Remember, that you can down load a copy of your tax return now on the Agenzia delle Entrate website if you have a SPID or the carta d’identità elettronica which you have linked to the app. We have all the tools, so let’s use them or alternatively, just ask me!

On that note, I will leave you with this shorter E-zine. I will be writing about UK Inheritance tax and the very important changes that have occurred in the 30th October budget in my next E-zine. For once some tax changes could be a huge bonus for anyone looking to live in Italy for the rest of their lives and then pass on as much as possible to their heirs. The rules have been changed to make it much more clear on how you can now escape UK inheritance tax. For the likes of us who live in Italy, where from an inheritance tax point of view the country is like a fiscal paradise, we have a clearer path to taking advantage of Italy’s rules rather than the UK, but like almost everything it will require carefully planning and a full understanding of the changes.

I will certainly get that Ezine to you before Xmas !!

In this E-zine I will keep things brief because house work is still ongoing from my end (hopefully completed by the end of July and moving into the new place on the 5th of August). The photo below was taken down the road from the property near a vineyard.

The first is an important announcement for anyone who is over 80 years old and a recipient of the UK state pension!
The Department of Work and Pensions is checking to make sure that everyone is still eligible to receive UK state pension benefits, and therefore requires that anyone over 80 years old, of any nationality, and who is drawing a UK state pension, complete a form and have a witness sign it before sending it back signed, in the post!. This is called a life certificate. This is a routine process with which the DWP update their records. (If you have already done this, then you do not need to do it again!)

The number of submitted life certificates so far is lower than the DWP expected and so it has extended its deadline to the 31st of July 2024.

** If the certificate is not provided, it could lead to suspension of UK state pension benefits **

If anyone over the age of 80 and receiving UK state pension benefits has not received a letter explaining this, or has not updated their address details, then the link to do so is here:
https://www.gov.uk/international-pension-centre

Anyone receiving or about to receive UK state pension benefits UNDER the age 80 will be contacted towards the end of this year, therefore you may like to check that the DWP have the correct address on file for you by using the same link above.

Please feel free to share this information if you feel anyone might be affected or just to spread the word.

Brexit – for the Italians it’s all wrapped up!
The next bit of news came from the Agenzia delle Entrate recently. Specifically their notifications page on the telegram app.. They regularly post the latest decisions taken re: specific cases submitted to them (intepelli) and also the latest announcements re: tax and various other bureaucratic measures.

The Italian government has taken the decision to close the ‘Punti Assistenza’ for both foreign investors looking to invest in Italy and also the ‘Info Brexit’ points of assistance. The reason for such a move is that they say they are rarely used. They go on to say, regarding the punto ‘Info Brexit’, that since the UK left the customs union, the Agenzia delle Entrate has provided clarification regarding most issues and hence is closing the Brexit information point.This may or may not be the case, but, certainly, questions remain and it looks like the Facebook citizens group ‘Beyond Brexit’ will be the last bastion of information regarding Brexit issues in the end. I would imagine that the UK Embassy will also be providing little to no support moving forward.

If you want to read the communication from the Agenzia delle Entrate, you can do so at the following link:

https://www.agenziaentrate.gov.it/portale/documents/20143/6193290/Provvedimento+Deskdel+26+giugno+2024.pdf/d860fa81-1922-866b-97ae-91f86b9a073a

Confirmation of EU permanent residence
Charlotte Oliver, of Oliver and Partners legal firm in Rome, also put out a recent communication from the Ministero dell’Interno which has issued guidance to the Comune in relation to British citizens resident in Italy since before 31.12.2020 which marks the end of the Brexit transition period. The Circolare confirms that British citizens are still entitled to obtain a certificate of permanent residence from the Anagrafe (“attestazione di soggiorno permanente“).

In other words, as guaranteed by the UK-EU Withdrawal Agreement, British citizens continue to have the right to obtain a permanent residence certificate (as provided for in the EU Freedom of Movement Directive and article 16 of Italian Law no. 30/2007). British citizens are entitled to this certificate after 5 years of regular and continuous residence in Italy, registered with the Comune, even if part of those 5 years were after Brexit.

