Viewing posts categorised under: Tax Declarations

Declaring your taxes in Italy

By Gareth Horsfall
This article is published on: 9th November 2022

09.11.22

I had a nasty surprise the other day and I just had to tell you about it. I got one of those dreaded pec (posta elettronica certificata) emails with the title ‘Agenzia delle Entrate – riscossione‘. They put the living fear into me and for obvious reasons. This time it was nothing significant, but still an issue relating to something my old commercialista did, or didn’t do, back in 2012, 2015 and 2017. My new commercialista has launched an investigation and hopefully we can park that particular communication in a draw somewhere, but I suspect I will end up having something to pay.

Why you should ask for a copy of your Unico!
With my horrible experience in mind, I decided to write this article where I want to just briefly touch on why you should really be asking for a copy of your Unico from your commercialista or whoever declares your taxes.

If you are unsure what an Unico is, it is merely a copy of your declared tax return pages that have been submitted to the Agenzia delle Entrate.

And will normally be about 20/30ish pages long, depending on how complex your financial affairs are.

You also want to request a copy with the receipt on the back pages, as this is confirmation that it has been lodged with the tax authorities.

That page should have a header as follows:

SERVIZIO TELEMATICO ENTRATEL DI PRESENTAZIONE DELLE DICHIARAZIONI COMUNICAZIONE DI AVVRNUTO RICKVIMENTO (art. 3, comma 10. D.P.R. 322/1998)

Now, you may ask why I am telling you this?
In the last few years, I have widened my services to my clients to incorporate a check on their declared financial affairs in Italy, to ensure that everything is being reported correctly. I decided to do this because it had become apparent that some errors had been made by various commercialisti and the odd client had been incurring higher taxes than necessary, as a result.

Checking your tax return may seem a complicated procedure, and you may be reluctant to do so, but actually, for most of the International English-speaking community living in Italy the entries in the tax return should be relatively simple. Apart from any declaration of income, which you would find under section Quadro RN or RT for investment income, you can also check on things like your accrued medical expenses under Quadro RP.

[An interesting point about the medical expenses section is that this year my commercialista contacted me about my receipts for farmacia expenses for 2021. However, he didn’t just asked me for the scontrini, but actually sent me a screenshot from the Agenzia delle Entrate website detailing all my farmacia spending for the whole year, where I had given my tessera sanitaria, which I found quite unsettling!]

The main sections that I would suggest that you check over are Quadro RW and RT. These are where overseas assets, incomes and capital gains have to be declared. These include properties, portfolios, bank accounts and other overseas assets, such as art or vintage cars, for example. These are the sections where I find the most errors. It might be that the market value of a property has been reported instead of a purchase value or local authority value or they have misunderstood the nature of a pension and declared it as an investment portfolio.

Also, remember when checking these figures that they must be converted into EUR from the foreign currencies in which you may have an asset. To do this you need the exchange rate for your respective currency. The Agenzia delle Entrate publishes those conversion rates and where valuations have been provided for the 31st December, for example, then you would need to use the declared rates from the Agenzia delle Entrate for that month. The link below takes you to the AdE provvedimento for Dec 2021 that provides exchange rates on all world currencies.

Click here for the link to the Dec 2021 AdE provvedimento for Dec 2021

In more recent years, where I have started working with commercialisti more closely for my clients, I have managed to iron out these problems and, in most cases, a good commercialista will be happy to learn the nature of an overseas asset and ensure it is declared correctly. However, there are still instances where mistakes can be made.

In brief, I would advise you to request a copy of your Unico for the last financial year. A good commercialista shouldn’t be worried about providing you with a copy. There shouldn’t be anything to hide if they have done it all correctly. You can also download this directly from the Agenzia delle Entrate (AdE) website. If you have not already done so, you can request access details to register with the AdE from a local office, and then create your access point. If you have a SPID (Sistema Pubblico di identità Digitale) you can access the website using this means, which is much easier. You want to find section Cassetto Fiscale > Dichiarazioni Fiscali.

Do a check of your declared financial position! There is unlikely to be anything wrong in most cases, but you may just be the one who is paying more than you need to because of an incorrect code or misplaced figure. Do not leave the exclusive responsibility of your finances in the hands of your commercialista or fiscalista and if you are unsure of how to interpret the data in there then you can always ask for my help by contacting me on: gareth.horsfall@spectrum-ifa.com or call/whatsapp on +39 3336492356

Bonus and Superbonus Edilizia
I have been asked a number of times recently about whether I think the new Italian government will stop the current range of bonuses for doing work on your property and/or upgrading your white ‘elettrodomestici‘ goods. Well, I had written a long article explaining the hypothetical new arrangements that could be announced to begin in 2023, only to be usurped by the Italian government which have now announced how things will change for 2023, as I explain below.

