New Zealand QROPS and why we don't advise them

The New Zealand based QROPS became a favourable option for some when it transpired that their regulatory framework for non NZ residents  gave you the option to 'bust' (as it was termed) your UK pension and enable you to access all the money in the pension as a lump sum.  

This clearly contravened the intentions of QROPS and in April 2012 HMRC in the UK closed that option down.

Why we are now in regola!

This blog has morphed into something much more profound than I ever intended and the subject of taxation has become one of its biggest topics, with no intention whatsoever.  However, I am acutely aware that the opinions expressed on this blog are my own, aside from the basic facts.  

It came to me that maybe I am not the best person to express this information and that my clients and people I meet would be better communicators of the dangers, opportunities and pitfalls to be aware of from an Italian resident/tax position.   I therefore asked a few of these people I know to write about their financial experiences of living in Italy. 

My first article is by a lady and her husband in Umbria, who were happy to share their experiences of the Guardia di Finanza, how they got caught,  and a little more.......

Residency in Italy

Residency is one of those topics which is regularly used to try to determine where an individual may or may not be located for tax purposes.  The fact of the matter is that it is actually a matter of fact and not a choice.

Here are the facts as determined by Section 2 of the Italian Income Tax Code:

Setting a business up in Italy.

Over the last few months I have been contacted by a number of people operating businesses in Italy in varying capacities.  In a few of these cases it has been common place that the individuals concerned have set up and are operating their company in another lower tax jurisdiction within Europe, namely Ireland or the UK.

It's time to save some tax in Italy!

With all the talk of the last 6 months about which extra taxes we need to pay in Italy and the different assets that are now taxed, both home and abroad, I thought it was about time that we started to fight back.  

Why 2013 might be unlucky for some!

Why the number 13 (2013) might be unlucky, not just for some, but for all of us.  And how to prepare for the worst.

The Italian pensioners tax allowance, that isn't.

Recently I have been having discussions with people about the supposed tax free allowance of €7500 for pensioners resident in Italy.  The problem is that this is an allowance that is not an allowance.

In fact it is nothing of the sort.  It is actually a tax credit

Setting up a business in Italy

Dear Readers,

I was recently contacted by a lady who has got into very big trouble for operating a business from the UK when her main centre of business activity was in Italy.  She explained that she had taken advice from many people (including verbal confirmation from the Guardia di Finanza) who all advised her incorrectly about how to set up a business correctly in Italy.  Below is an extract which she asked if I would communicate to the wider Expat community in Italy to try and avoid it happening to others.

We should blame Germany for the crisis!

It seems to me that the European crisis has just bounced from one bit of bad news to another all summer.  If the heat wasn't enough the failure of politicians to make any effective decisions had become equally tiresome. 

However, no sooner had the start of September come around than the newspapers started opining about the fate of Europe once again.  So I thought, let's take a slightly different view on who is to blame in Europe.  The Greeks, Italians and Spanish are taking the brunt of the negativity.  But, Germany has a very big part to play in the way this crisis has evolved. 

Greece will leave the Euro within months

A very interesting video from the BBC with Roger Bootle on the continued prospect of Greece exiting the Euro by the end of 2012.

http://www.bbc.co.uk/news/business-18727928

The tax man catches up

I recently heard that there were some Guardia di Finanza raids on stranieri across the country.  

I have been warning for while that stranieri are really quite easy to find.  The most obvious clue for the tax authorities is that someone has bought a house, taken residence (or not), and there are NO sources of income registered at the Agenzia della Entrate.  

Any income, whether sourced in another country and tax paid in that country, rental income from properties, investment income from offshore territories or otherwise, should be reported to the Italian authorities and assessed for Italian tax.  If not, then you are deemed to be deliberately misleading them.  Penalties and fines come next. 

Don't be the next to get caught in the act. 

Foreign Owned Asset Tax for Italian Residents

My meetings with expats around Italy are becoming increasingly alarming due to the general confusion in the expat community in relation to the taxes specifically on overseas property and assets.  (IMU is already well publicised so I will not recover that ground).  

Who is expected to pay the new taxes?

Anyone who is tax resident in Italy and who has a house and/or financial assets overseas. You are included if in any tax year you were either signed up as resident with your Comune OR living in Italy for more than 180 days, OR the centre of your business and domestic activities was Italy (in other words, you earned income in Italy and/or your family lived here).

You think its only Italy, think again

PORTUGUESE TAX HIKES

In line with several other countries in Europe facing significant fiscal deficits after the
financial crisis, Portugal has introduced a number of tax increases which particularly
affect the more affluent parts of the country’s population, including expatriates
resident there.

My income is rising, when all else falls...how?

Yesterday I read an article in the Guardian newspaper entitled 'UK companies pay record £18.8bn dividends. 

This information on its own means very little but further into the article it explains that UK firms increased their dividends by 25% on 2011.  That is the equivalent of my salary increasing 25% on last year, the interest rate on my cash account increasing by 25% last year, or even my fixed pension increasing 25% on 2011.   However, in these examples nothing of the sort happened.  