You can see Charlotte’s communication and the MInstero documents on her website, at the following link: https://www.oliverpartners.it/confirmation-of-permanent-residence-for-british-citizens/

Due to Brexit and the political uncertainty, the average GBP:EUR exchange rate over the last decade has now fallen to €1.20.

So, why the potential revival?
Well, it may not surprise you to learn that it is all about the UK elections, the Labour win and the disastrous time under the Conservatives. (Theresa May, Covid lockdowns, rising energy prices and Liz Truss’s short-lived government).

It would seem that Labour is very likely to try and realign the interests of the UK with its nearest neighbours and Labour may try and negotiate new agreements with the EU to ease trade and the share of technology and other areas. The EU may be interested in the UK’s military equipment and intelligence capabilities, given the ongoing events in Ukraine. The UK may also decide to align with the EU market on food and agricultural products, which may maintain smooth customs arrangements for import and export, but it might be a sticking point because it may mean that the UK becomes a rule taker again rather than rule maker.

Also, the longer the UK remains non-aligned with the EU, the more its businesses are adapting to other foreign markets. The US is now the UK’s biggest customer regarding service led businesses. In reality, though, the service sector is unlikely to interest the EU anyway, because they are able to continue to take away valuable services based businesses from areas which had previously been monopolised by the UK.

This may all be rather positive for the GBP: EUR exchange rate of course, but a lot depends on to what degree Labour will be able to negotiate closer ties to the EU, without breaking the Brexit red lines.

If you are interested in the wider article, you can find it at the link below:

https://www.evelyn.com/insights-and-events/insights/get-ready-for-a-sterling-revival-under-labour/

I have for years now been advising clients to retain any GBP holdings in the currency and invest likewise. It is my long term view that a single country like the UK, will have the ability to develop its markets and economy more dynamically and quicker than a bloc of 27 states who need approval from each (in most cases) to make decisions for the bloc. I am not anti EU by any means, but the political environment in the EU is such that it does not bode well for long-term economic stimulus and development. This will always be a drag on the EUR versus other currencies, and particularly now with the situation in Ukraine and long term inflationary pressures. That all being said the UK will need to go through some soul searching to determine it’s future direction, which may or may not lead to a Sterling revival.

Long-term productivity figures seem to imply that GBP:EUR should be at a natural rate of around 1.2 to 1.25 but that does not take into account political cycles and significant economic events such as Brexit. Markets like stability and until that returns sterling will probably still be in for a volatile ride.

I will be back with more information, musings and ideas when we are installed in the new home, after August 5th, but if in the meantime you would like to discuss any tax or financial planning related issues in Italy then please don’t hesitate to contact me as I will working through the summer. 

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“Nothing is constant but change”
– Heraclitus

(“One cannot step in the same river twice”)

You might be wondering why I have started this E-zine with one of my favourite quotes? Well, you may or may not know that I have been living in central Rome for the last 20 years of my life, between Trastevere, Campo dei Fiori, the Pantheon and for the past 8 years in Prati. I feel like I have been living a real Roman Holiday!! This is also my 50th year on this planet (how time flies) and I will be celebrating my birthday at the end of July.

There was always the possibility of moving out of the direct centre of Rome, in a more quieter area, but the areas we would like to go are either too expensive or badly connected and so choosing to lead a life stuck in traffic or up to my eyes in debt didn’t seem so appealing.

But the city angst was always about me rather than my family. My wife is a self confessed city girl and she can’t imagine a life without cinemas, theatres, restaurants and bars on the doorstep. My son, at 14 years old might have trouble if he were to relocate from Rome, but he is finishing terza media this summer and so Heraclitus might be right with the timing.

I had actually told my wife a few years ago that I could see myself living in Rome until I reached the age of 55, and when Alexander turned 18, then I would need to move out of the city and into the countryside somewhere. She wasn’t convinced back then to which I replied, ‘well that’s OK. You can have a small place in the city and I will have a small one somewhere quieter and we can meet up in the middle’. That’s been a kind of running joke because we did actually try and make a break for it just after Covid when we found 2 properties we liked in and around Cortona and made offers on each, only to be rather disappointingly used to bump up offers for other prospective buyers.

Anyway, that put us off the move and it worked quite well because my son enrolled in a school in Rome and my wife got a job at the Chicago Loyola University of Rome as the lead psychologist/wellness person.