My thinking has always been that they are likely start to phase the bonuses out rather than cull them altogether. But, I can’t see a long-term sustainable economic plan for the country with continued ‘Bonus Edilizia‘ at the current levels, particularly the 110% bonus.

Under the legislation brought in by Draghi the 110% Bonus would have been in place for the whole of 2023, after which it would fall to 70% in 2024 and 65% in 2025. For ‘ville‘ and properties which are classified as ‘unifamiliare‘ the bonus would only be available until the end of 2022. But this is Draghi legislation. He has now gone and the new administration want to put their stamp on things, hence the revised measures coming into force from Jan 2023.

So, the new measures announced last week are as follows:
1. The superbonus will be reduced from 110% to 90% from the 1st Jan 2023 for all condomini (buildings with more than one property).

For ‘unifamiliare‘ properties, i.e villa’s or standalone houses, the same percentage will be offered, as long as it is used on the ‘prima casa‘. However, a new measure for ‘unifamiliare‘ properties has been added. They will now also assess the ‘reddito familigiare‘ of the occupants of the property and reduce any bonus accordingly. The maximum income and formula for the reduction in bonus have yet to be announced.

Possible reductions/removals
No mention has been made as to whether the superbonus will still be available or reduced significantly for ‘seconde case‘. The proposals for the ‘seconde case‘ could range from anywhere between 50% to 65% or a complete removal altogether.

The other notable plan is that the Agenzia delle Entrate have been given more powers to ramp up the controls and investigations for bonuses. More paperwork requirements are expected to be demanded to ensure that the monies for the work end up in the hands of the people actually doing the work, at a fair price and not artificially hiked to exploit the bonus regime.

As for all the other bonuses for electric white goods, etc. It looks like they will be here to stay for the coming year/s, at the very least. (Ecobonus, Sismabonus, Bonus mobili e elettrodomestici, Bonus Verde, Bonus idrico, Bonus acqua potabile, Bonus Facciate, Bonus ristrutturazione, Bonus restauro, Bonus prima casa under 36, Bonus affitti giovani under 31)

The final details have not yet been ironed out and knowing the normal process for the Legge di Bilancio we may not know the final details until after the 1st Jan 2023.

Since the superbonus scheme started the Italian government have now paid (or are awaiting payment) of €51 billion of tax rebates. The objective is to reduce that to €31 billion for the period between 2023 and 2028.

For anyone looking to apply for the ‘Bonus Edilizia‘ right now, my suggestion would be to get your requests in and push the people who are making the application on your behalf to make sure that you qualify for the current bonus amounts. If not, you may find the amount you get back is lower than you had expected.

Spanish tax on UK property

By John Hayward
This article is published on: 29th March 2022

29.03.22

In February I wrote about the impact on investments with Russia’s invasion of Ukraine and inflation rearing its ugly head. For the last month or so, the movement of global stock markets has attracted comparisons to a violin player’s arm joint and the undergarments of a professional lady. This is possibly the future for investments for a while although there appears to be more positive than negative movement (at the time of writing in case there has been a sudden catastrophe).

In the meantime, away from the uncertainty of how much a tank of fuel will cost in 6 months’ time, I want to mention something regarding Spanish tax on UK property.

31st March 2022. The end of the declaration period for everyone’s favourite, the Modelo 720. Although this is not a tax declaration, it does highlight assets and how these might be taxed in the future, whether this be capital gains tax, wealth tax, inheritance tax, or income tax. Focusing on the latter, I believe that it is generally not appreciated that a tax resident in Spain has to pay income tax on a UK property, even if it is not rented out.

Download your guide to tax in Spain here

It is (fairly) well known that, if you are a not tax resident in Spain, and you own a property in Spain, and you receive rental income, you have to pay Non-Resident Income Tax (NRIT) or Non-Resident Imputed Income Tax (NRIIT) if you do not receive rental income, perhaps both depending on how much of the tax year (1st January to 31st December) it is rented out. Imputed rent is a fictional amount of rent that the Spanish tax office decides is what you are receiving based on the cadastral value. It works the other way around. That is, if you are a tax resident in Spain with a UK property, and you do not rent it out, you still have to pay tax on the imputed rent.

