Implications of becoming a resident

05/08/2011 - 19:32

 Hello all,we are to visit our house to check our renovations this month.The roof is now finished and the outer wall plaster removed to expose the stonework,the photos our geometra has sent look fantastic and during our visit he will take us to the town hall to apply for residency.This he advised, to reduce our tax bill on the house purchase,you have 18months to apply from signing with the notary.We would like to ask the forum what if any are the implications of becoming a resident?



"what if any are the implications of becoming a resident?" Two immediately Spring to mind;-

  1. Living in Italy for at least 6 months a year
  2. Paying Italian Taxes, including Income Tax - but avoiding ICI

But at least you'll be able to buy a car without too many problems

i do not believe you have to live in Italy for the six months the reallity is that you have to be able to live there long enough for the vist from the comune to be assured that you are actually living there on that day and thats the end of the checking.. resident or not if you own a property here you have to pay tax and are part of the italian tax system.. benefits of residency include the prima casa reduction on purchase but means as well that if you sell before five yeras there are implications regarding repaying the tax difference and i would presume ICI might be involved..  the right to healthcare .. via the Italian system, reduced vat on the cost of your restoration... cheaper services.. an accountant will explain it better i am sure but your residency is not in one sense a fiscal change of your domicile and to be honest if you wish to you can move residency as and when you arrive and leave..if its a worry.. italians with second homes and generally in retiremnet that spend their lives in two properties move their residency all the time backwards and forwards.. which then has implications re things like tarsu.. the rubbish tax.. ie if you are not occupying the house it should be cheaper .. so to my mind its a good thing to obtain straight away .. and then forget it almost.. hand over your yearly tax decleration that you make to an italian bookeeper.. and i would think if you pay tax in the UK it will not be double taxed here .. and it will be relatively simple to be sorted.. however am willing to be told differentley by someone that has got stuck by a six month rule which to be honest i have never heard of..

adriatica..................however am willing to be told differentley by someone that has got stuck by a six month rule which to be honest i have never heard of.......... This is indeed not correct, you can get residency much quicker than this (as I did), the taxes that you mention are also in line with my understanding............ S

As part of the application for residency you will be required to submit evidence of healthcare provision. If you are intending to live permanently in Italy, you can opt out of the UK NHS and transfer into the Italian system, or you can take out a fairly basic private health policy. Either of these options is OK to get residency. If you opt out of the NHS you are no longer eligible for routine healthcare on the NHS whenever you are in the UK. You would still get emergency treatment on the NHS via the EHIC card (issued to you by the Italian health service) in the same way as you presently are covered for similar healthcare in Italy or anywhere else in Europe via the UK issued EHIC. In other words, you trade the UK system for the Italian system. A complication lies in that the UK system is "residency-based", which is variously interpreted as merely owning a house in UK in which you reside for part of the time, or as spending more than 6 months there each year. If you don't qualify under these rules, you must opt out of the NHS. However, a further complication is that the UK tax authorities claim that you are tax-resident in the UK if you spend more than 90 days there. Whether this also counts as residency for NHS purposes, nobody seems to know. And if you interpret it all incorrectly, it's probably not a hanging offence smiley.  Terry

I'm a bit confused as to how you are going to save any substantial amount of money on your 'house tax', since it sounds to me as if you have already bought the house. Perhaps you paid the 'prima casa' tax rate when you bought it, (rather than telling the notaio it was seconda casa), in which case you are obliged to become resident (within 18 months of purchase, in the comune where the house is located - not necessarily in your own house) or to pay the difference - which amounts to something like 7% of whatever basis the charge was calculated. That's not quite as daft or vague a comment as it first appears, there are frquently various options available to you at the time of the atto. If you do not intend to live in Italy on a more or less permanent basis then I wouldn't involve myself with residency. If you are going to move permanently then you will find it a convenience (though not greatly advantageous, financially, apart from the prima casa tax rate). As far as I am aware the IVA on almost all building works of reconstruction are the same for residents and non residents. It's a different issue of the house is regarded as 'new build'.

Thanks for all the comments,Our house Fillide is an old farmhouse which we have bought and yes it was the prima casa tax we paid.Our deeds from the notary state that it is a requirement to apply for residency up to 18months.Another factor we are told is being able to open a bank account in Italy.We did not intend to live in Italy on a permanent basis,but to use the house a few months each year.We will have a few questions to ask our geometra from what you advise.Just thought it will be another year at least before the house is fully habitable,what happens now?

Am I getting the impression here that you are not going to be able to 'move in' within eighteen months from the date you purchased because the restoration has taken longer than you anticipated? And at the same time that you are not going to be 'genuinely' aka permanently resident even when the house is finished? In this case, I'd just bite the bullet and pay back the difference between the lower tax rate you paid on purchase as prima casa and the seconda casa rate. If you carefully peruse the fattura which the notaio probably provided you with after the atto you should be able to determine the amount which you paid, (ignore the onorario and most of the other charges), then slightly more than double that amount - if you can face paying that amount then you don't need to concern yourself any more with residency. But ask your geometra - there could be other implications which have not occurred to me. Remember, however, that the default 'Italian' advice will be to 'evade' tax at all costs, which is not always the most appropriate advice for a non Italian! Unless it is essential for you to have a resident Italian bank account (possibly if you have a mutuo/mortgage it is essential) it's not necessarily economical to have such an account. Most utiilities etc can be coped with on a UK credit card, and any cash transactions are cheaper just to buy Euro in Sainsbury or whatever than bear the charges of running even a resident Italian account.