However, my dreams of living outside Rome did not quell and I found that Facebook has loads of properties in the country for sale if you join enough groups and click enough links. The power of social media being that when it knows what you are interested in it just starts firing lots of options at you. The ones I liked I would send to my wife who, I joked would, in a very ‘Tinder dating’ kind of way ( not that I have ever used Tinder I might add !) swipe right for no and swipe left for yes. In about 2 years I don’t think there was even one left swipe but there was engagement and that was the thing.

Now, that sounded like my kind of arrangement! Then 2 weeks out from the rogito we were told that the coperativa no longer want to do it because they have enough land to deal with already.

So Oct/Nov 2024 could be an interesting time! That being said if you are looking for oil you know where to find it!

On the subject of olive trees they have also given me a great opportunity for work. I had decided in 2024 that I was going to start doing more video content and just putting out short video content of subjects that come up regularly and which I could talk about quickly and then upload to either Youtube / Instagram or other social media platforms. One of my issues with doing these videos is that I like to be out of the house when I do them. I hate just sitting in front of the computer and doing a video, instead I prefer to be out in the open space and talk, walk, stand…whatever takes my fancy.

So, as per most properties in rural Italy it needs some work and is currently undergoing building and ripristino work. Structurally the property is sound and so it just needs bathrooms doing, walls painting and bringing up to date as it was last renovated in the 1990’s, that being said it does hide a magical jewel. It’s own very private, yet consecrated catholic chapel.

We are told that underneath the more modern exterior of the house there  is an old church from the 1600/1700’s which the local monks used to pass by and pay penitence at the windows of the chapel. The knee imprints can still be seen in the travertino stone underneath the windows. A beautiful story to uncover in time.

Lastly, the exciting thing for me is the land that comes with the house.   Finally some green!  No more staring at cement and tourists.  I must say that although I do love Rome (resident population 2.8 million, expected tourist numbers in 2024 -19 million, expected tourist numbers in 2025 [Giubileo Vaticano] – 35 million), based on these kind of numbers it seems to be the right moment to go.

Of course our Italian friends are horrified and jealous at the same time.   They admitted that they would be petrified to live outside the city.  That living in amongst the neanderthals, ogres and in the great unknown which they only visit en-mass on Sundays when they want some fresh air and when everyone else is going – safety in numbers – is a big no-no.   Yet, some of them have openly wish they had done it themselves and they would have loved to try a similar life.   For us, its probably not a forever place, although I am sure it will grow on us and we will never want to leave but we understand that life throws curveballs at you and never say never.   For now, its a long term project to bring the land back into the shape and for me to save 4 old ‘secolari’ olive trees which I discovered the other day all covered in ivy and with other plants growing all around them.

I know this E-zine is a little bit off my usual subject but I wanted to write to explain why I have not written an E-zine in the last month or so and to share this journey and excitment with you.  Getting the bank to agree a mortgage and then agreeing terms with the ex-owner was, as it always is in Italy, a stressful task.   I am now following workmen which is equally stressful but I am determined to keep an eye on them like a hawk, and hopefully learn a few things in the meantime.  And so we can move in July, when planned.

It goes without saying that once set up fully (probably after the summer) that you are more than welcome to visit and see the place for yourself if you are down this way, meet for work purposes or just to pop in and say hello.  I would be more than happy to see you there.   I will be with my new fast Starlink internet connection and so be connected although in the blissful countryside, for those who can’t make it in person but who would still like to hook up online.

For now, I hope you enjoy the fotos and I will be in touch again soon with more financial and tax planning ideas for your life in Italy, and small updates on the state of the house.

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I hope you had a good Easter and didn’t eat too much. I took a break with the family to go and visit some friends in a Hotel on Lago di Garda during the Easter period. We had a great time even though it rained every day that we were there. That being said I got to see a few nice towns and learn a few new things.

We stayed just outside Bardolino, but also visited briefly Lasize. Lasize, I discovered, was the first comune in Italy. Apparently the King of Lasize in 983 a.c decided to concede the management of the town to the local civil authority, an interesting fact, I thought. We also visited Sirmione, which I know of because of the vials of sulphuric water which we used to put in a nebulizer for my son when he was a baby to clear his airways during the period of the winter cold.

