Do you have overseas assets and are living in Italy?

I thought I would write about the colour yellow in this E-zine.

I never knew how much I liked the colour yellow. It had never really come on my radar until Lazio moved into ‘zona gialla’ again on the 1st February.

This lockdown has been quite challenging in many ways but it has really made me appreciate the small things which enrich our daily/weekly/monthly lives and break the daily monotony. For me, it’s those meals out with family, friends and clients, those mid-week trips to the cinema to see a film that has been newly released or a special theatre trip because some performing artists are in town. And I have to admit (I never thought I would ever write this) that I actually miss those kids parties when the parents lurk around at the back of the room talking and the fathers sneak off to have a beer or a glass of wine (or 2). Oh, and not forgetting those little trips, overseas or in Italy, that have been off the table now for sometime, but are the icing on the cake of life. I long for the day when I can make, even short trips away, with the family and friends again.

What’s New

Anyway, enough of my Covid colour thinking.

Well, if you have missed it, there is a new technocrat government in Italy. This time under the supervision of Mario Draghi. For anyone who is unfamiliar with Mario Draghi, he is the last ex-President of the EU Central Bank, previous head of the Bank of Italy, previous economist for Goldman Sachs and has also worked at the World Bank. If you are interested, he also has a house somewhere near Citta delle Pieve, Umbria.

What’s interesting about this appointment is that he was the man who pretty much stopped the EU crisis of 2012, merely by announcing that the ‘Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough’. With those words he stopped the attack on Spanish and Italian government debt, being launched at the time by the worlds financiers, and prevented a complete meltdown when Greece was also in fear of default.

There is no doubt that ‘Super Mario’ (his other widely known name) is a very adept politician and economist who has the ability and knowledge to get Italy out of it’s current predicament, as a result of Covid.

It was Matteo Renzi who pulled out of the coalition which was keeping Giuseppe Conte in power and managing the Covid crisis, but Renzi being a ‘supposed’ pro-business politician didn’t think that Conte had the ability to manage the €266 billion Recovery fund which is shortly arriving from the EU, and which will be used to help rebuild the economy. I happen to agree (although I think Conte has done a good job of managing the pandemic in Italy) and also believe that Mario Draghi is probably the best person for the job.

However, to what extent he will be prevented from doing so by the warring parties is anyone’s guess. He is a no nonsense economist/politican and has already made it clear that he wants to surround himself with capable people, and not politicans who are looking to advance themselves or their parties.

I suspect he will get some new and interesting projects approved by Parliament, but like the technocrats before him (Letta and Monti), will eventually be stopped by the other political parties who will want to merely push their own agenda and take power.

But, let’s not take this step for granted because if Mario Draghi is given enough leash to enact some serious recovery plans, and real effects can be seen, then they may give him more leash than we might expect.

My thinking is that alot of the burden will now be placed on his shoulders, and should he be able to magic the economic bunny out of the crumbling Italian economy top hat then the other political parties will quickly amass like children around a fresh birthday cake, to benefit from his good work and look to ultimately grasp power and take all the credit.

It’s all to play for. I shall be watching this one carefully. I think like most of us who have been living in Italy for quite some time, we really hope that something significant happens because we see so much potential for change.

UK Offshore territories
For anyone holding money in the UK offshore territories: Jersey, Guernsey, Isle of Man, British Virgin Islands, Cayman Islands etc, you should be aware that the EU voted to put these territories back on the EU black list as of the 1st February 2021.

https://www.theguardian.com/world/2021/jan/22/meps-vote-to-add-channel-and-british-virgin-islands-to-tax-haven-blacklist

I suspected that this would be the case once the UK lost its protected status in Brussels and these territories, which depend on the UK, have been now put back on the EU’s black list. Essentially this means that they do not share adequate financial information and lack sufficient fiscal transparency. By keeping arrangements in these jurisidctions you will be subjecting yourself to punitive tax rates as a resident in Italy.

If in any doubt then you can always contact me on +39 3336492356 or on email gareth.horsfall@spectrum-ifa.com

Firstly, I should say that I do not have any insight into what the Agenzia delle Entrate (AdE) is doing or thinking, but can only hypothese based on past experience.

One thing I think it is fair to say is that I don’t think that the AdE is actually targeting British citizens living in Italy as a result of Brexit. What is more likely the case is that the AdE are doing what they do most years, at the start of the year, and send out standardised letters to foreign citizens resident in Italy with the hope that they will pick up somebody who has undeclared income/assets and/or gains.

I myself have received 2 of these letters in the past. The first proved to be a mistake, the second however, put me in such a panic that I went back over my finances for the previous year with a fine toothcomb and realised I had mistakenly failed to declare a small dividend payment in the UK, but it should be said that there was no mention of this error on their letter. The letter itself was a standard letter merely saying that as a result of information gained from the exchange of information between tax authorities, it was ‘believed’ that I may have undeclared assets/incomes and/or gains and that I needed to regualrise my affairs. It was enough to make me look back over everything and get everything ‘in regola’ .
I know that in the last few years the Italian authorities have become more sophisticated with the information that they have received and so should you receive a letter with specific figures mentioned, then I think it is fair to say that you have been caught and you will have to provide the information requested. It would also make sense to get a commercialista to help submit the information and negotiate with them on your behalf, if required.

However, if you receive the generic letter then it could just be that they are on a ‘fishing’ mission. Setting a cat amongst the pigeons, pick one off and the rest become so much more wary. In my opinion, any letter from the Agenzia delle Entrate should not be ignored. It could certainly be the case that they are party to information which has been shared by tax authorities in other countries where you hold assets and so to ignore such a communication could land you in very hot water indeed.

My simple message for anyone, to prevent ever receiving a letter from the Agenzia delle Entrate is

‘If in doubt, declare the account’
(And don’t forget your other worldwide assets/gains and income too)

Imposte and Tasse
Do you know the difference bettwen your ‘imposte’ and your ‘tasse’?’. In English they are both taxes, but in Italian they have different meanings and so it is probably a good idea to understand what the difference is.

Tasse are taxes which are collected to fund a specific part of the Italian state. A good example is TARI (Tariffa sui Rifuiti) or even airport taxes. They are collected for the purpose of funding a specific part of the Italian state infrastructure.

Imposte,on the other hand, are generic taxes which are charged but which have no specific objective in mind, other than to fund the ongoing cost of the Italian state. These would include things like IRPEF (income taxes) IVAFE (wealth taxes) and IVIE (a tax on property).

So, the next time you have a chat with your commercialista, or when you are chatting in the bar about how much we have to pay in taxes in Italy, you can make sure that you use the right terminology for the correct type of of tax!