British expats living in Italy face new rules about declaring their offshore assets to the local tax authorities.
But the rules seem an unnecessary and pointless administrative burden as no tax will be due on the assets in Italy, regardless of their value or income they generate.
Currently, all Italian residents have to declare any offshore assets valued at more than £8,400 or 10,000 euros.
Now, the government is scrapping that threshold, making the reporting of all overseas assets a requirement with filing an annual tax return on September 30.
British expats with bank accounts outside the country that may only hold a few pence not have to tell the Italian tax authorities about all their financial assets worldwide.
Severe fines
Failing to comply with the new laws will lead to severe fines.
The tax authority wants all expats – and Italians – with offshore interests to list them on a foreign asset reporting form as part of their tax return.
Expats who are tax resident must also detail any cash or investment transfers in or out of the country.
Until now, the reporting limit on these transfers was set at the same £8,400 level as the foreign asset declaration threshold.
This could mean that British expats with Qualifying Recognised Overseas Pension Schemes may have to report details of their retirement savings to the Italian authorities as well as HM Revenue and Customs in the UK.
However, this requirement will not become clear until legislation clarifying the requirements is published.
IMU axed
However, although the tax administration burden is increasing for expats in Italy, IMU, or the municipal real estate tax, is axed after this year. The IMU is not gone for good, though, but will come back in some shape or form next year as a property service tax, expected to resemble the UK Council Tax.
The advantage should be that all local authority charges are consolidated into one tax bill.
Like Council Tax, the government will set a national rate to which local authorities can add a levy.
Expats need to watch the progress of the service tax as the current draft switches payments under the scrapped IMU paid by an employer to the home occupier.
Tenants only pay rent, condominium charges and a fee for rubbish collection at the moment.
If the draft becomes law, failing to pay the new service charge will result in a fine for property owners or occupiers.