Lastly, we visited a place called the Vittoriale degli Italiani, just outside the town of Salò. (https://www.vittoriale.it/). Salò was the last fascist town in the whole of Italy and the Vittoriale appears to be a tribute to that fact. It was, also, the home of the poet and soldier Gabriele D’Annunzio and a tribute to his heroism during World War I.

I can say that I am not a big fan of fascism, but it was very interesting to visit and certainly an unexpected and eye opening trip down Italy’s recent past. All of this whilst I started the book ‘The General and his Labyrinth’ by Gabriel Garcia Marquez, about Simòn Bolivar and reflections on the end of his life after the liberation of South America from the Spanish.(I think I may need another holiday after all these cultural learnings!)

Anyway, talking of fascism, it leads me nicely onto the subject of today’s E.zine: Tax and tax deductions!

I am not sure if tax authorities can be considered as fascist but certainly they fit the description in many ways:
‘An ideology and movement, centralized autocracy, militarism, forcible suppression of opposition, belief in a natural social hierarchy’

Joking aside, they do tend to operate with an iron fist and as I have mentioned on many occasions it is imperative that incomes and assets etc are declared properly and within the right time. That being said, in Italy we do get the possibility to utilise the system of detracting and deductions from income which can sometimes help to reduce our overall tax burden each year.

In this E-zine I will summarise the main ones (please be mindful of the fact that there are specific details related to each category and so I would recommend you check the link to the CAF at the bottom of the email if you are interested in any specific area).

Also please note that if you are on a forfettario tax regime in Italy, ie. 100K flat tax, 7% pensionato or partita IVA forfettario etc, then it will NOT be possible to deduct any of these expenses from your income!

But without further ado, here is the list of deductions which you might be interested in:

Medical expenses of any type: (generic, specialists, surgical, pharmacy, etc) can deduct at 19% of the total annual cost which exceeds the excess/deductible of €129,11. You need to add all your expenses together and deduct the €129,11, 19% of the final amount can be used against tax; if the cumulative amounts do not exceed the €129,11 then no deduction is allowed.

In the expenses calculation you may also include those which have been reimbursed by insurances (personal or corporate).

If your annual expenses exceed €15493,71 it is possible to spread the deduction over 4 years in equal parts.
(The deduction system, without limit of the amount over €129,11 would apply for anyone with special assistance needs e.g. car accident victim).
(Expenses of family members who are ‘a carico’ also qualify).

To use the deductions system, you must be in possession of the relevant documentation that certifies the expenditure i.e. invoice, receipt, quietanza etc. Your receipt should always show the nature of the medicine / treatment and include your codice fiscale.

***When you buy something at the farmacia with your tessera sanitaria, and it is a qualified medicine, then it is automatically registered with the Agenzia delle Entrate. This does not mean that you no longer need the ‘scontrini’. Your commercialista is required to ask for the evidence of purchase to match up with the payments received by the AdE***

Insurance premiums:
19% on the total costs of insurance policies ( Italian and overseas), as detailed below:

• Maximum total annual premium of €530 for life and accident, and non self-sufficiency type policies
• For insurance contracts covering death and permanent disability and long term care, the maximum premium total is €1291,14
• For insurance contracts covering individuals with serious disabilities, on risk of death, the maximum premium total is €750

Schooling (non university):
Nursery, primary or secondary school (private or public school) a maximum of €800 expenditure on which the 19% will be calculated i.e. max amount detraction €152 pa.

Private university education costs:

There are other conditions, such as how close the family home is to the university which the student is attending, so it’s worth checking out the rules. The above table gives a rough idea of the kind of amounts that can be deducted depending on where the university is located in Italy.

Funeral expenses:
19% of maximum annual expenditure €1550 i.e. (maximum detraction of €294.50).
The invoice needs to be in the name of the person making the payment and paid via traceable means (not cash). Equally the name on the invoice must have a direct family relationship to the deceased.

Sporting activities for children aged between 5 and 18 years old:
19% on a maximum spend of €210pa i.e.€40 detraction .

Veterinary bills:
19% on annual expenditure between €129,11 and €387,84 i.e €49 – 19% of €258pa.
The deduction is for the person listed on the fattura and does not have to be the owner of the animal, therefore, for a couple it makes sense that you both pay at least once if you have significant veterinary bills for the year.

