Our blog’s resident accountant Antonio from Studio Del Gaizo Picchioni has just sent us through some very interesting info on two new Italian taxes that will be like an icy wind down the back of anyone with Italian Residency that owns a property or has a nest egg in their native lands… The Abruzzo property market had been doing quite well with foreign investment despite the global downturn, I do wonder how it will manage if these new taxes are collected, at least inflated prices may become local once more.
“Alert for all those with Italian residency with property or financial interests overseas. The Italian tax authorities have introduced two new taxes on overseas assets: one is on property, so is bound to catch any foreign nationals who maintain properties “back home”. The rate of tax is 0.76% of the value of the property, either as stated in the purchase documents or, failing this, at market value. This means that someone with a house which they bought for the equivalent of €150,000 will be required to pay €1140 a year for the privilege.
A second similar tax applies to any financial assets held abroad – e.g.
shares, bonds, even savings and current accounts. These will be taxed at 0.15% on the value of the asset in the current tax year. Again, a person holding a nest-egg of €150,000 in an overseas account will be required to pay €225 to the Italian tax authorities.
As the taxes are retrospective in effect, they already apply to 2011 and will therefore be included in the next tax return due in June this year.”
Q& A Sammy & Antonio
Oh my word! That is going to put off a lot of people buying or maintaining property in Italy for sure! I just want to make sure I get this right… anyone with Italian residency who owns a property in their native country or has a bank account/nest egg will be required to pay tax on that house to the Italian govt? Will that be applicable to their pensions? Can the Italian government legally do that? How will they chase a person in the USA as an example.
To answer your questions, the situation isn’t entirely clear yet. In the original decree there was no mention of these new taxes, they were added on in literally a couple of lines when the decree was made law. So it’s taken everyone by surprise. Hopefully sooner rather than later the Italian Revenue will come out with the details of exactly what is intended, how it will be applied etc and then we will have a fuller picture.
As regards pensions, for those receiving a pension from abroad my feeling is that this is just a source of income rather than an investment, so I don’t think the new tax will apply. However it probably will apply (I feel) to pensions as they are being built up, as this would be seen as an investment. Quite frankly I don’t understand how current accounts count as investment, but there you go.
As to how they’ll do it, you may recall the famous RW section which was introduced some time ago into the annual tax return and required all residents to declare the assets they held abroad. At the time the Revenue said it was for “information purposes only”. Well now they’ve been informed on exactly where and what the overseas assets are, it’s comparative child’s play to collect the tax.
Have an accountancy question for Antonio, need an English speaking accountant, he can be contacted for more information via the Studio Del Gaizo Picchioni website