Penny's activity

Especially as the government has decided gas is to go up another 2% I saw today, in order to pay for 40% 'grants' for people installing solar thermal systems (I assume this means hot water rather than PV) and biomass boilers.

RAM the Inland Revenue doesn't actually state precisely what the requirements are (historically the 180 day rule applied but there have been cases of people being classed tax resident with less) but yes they will try to make you resident at the drop of a hat for obvious reasons. There is currently a consultation to compose a 'statutory definition of tax residence' which if you can't sleep one night might just help you on your way. It is a work in progress though so still no definitive answer. Rachel, if (which I suspect as lots of things work this way) the offsetting of the tax you have paid in the UK against your Italian tax bill works in the same way as my maternity pay calculations did (please don't ask me to explain the connection - I don't have the energy for several sheets of A4 to explain it all after picking olives all week ), then I'll give you an example below:

• You paid £1200 (roughly €1440) in tax in the UK for April 2012 to March 2013.
• You owe €3000 for 2012 tax year. The Italian tax authorities will divide €1440 by 12 and multiply by 9 (ie April to December) and allow you to deduct €1080 from your Italian tax bill for 2012.
• The remaining €360 will be allowable against your 2013 tax bill.

It would be a lot easier for you to apply to join the UK's 'non-resident landlord' scheme, get you rent paid without any tax deductions or payments made in the UK and just declare it here in Italy if that is where your home will actually be. It's perfectly legal in the UK as it is an Inland Revenue scheme. You'll pay no more and it will save you in accountant's fees as you'll only have to file a tax return in Italy. Honestly, unless you are talking about big money then any gains brought about by all the schemes for being out of the country to save tax will just be swallowed up by accountants' fees to sort out the complicated tax arising. As Flip said - pick a country, be resident and pay there. It will be a lot less stressful and probably cheaper in the long-run. IVIE you are stuck with as soon as you are resident in Italy.

It doesn't really work like that. Italy will consider income for any tax year to be whatever hit your bank account (or you issued a receipt for if it was in cash) between the 1st Jan and 31st December in any year. The UK will consider income to be whatever hit your bank account between 1st (roughly) April and 31st March the following year. The same applies to expenses. You will have to submit a tax return in each country respecting the tax year for each country. The problem is that becoming resident will be the trigger for the Italian state to expect you to start paying tax. Whether you spend over 180 days in Italy (this would mean between 1st Jan to 31st Dec) or not, would be down to you to prove should the taxman ever decide to send you a bill for a period when you say you were not in Italy for more than 180 days. I suspect, although don't know for sure, that if you moved to Italy on 1st March then you would need to spend more than 150 days in Italy in that first year to be due to pay tax here. It gets complicated because the UK would consider you tax resident if you spend more than 180 days in a UK tax year (ie April to March) in the UK. I know this is a simplification of the rules but even they are not clearcut. Whether you earn or not in Italy is irrelevant. It is where you are tax resident that is relevant when it comes to paying tax on your worldwide income. You are not subjected to double-taxation! You are being asked to pay at the Italian rate and under the Italian rules which just happen to mean you will pay more. You are not paying twice, as any money you have paid in the UK can be deducted from your tax bill in Italy. NB - I am ignoring accrual accounting as it is unlikely to apply to you in case anyone is feeling pedantic.

Not encouraging them at all. It's just what we had to do. Either that or upgrade all the electrics in a rental flat.

Do you mean they come with 3 prong plugs? Just cut the middle one off or rewire the house :-)

Yes, you need to make the december figure an adjusted figure so if the annual cost is now 792 and you have already paid 588 then you should pay the difference.

Of course - tell them I recommended them to you.

We get bitten like mad but our next door neighbour says she doesn't get any and puts it down to the big fish tank in the living room. She reckons they eat the mossies. No idea if it's true!

Hmmm 'benefits'. I would be fascinated to know what they are in Italy. No unemployment unless you are a dipendente, no child benefit, no free prescriptions, no housing benefit, tax deductions now capped at €3,000p.a. I can't think of anything you can get here other than the pension when you retire. Or maybe they are like my maternity pay (approx €500 a month for 5 months - before tax) which arrived split over 2 years, all after I had returned to work, and the last of which was paid when my daughter was 18 months old. Believe me, Italian benefits are rather different to UK ones and do not feel like a very good return on investment for such high contributions!

I read an article on one of the Italian finance sites (sorry can't remember which one as at the time I was looking at so many) that basically said unless you earn over €14,000 the 21% scheme I mentioned was the most tax efficient. They had done the calculations to see at what point you lost the benefit of it and were better off declaring it as a business and being allowed to deduct some expenses. The advantage also of the 21% scheme is that it does not attract INPS contributions (another 26% tax) nor does it count towards income for other calculations. For example I am a registered farmer who cannot earn more than 50% of my income from sources other than farming which presents a problem if my rental income was declared as a business. Under this scheme it is not, so I am still free to earn a little other income. Things are very regulated here. Another example: my husband had a mountain biking business renting bikes and doing day tours for tourists. This made him a commerciante (same category as a shop-keeper which meant minimum INPS contribution of over €3000 each year whether hereceieved a penny or not). If he wanted to repair bikes however he would have to register as an artigianale (craftsman) and pay the artigianale INPS too - another €3000+. In fact as no-one in their right mind would  ever do that, we never got a definitive answer on whether that was even possible! The tax burden in Italy is much higher than we are used to in the UK so I am afraid you will probably have to redo your calculations.