Cost of rent (based on income):
a maximum of €300 if your income is below €15493,71 and €150 if your income is between €15493,71 and €30987,41.
There are differences for those who are renting from an organisation rather than private individual, under 35’s, people who transfer their residence to another comune more than 100kms from their current home and also students who study at a university away from comune of residence. Check details with your commercialista if you think they might apply to you.

Costs of public transport:
as of the 1st Jan 2018 it is possible to detract 19% of the costs of an ‘abbonamento’ for local, regional and interregional public transport, up to a maximum spend of €250. This limit also applies to the family, if there are more than 1 ‘abbonamenti’ but cumulatively no more than €250 in total.

Sismabonus: 50% on maximum spend of €96000 deductible over 5 years if you live in seismic area

Superbonus: see link below for details:

• Bonus mobili e elettrodomestici: 50% on a maximum spend of €5000, deductible from income over 10 years (only available until 31st Dec 2024)
• Bonus Verde: 50% on maximum spend deductible over 10 years (only available until 31st Dec 2024)
• Bonus barriere architettoniche: 75% the maximum depends on the type of work being performed (only available until 31st Dec 2025)

If you think you might be eligible for any of the bonuses named above, please check the details and do sufficient research or take professional advice before starting work to ensure that you are eligible for the deductions.

It would appear as though my timing was off slightly regarding my last E-zine, specifically in relation to the payment of the €2000 voluntary contribution to the Italian healthcare system. Two people contacted me to say that the UK Embassy website updated their website about 12 hours before my E-zine was released which I had not yet seen. The text was as follows:

As is often the case with communications of this sort it often throws up more questions than answers and so I will wait for further clarification on the issue, but at the very least, I think it can be assumed that any Brit registered in Italy before 1st January 2021 will not be paying any more than they were before for access to the health service in Italy.

The lunch is open to anyone, and is more about connecting people than just ‘touting for business’. People from all walks of life come along, from UN retirees, yoga teachers, online networkers, lawyers, real estate agents, English teachers, and people who just want to connect and make friends. So, if you are in Rome and would like to come along then please do so. Just please give us a few advance days notice so we can book you a place.

If you have any questions about any of these issues and how they apply to you and your financial situation, or if you think that you might be paying more tax than need to then do get in touch and I will be happy to see if I can help you with your plans.

I can be contacted on email: gareth.horsfall@spectrum-ifa.com or on cell: +39 333 6492356

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I am back from The Spectrum IFA Group conference 2024 which this year was held in Budapest. I have been to Budapest before but had forgotten just how interesting the city is.

Getting there was relatively easy enough from Rome: Ryanair to Budapest. Getting back was logistically a bit more difficult, needing to re-route through Prague on a Friday afternoon, creating a 4 and  1/2 hr round trip. This I found quite strange. On a Friday there weren’t many flights going from Budapest to Rome. There was one that returned at some ungodly hour, but I preferred to get home earlier so took the alternative route.

Ryanair is always a variable experience for me. The big panic is always how much your bag weighs and if your hand luggage will fit in the container, because you are never sure who is going to ask and if they are going to be pedantic about the rules, or not. In my case I had packed to perfection on the way out so there was no question, but my main bag weight limit was right on the nose of 20kg. My carry on bag, quasi empty.

At the Budapest end all went smoothly as my bag weighed 21.3kgs on their scales and I guess they used some discretion that my main bag was empty and so the extra could go through. Going through Prague airport was a different story. There, interestingly, my bag weigh 23.4 kgs (which was probably more likely!) so I didn’t argue that point. However, I got the Ryanair agent who went by the book. At this point I tried to argue that my carry-on was almost empty and I could just move some things across, but the overall weight would be the same, so what’s the difference? As you might imagine that didn’t work. He did offer to allow me to move to the side and unpack my main luggage and put some things in my hand luggage. I just couldn’t stand it, so I just agreed to pay the extra fee. We were talking 2kgs at the most and I didn’t have the energy to start unpacking and packing again in front of a queue of people. What a pain! Anyway, I guess I should be happy that I managed to at least survive the Budapest side without issue.

