'residenza' versus 'resident for tax purposes'

[lupo]

Good advice Pigro and yes, context is always a caveat. In fact I rather suspect that it's the UK who are more inclined to decide which country you do a tax return in and I think i've already decided that I need to talk to a commercialista. Still, just giving it an airing makes one feel 'less alone' as someone once said, on some other thread.

[Cassini]

The revenue in April 2008 published a new IR20 Guide to Tax for Non-residents. It is downloadable here. Essential reading for all considering residency in Italy.

http://www.hmrc.gov.uk/pdfs/ir20.pdf

[Angie and Robert]

Originally Posted by NickZ

Tax residence is covered by the tax treaty. Having pension income sort of complicates/simplfies it because pensions can have special treatment often covered under a different treat. For example military and some other government pensions are often given "special" treatment.

A third issue is pensioners have a higher no tax zone in Italy. So between that and any other tax write offs you might have no Italian taxes to pay. Home improvements and even appliance upgrades can be covered.

I seem to have got the idea from somewhere that you don't pay tax on your pension if it is under 5000 euros. Does anyone know if this is the case ? Also with married couples does this apply to both ?
Robert

[NickZ]

Do you mean in Italy?

The no tax zone for pensioner I think is higher then 5K. I want to say 6K per person. It wouldn't be just pension income but all income. But it's also a sliding scale so the higher your income the less benefit you get.

I'll see if I can find it.

[Angie and Robert]

Thanks Nick our sole and permanant home is in Italy.
A

[NickZ]

7500 under age of 75 if you've received the pension for the full year
7750 75 and above.

[bosco]

If you want to do your head in (and/or confirm the potential need for professional advice, the following is, I believe, the current double taxation agreement between Italy and the UK: The Double Taxation Relief (Taxes on Income) (Italy) Order 1990

Among its contents are, I believe, the provision that if you are a UK citizen residing in Italy and receiving a pension from the UK state or a pension derived from employment in that state, you do not have a choice about where it is to be taxed: you will be taxed in the UK. The same applies to income accruing to a UK national which is derived from property in the UK

However that does not necessarily mean you that should not complete an Italian tax form, as it is likely that few UK citizens choosing to retire in Italy will not have additional sources of income (such as interest on saving accounts, or dividends, however small) which should be taxed in Italy - and in the taxation of which Italy may need to take your full world-wide income (including pensions) into account.

Happy hunting!

[Michael J Murphy ACA]

That is not right.

Artcie 18 states: (1) Subject to the provisions of paragraph (2) of Article 19 of this Convention, pensions and other similar remuneration paid in consideration of past employment to a resident of a Contracting State and any annuity paid to such a resident shall be taxable only in that State.

Pension paid in cosideration for past employment is taxable in the state of residence only. The pension paid to "the resident of a contracting state" (so Italy) shall be taxable only in that state (so Italy).

You are also incorrect on rental income. The treaty does not restrict Italy from the right to tax rental income earned in the UK.

(1) Income derived by a resident of a Contracting State (so Italy) from immovable property (including income from agriculture or forestry) situated in the other Contracting State (UK) may be taxed in that other State.

So the UK may tax and they do. But there is nothing here that limits the right of Italy to tax. This right for Italy to tax its residents on their worldwide rental income is leglislated in Artcile 67 paragraph c letter f of the 1986 Tax code (TUIR).

The tax treaty at no point suggests that only the UK can tax. Compare this to Artcile 19 where a pension received from goverment service is only taxed in the place where the employment took place.

If rental income was only taxable in the UK, as you suggest, then Article 7 would say that rental income is only taxed in the state of source.

[JulieD]

This is unfortunately not an answer to all these questions, but I am also in the process of considering applying for residency in Italy - but cannot seem to get a clear piece of advice regarding my tax position. The last comment that has concerned me - I currently do some work (remotely) for a company in the UK and pay tax at source, whilst living in Italy. I have been advised that, if I become an Italian resident, my NI contributions will come to Italy and would therefore effect my UK state pension (having not yet qualified for the min nunber of years work to achieve basic state pension rights). Is this true ? Or can I apply for Italian residency, continue with this work (being taxed in the UK), but also enjoy the benefits of cheaper utilities in Italy. Grateful for any comments please.

[NickZ]

Residency doesn't matter. If you're working in Italy then your employment income is subject to Italian tax. That's pretty straight forward. For example consider temporary worker that stays in Italy for two months while working. That person wouldn't likely have any sort of residency but would be taxed in Italy. There are exemptions to this. Visiting sales people and other business persons for example.

The problem is are you considered to be working in Italy ? I've no idea how remote working is handled.