How is the tax calculated? UK properties do not have a thing called a cadastral value. Some have said on the (not always reliable) worldwide web that it would be the rateable value that would be used. The actual rule is that, if there is no cadastral value, the tax is based on 50% of the original purchase price with the application of a rate of 1.1%. That gives you the imputed rent. It is this figure that would be used for income tax purposes.

For some people, this may not introduce a problem, especially when considering the double tax treaty between the UK and Spain. It is the fact that those who should have been declaring this “income” have not been and my message could prompt a chat with their tax agent. The Spanish tax office is regularly sweeping up what they (or their computer) see as outstanding items, often up to 4 years old in line with Spain’s statute of limitations.

Contact me today for more information on how we can help you to protect your assets from unnecessary taxation and make more from your money, protecting your income streams against inflation and low interest rates, or for any other financial and tax planning information, at john.hayward@spectrum-ifa.com or call or WhatsApp (+34) 618 204 731.

French Tax declarations in June – Trusts & Wealth Tax

By Katriona Murray-Platon
This article is published on: 1st June 2021

01.06.21

Oh what a month of May! So despite the old adage of being able to do as we please, the weather clearly didn’t get the memo! May has been a whirlwind of enquiries and questions on taxes with lots of people requesting the Spectrum Tax Guide. Hopefully, by now most of you have filed your tax returns, but those living in department numbers 55 to 976 as at 1st January, still have a few more days, until 8th June to file theirs. Also, if you have appointed an accountant to do your tax return, they have a special extended deadline until the end of June to file all remaining returns.

If you had a go at your own tax return, but would prefer to hand it over to a professional either for future returns or to check that what you filed this year was correct, it would be best to try to contact them after the end of June. If you think you made a mistake on your tax return, you have until the end of the year to correct it. You will soon know if there is something not quite right with what you have declared when you receive your statement at the end of August/beginning of September. At that point, if you are quick you can submit an amended return before the payment deadline; otherwise you may have to pay the tax payable on the original statement whilst awaiting the amended return to be processed and a new tax statement to be issued, with any tax reductions if applicable.

This month, my family and I set off for our first mini-break since the lockdown in March last year. I have to say we were a bit nervous venturing out of our house, preparing the suitcases and worrying that we hadn’t forgotten anything. We stayed in the lovely village of Coux-et-Bigaroque, about 45 minutes east of Bergerac. In spite of the weather we were able to take the children to the Perigord Aquarium, the Caves of Grand Roc and the Chateau of Milande, formerly owned by the singer and entertainer Josephine Baker. Whilst I love visiting this chateau and the birds of prey show in the grounds, it always makes me feel a bit sad. It is an example of how someone with such talent and a kind heart didn’t have the right advisers to help her make the best financial decisions.

In June there is another tax deadline that still needs to be considered:

Which is that all Trust declarations need to be declared by 15th June. I wrote an article many years ago which you can find HERE

There have been no significant changes to the treatment of trusts since the law of wealth tax was amended to include only immovable property. A trust can be recognised in France and perfectly valid in France provided that it doesn’t go against public policy (ordre public) and in particular the rights of heirs under French law. Income from a trust is subject to income tax depending on the nature of the income (rent from an apartment or capital income) and can be subject to tax credits under a double tax convention. Trusts (excluding charity trusts and pension trusts) must be declared in France if any of the settlor, trustee or beneficiary are French residents or if the trust contains an asset situated in France on 1st January. According to a press release by the Ministry of Finance on 5 July 2016, 16,000 entities had been identified and notified as trusts to the French administration.

Another change this year is that the Wealth Tax declaration which normally had to be submitted by middle of June if you have assets over a value of €1,3million, this year has to be submitted at the same time as your tax returns by way of a tax form called 2042-IFI. Those of you resident in departments numbered 55 and above still have until 8th June to submit. If you French tax residents who came to live in France, after having spent 5 years abroad, you are not taxable on your non-French assets until 5 years after you became resident. Non-residents also have to declare if their French assets are over €1.3million.

Finally, 30th June 2021 is the deadline for Brits who were resident in France before 31st December 2020 to apply for their residency permit under the Withdrawal Agreement. If you haven’t already done so or know of someone who hasn’t, and they were resident before 31st December 2020, please do try and encourage them to go to the following website:

https://brexit.gouv.fr/sites/brexit/accueil/vous-etes-britannique-en.html