So why am I mentioning all of this? Well, one of the main themes of the conference was Artificial Intelligence (AI) and the impact it will have on our lives in the here and now and the not so distant future. The question is will Ryanair become more consistent when they inevitably use AI in their booking procedures, or maybe they will just continue, for some time to come, with their current form of ‘intelligence’ instead of the artificial type?  Knowing Ryanair, it won’t take long to find out.

Talking points for 2024 and beyond
Anyway, enough about my travel woes and onto some of the talking points raised and ideas for the future which I learned from The Spectrum IFA Group conference 2024.

A quick look back at the markets – 2023
You may have noticed by now that there was a slight rally in the stock market towards the end of 2023. What you may not have noticed was that it was heavily concentrated in one specific sector: TECH! However throughout the year there were some other more interesting developments which caused market volatility during the year.

AI
The hype around AI started driving up markets early in the year. I am sure you know the hype by now: AI will take over the world, humans will become batteries for electricity generation, we are all going to lose our jobs and be replaced by machines, it will be impossible to speak with a human again etc etc. Well, let me put your mind at rest, none of the above are true….at least for now.

(MIT in the USA think that AI is unlikely to replace as many jobs as we think and even those that it does, it will probably not do the job as well as humans. https://fortune.com/2024/01/22/ai-jobs-humans-cost-mit-study/)

If you don’t believe me then take a look at the following slide, courtesy of Evelyn partners, which shows the G7 median unemployment rate going back to 1755! Whichever jobs are displaced by AI will likely be created in some other field, of which may not even exist yet!

Not only, but AI is in in its infancy (think internet 2000 – if you haven’t used ChatGPT yet I would encourage you to ask it some questions and see what kind of responses you receive, you will likely be under whelmed ), but it will likely develop quicker than any technology we have ever seen in human history!

However, here is the list of the top professions which might be affected by AI (Teachers beware!!)

And the least affected:

Here is an interesting fact for you –

In the Federal Reserve in the USA there are approximately 500 employees of which 400 are at PhD level and above, who are all engaged in making economic forecasts. The problem is that they are absolutely terrible at forecasting. In almost every period their forward economic projections turn out to be wrong. As an example in 2021 they anticipated that interest rates in 2023 would be at 1%, when in fact they were 5.25%!

They use historical economic data to predict the future rather than forward looking models which are now readily available from many different companies. Is this an AI opportunity?

But enough of AI, some other strange hype happened during 2023….

So, you might be forgiven for wondering why the markets didn’t really climb during the year when all these actors were at play. Well, the truth is that markets did climb, but they also fell back around November. The hype died. Every 3 or 4 months in 2023 there was a new theme which came to life and then quickly died away. It was almost like everyone was searching for some sign of good news in a year, which otherwise was once again occupied by concerns about global war. Thankfully the year finished on a positive note mainly because of the rise in stock prices of the Magnificent 7 – as they are now known – (Meta, Amazon, Alphabet (Google), Apple, Microsoft, Nvidia and Tesla).

To 2024 and beyond
So looking forward, what is awaiting us?

The USA is faced with multiple issues that need fixing, none more so than the illegal immigration problem, bringing manufacturing back to the US, fixing the rural rust belt crisis and the fentanyl crisis, and there is a possibility that under Trump they may also leave NATO. The USA is retreating from the rest of the world and becoming more protectionist. Globalisation is unwinding. In some ways it is starting to look very much like the period of the 60’s and 70’s: wars, geopolitical risk, and perhaps the end of the centre left and not just in the US, but also around the world. So all eyes are on the USA this year. US general election years can be good for investment markets (there are no guarantees), but often the government in power will do its utmost to stimulate the economy, consequently stimulating the markets which may help with the voters. It’s all to play for in a world which is changing very quickly.

Elections around the world
Let us not forget that there are also going to be a further 64 elections around the world in 2024, plus the European Union. This will cover 49% of the world’s population. We might see some interesting results as the year progresses.

However, a number of our speakers made the case that perhaps the tide has turned. Not since the 1980’s and 1990’s have they seen such value in the bond sector. Prices are looking attractive, particularly US treasuries and sovereign bonds over a 1, 2 and 5 year periods. Not only do sovereign bonds now have some potential to provide reasonable yields (interest), but also capital growth and capital protection of your portfolio as well.

