Taxation (again!)

Maurice Image
11/26/2010 - 14:43

We own and now rent out a property in Italy and declare income on UK tax returns. We are both UK tax resident. We are trying to do everything by the book including registering the activity in the comune (as required by L.R. N42 of 23.03.2000 [Tuscany]) and advising the carbinieri or comune of all our guests (as hotels do).Can someone please explain the implications of the double taxation agreement. I assume we need to complete an Italian tax return (with help from a commercialista) but is evidence of payment of UK tax sufficent to avoid Italian tax?

Comment

i'm not sure about the international bi lateral tx arrangements BUT if you are residing in italy on a more or less permanent basis and/ or if the duration of your hospitality exceeds sixty days per annum in total then it will be (as far as the italian tax people are concerned) an italian business and as such subject to italian taxation/vat/health dues and laws.The fact,as you say,that you have until now been paying tax to the uk gov. would only constitute an extenuating factor in that they would probably not fine you but ask you to regularize vis a vis italian tax laws.

I think before you do anything else you need to see a commercialista, preferably one who has other clients who let properties. There is much more to their service than the filling in of the Italian tax return, and I would wait before you register your buisness with anyone else, depending on the scale of your operatation it may not always be necessary, but only the commercialista can advise on this.

Michael used to advertise here (possibly still does) and has been very helpful to myself and my husband.  We do not have same circumstances but he and his Italian Commercialista partner Antonio seem to have the English/Italian issues covered. (I work for a UK company on a self-employed basis and live in Italy - scared most Italian Commercialiste.)  Michael/Antonio will give advice and prepare all returns as required and they do not charge silly amounts unlike some "professionals" who take advantage of the fact that many of us do not understand sufficient Italian and need English speaking professionals.  Worth contacting them!!  In the first instance mail Anna at  anna@mjmurphyaccounts.com  Good luck with the venture.

I have similair circumstances to you Karen - my husband and I will be moving over to Italy in 12 to 18 months.  I own a UK business and will continue to run it when we move - I will return to the UK every other week or so - my husband isn't sure what he'll be doing but will be in Italy full time.  Where does Michael live - at the moment my accountant isn't local he's 300 miles away but 10 minutes form my business partner - we're going to be in Liguria

Its all down to where you are resident.  If your husband is going to be full time in Italy he is tax resident in ITaly and all his taxes fall under the Italian system.   If you spend less than 183 days in Italy, you can continue to fall under the UK system on your world wide income.