Is there anyone who has not dreamed of being immersed in the nature of the Tuscan countryside? Being surrounded by art and history in one of Tuscany’s beautiful towns? Ever more frequently, foreigners are deciding to acquire homes and transfer their residency to our region.
When thinking about taking up residency in Italy, it is important to be aware that Italian fiscal law imposes certain obligations on all those who live here physically, whatever their nationality or citizenship. Acquiring a residence in Italy, by definition, means being subject to Italian fees and taxes.
However, there is more to it than this. Foreign citizens, even though they have transferred their residency to Italy, often continue to hold part of their earnings abroad. For example, a home in the country of origin or accounts in foreign banks. In Italy, these income sources are subject to obligations under the so-called “fiscal monitoring” process. Foreign residents living in Italy must not declare their income wherever this is produced and pay the relative taxes.
In addition, they must make a specific declaration of their investments held abroad, of whatever nature these may be. For example, bank accounts, shares, titles, properties, boats, etc. In other words, in relation to the goods held abroad, they must make the declaration and payment of taxes regarding their eventual income, and with reference to bank accounts, bank deposits and properties, they must pay the patrimonial (IVAFE and IVIE) taxes.
A practical example
Let’s look at an example. An English citizen has acquired a house in Tuscany and has established fiscal residency in Italy.
At the same time, she continues to own a family home in the UK and bank deposits and stock investments at an English bank. This foreign citizen must therefore, in addition to paying taxes on the Italian home (IMU/TASI) also fulfill the monitoring requirements in terms of the foreign patrimony. She must therefore fill out the relevant section in the earnings declaration (section RW) where the amounts of deposits, shares, and foreign properties should be indicated.
With reference to such goods, the relevant patrimonial charges (IVAFE and IVIE) must be calculated and paid, and the relative earnings issues must be managed. For example, when there have been bank interests or property renal incomes (filling out, according to specific cases, the relevant sections of the income declaration -RM, RT, ….).
The fiscal obligations are many, and if these are not respected, one risks heavy sanctions. However, the Italian laws allow amendments of the violation made in preceding years, through the so-called ravvedimento operoso.
The fiscal requirements for those who intend to reside in Italy they should, with the help of qualifies professionals, carry out a correct and detailed evaluation of their fiscal position in terms of the eventual obligations that will result, in order to avoid risking errors and sanctions by the financial authorities.
This article was originally published in Tuscany’s Grapevine Magazine with the title “Turning a Property to Profit” in its issue of May 2016.
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