Expats in Italy hit by new tax rules
Expats living in Italy have been hit by the implementation of new tax rules with many facing possible prosecution by the Italian authorities if they do not declare all of their assets both at home and abroad.
Under the country’s previous system residents in the country with assets over the value of €10,000 (£8,400), had to be declared, now however all overseas assets regardless of value have to be declared.
All assets based outside Italy must be declared on a foreign asset monitoring form which is commonly filed in conjunction with Italian tax return forms. Typically these have to be handed in by the end of September.
Previously expats were able to transfer up to €10,000 into and out of the country without the need for declaration; this has also been changed with the limit being scrapped. As a result all foreign transactions have to be declared regardless of the size.
In an effort to try and sort out the mess which is the Italian tax system the troubled government has taken action. The unpopular municipal real estate tax (IMU) is set to be scrapped. For expats however the tax still applies to second homes or holiday homes at least until next year. In place of the IMU a new service tax is to be introduced which combine all local taxes such as waste disposal into one tax.
The scrapping of the IMU could prove to be bad news for expats that rent property in the country as the tax has to be paid by the buildings occupant. Prior to that under the IMU regime meant that the building’s owner had to pay the taxes.
With the Italian tax system already very complicated the changes look set to cause even more confusion.