In reply to by Fillide

Hi Fillide,we still have time to back out of residency our 18months end is Jan2012.You are probably correct that the house will not be finished in time.These are questions we will ask our geometra on our visit next week.It is also not essential for us to have a bank account and we also have heard of the high charges from the banks.We were told that maybe you could pay bills through the post office?What Chrisnotten says about who your geometra knows in your commune,again we must ask the questions.It does seem strange that one commune area can be so different to another!When we get our answers from our geometra next week,thinking even now that its maybe not worth all the problems that we may have to be a resident (the tax saved is not a large amount) it was the "Italian" advice to "evade"tax at all costs,from our geometra,just the way you describe Fillide.Thanks again Atessa.

Is it possible to simultaneously have residency status in both the UK and Italy if one spends approximately half the year in both countries?  Is any official "tally" kept of how many days in total per year one spends in either place?  I currently frequently go back and forth between both and truly do not know where I will spend more time in any given year. 

If it is going to save you a lot of money & your geometra can arrange things easily for you then then the advantages probably outweigh any disadvantages. You may find however that there might be a couple of obstacles put in your way by the commune. This really depends on the local interpretation of the rules & who your geometre knows there. From what I hear, if you were in Ascoli Piceno then you might be advised to run away nowfrown but in your area perhaps things are a little more "arrangeable".

  1. You may find that you need an address in the commune where you can be inspected. This usually goes away once they realise that you are not Eastern European or scarily foreign wink                           
  2. You may be asked to provide evidence of medical coverage. Sometimes a form from the DW&P in th eUK will do it, sometimes a cheap medical insurance policy certificate, If your geometre has enough pull then all this can be "overlooked" too.                                                                                  
  3. You will probably have to show that you have some money in the bank so bring a few copies of bank statements or savings. I had already opened an Italian bank account when I applied & that was enough for my commune.

You will not lose any NHS privileges unless you tell the DW&P that you are leaving the country to reside elsewhere. There are a number of strategies to avoid this even if you do, but you probably won't need to worry about this. I would go for it only if it will save you a reasonable amount. Useful thread here: I have My Residency, Carta d'identita, Attestazione di regolarità per i cittadini dell'Unione Europea, Tessera Sanitaria etc. all in place now but it took some arranging!

In reply to by chrisnotton

Hi chrisnotton, You seem to have covered most of the angles, the only thing that (I know) that you didn't mention was the driving licence, I was under the impression that this was a 'requirement' ? S

"Another factor we are told is being able to open a bank account in Italy" Unless things have changed [and I'm pretty certain they haven't] - you don't need residency to open a bank account.  I opened mine [with the help of my estate agent] before I owned my holiday home - used the account to pay for the house.  Now use it for Gas and Electric standing orders

I agree with Alan in that you don't need residency to open a bank account.  We did exactly the same thing - opened a bank account with a local Italian bank, transferred the money from England for our apartment and now use it for direct debits to pay the gas and electricity bills. I have to say, this was in 2005, so not completely up to date...

Actually I find having residency rather nice as producing your carta d'identita occasionally is quite satisfying and being as one with your neighbours down to paying for your rubbish removal is part of my communal responsibility. There are of course other legal thingys which are nice to have. As for residing for 6 months minimum nobody seems to check. However after residing here for 7 years we had a visit from 2 nice carabinieri blokes to check our documents (carte) and we had to show proof we were paying our electricity bills. They then departed declaring everything to be perfetto.

".... and being as one with your neighbours down to paying for your rubbish removal is part of my communal responsibility. ....." As a non resident, I also pay for my [wonderful] rubbish collection service  [if only the UK one was as efficient, and as cheap"

Ok here we go - but not chronologically....  As a non resident you pay rubbish tax, but less than a resident - the comune thinks that you dont live in the house all year, so you pay less TARSU as you have less rubbish to collect, but instead you pay ICI.   Bank accounts: some banks will not let you open a nonresident account, but some banks will.  They cost noticeably more than a residents account and you cannot have some of the perks. Prima Casa:  If you are resident in Italy the law assumes you spend more than 183 days a year here and it is your taxable address for all your worlwide income. You cannot be fiscally resident in more than one country, unless you have a very clever accountant to whom you pay wods of dosh.   By being resident in Italy, you lose the NHS benefits, as to the UK you live here, and pay into the system here and not in the UK.  In your case, your house wont be finished, but you claimed prima casa on the purchase.  the difference in tax between your prima casa and seconda casa on a ruin which you have done up will be minimal, and it would be worth paying back the Tax office what you saved.  They will find you if you dont.   OTOH it may be that you geometra is suggesting youtake your residency for the tax benefits of the reconstruction that a prima casa would bring.  Obviously if you wont be paying income tax in Italy there is no tax benefit, but usually an Italian doesnt see it like this.