Portfolio diversification in the1990’s, when I first started investing, very much looked like a 60/40 portfolio. 60% equities and 40% Bonds or vice versa depending on the way of the economy. These days we have many more asset classes to help diversify our portfolio, but it might be that your portfolio starts to resemble those portfolios of the past moving forward.

Healthcare
As I stated above healthcare was very much a hyped theme in 2023, but it will continue to play a much more important role for growth in coming years. I am not just talking about over publicised weight loss drugs but the developments in medical technology. The world is aging. Almost all developed countries in the world now have a falling or negative replacement rate (the birth to death ratio to sustain population). The Far East: China, S. Korea, Japan, for example have dangerously low replacement rates. This means that their populations are aging at a fast rate and with the benefit of better medical care they are living longer. Italy included!

Medical technology will help to relieve the stress on already over-burdened health care systems. A great example of this is my mother in law, who had polio when younger, now has difficulty walking and more importantly a fear of falling. She recently told me that she had bought an iPhone and iWatch because the iWatch will call for an ambulance if your heart rate drops and it suspects that you are unconscious and need medical help.

We might even see more of these things become mandatory if we want to receive access to our health care systems. Imagine your doctor being able to get real time access to your heart rate data if you are suffering from cardiovascular problems.

This will be a huge growth area, but identifying the tech winners might be harder than you might think.

Defence stocks will almost certainly benefit from a multi-year period of growth as armoury, weaponry and military logistical hardware be required for re-stocking purposes by nations across the world. Who will buy from who will very much depend on military and economic interests.

I read the other day that to power the AI universe that the utopian thinkers would have us believe is our future, we would need so much energy that we would effectively need to cover the earth with solar panel and wind turbines, if we were to try and support it with green sustainable energy sources. To what degree that is true, I don’t know, but we are going to need an incredible amount of energy to power the tech needs of the future and it does beckon the question, where is all that energy going to come from? We need a revolution in the storage of energy and no-one is talking about that…yet.

Rewarding Loyalty
As a shopper we all like to think that we are loyal customers. A lot of our favourite places to shop and eat are digging deep to discover just how loyal we really are.

McDonalds is a great example, you can now sign up to their loyalty scheme and receive offers for free burgers and other deals. They are seeing the customer return rate increase as a result of their loyalty schemes. (Interestingly, they are, at the same time pulling away from healthy food options because they were a resounding failure because who wants to go to McDonalds for a salad and a vegan burger… right?!)

Costco is another success in the USA. They are a membership driven business. Their prices and quality of goods are second to none (I have visited one in the UK and can confirm it’s true!) but it’s not that which pulls clients in. They actually have the cheapest gas prices in the USA and this drives people to become members which then allows them to market to each and every customer according to their specific needs.

Customer focused businesses will survive in the modern world.

And finally….boring old infrastructure
(For any non-UK person reading this, HS2 is the high speed railway which the UK has been planning and building for years and is turning into a national farce. But why am I mentioning this? )

Did you know that the USA is in the process of building 50-100 equivalent high speed rail networks?

Infrastructure companies, those building tunnels, roads, railways, electricity grids, toll roads, inter-connected cities, schooling, healthcare facilities etc, leading up to 2023, were considered to be solid businesses in which to invest that would provide long lasting portfolio stability and a decent return. However like most other sectors they were also burdened with debt. In 2022/2023 the interest rate spike suddenly meant they had to contend with significantly increased debt repayments and therefore started restructuring their businesses. The markets didn’t like that and most stocks in this area were down 30-40% in 2023, that created a buying opportunity, because in the end some boring old businesses are worth investing in.

The USA is undergoing significant infrastructure build. A southern border wall is almost assured to be erected following the US election, whoever comes ino power, and besides that we need to update, modify and prepare our economies for the future. Infrastructure spend is going to continue unabated.

So on that note I will leave it there. I just wanted to add a note about some of my activities planned for 2024.

In 2024 I will be expanding my short video content on topics that come up during the year,  and I can do a quick video about them.  I will, of course expand on these subjects in my E-zine. If you are interested then you can see the videos, to date, on my page on The Spectrum IFA Group website. Just click our logo to the right to take you to the page.