Penalties for failing to declare taxes in Italy

Following on from my previous posts about tax changes that have taken place in recent months in Italy, I thought I should follow up with the possible implications of not following the rules given that the rules are being enforced more radically then ever.  The information is care of Philip Laroma Jezzi, International tax lawyer, Via Maggio 7, 50125 Firenze (FI).

An opportunity to meet and talk with the Spectrum IFA Group ITALY and HSBC Global Asset Management

BRINGING EXPERTS TO EXPATS IN ITALY

Following the success of the ‘Bringing Experts to Expats seminars’ across Europe, The Spectrum IFA Group are returning to Tuscany and Umbria in April 2012

·        Have you seen the interest on your savings fall in recent years?

· Can you purchase less than 5 years ago with the same income?

· Are you subject to increased taxes on your assets and earnings?

· Do the recent Italian tax evasion measures have you wondering if you are doing the

right thing?

The global financial crisis is now in its 4th year and there could be further shocks to

come. Government response has been to raise taxes and freeze pensions and incomes

in an effort to alleviate public finances.

However, in the midst of the crisis, we are helping our clients increase their incomes,save taxes, save bank charges and build their capital to provide protection for them and their families.

We will be hosting 'FREE' informal question and answer lunches from 12pm on the 26^th April at the Hotel Carignano, Lucca - Tuscany and from 12pm on the 27^th April at the ristorante Monnalisa in Castiglione Del Lago. Umbria.

This is your invitation to join us for a FREE lunch, ask questions, such as ‘what is the

economic outlook for Italy and the rest of Europe?’, ‘does offshore still exist?’, ‘how can I can increase my income and reduce my taxes’ and ‘how can the Spectrum IFA group help me?’

Our speakers will be the manager of the Italy branch, Mr. Gareth Horsfall, the Chairman of the Spectrum IFA Group, Mr. Michael Lodhi and Mr. Mark Newsam from HSBC Global Asset Management.


If you would like to attend this 'FREE' lunch then you can contact us on +39 3336492356 or email gareth.horsfall@spectrum-ifa.com to reserve a place.  Due to limited availability please book early to reserve a place. 


We look forward to hearing from you. 

Are final salary /defined benefit pension schemes really safe?

It is commonly thought that a final salary pension scheme (otherwise known as a defined benefit scheme) is the solution to all our retirement needs because of the guaranteed benefits it provides when you reach pensionable age.

The tax efficiency of a Life Assurance Investment Bond in Italy

Following on from a previous post about the tax efficiency of Life Assurance Investment Bonds in Italy, I thought that I would provide an example of the potential tax savings.  This is quite a mathematical blog post but one which I hope you will be able to follow:

For ease of understanding I will do a comparison:

Let's assume you have a diversified portfolio of assets to the value of €100,000 (either in Italy or in another country)

Blackrock calls for longer Term Investment

Asset management giant BlackRock today unveiled a high-profile campaign designed to engender a longer-term global investment culture.

“Investing for a New World”, which was launched with a four-page insert in global newspapers including the Financial Times, seeks to encourage investors to build “more dynamic and diverse” portfolios, with the aim of overcoming low yields and volatile markets.

Tax efficient investments for Expats in Italy

After living in Italy for many years, I have started to understand a few of the more Italian ways of life.  There is no need to write about food, drink, beach, mountains when it can be written about so beautifully by others.  However, my personal favorite ( surprise surprise), is the Italian pastime of avoiding taxes.  I am sure that you are aware that there is a fine line between tax evasion and tax avoidance and therefore I don't think I need to state the difference between the two.

Well fortunately, for we expats, who never quite get to grips with the fancy tax avoidance schemes for the Italians,  we are fortunate enough to have access to an English language Italian compliant tax efficient scheme all of our own.  The International Life Assurance Investment Bond.

Property abroad comes under the tax spotlight

The Italian Government have now taken steps to tax Italian residents on the property that they own abroad.  

Spectrum IFA Group open for business in Italy

At the start of 2012 an article was written in the International Adviser magazine, a professional press publication, on the expansion of the Spectrum IFA group into Italy.    I was interviewed by the journalist for comments on how and why the Italian Expat market had remained so difficult  to reach out to in the past and what we are doing to increase our visibility amongst the International community in Italy.


If you are interested in reading the article then click the link below:

The Spectrum IFA Group launch in Italy

Tax Evaders - Look Out !

The Italian tax authorities have just come to an agreement with the government that Comuni will have the power to report suspected tax evaders and receive a hefty portion of any amounts that are recovered as a result.

The Comuni already have this power, but little incentive to use it as the amount recoverable is only 30%. In fact, to date, only the Comune di Genova has taken advantage. This percentage will be raised to 100% for the next three years – as an additional incentive, especially at a time when local coffers are being diminished due to central government cuts.  The tax take will subsequently fall back, from 2015 onwards, to 50%.

Some encouraging news for US Expats in Italy

US authorities have agreed to pursue an intergovernmental framework with a number of European countries for the implementation of tax rules that is expected to lighten the regulatory burden for fund managers, experts say. The US, France, Germany, Italy, Spain and the UK has published a joint statement that sets out a common approach to combat tax evasion, where firms would report information on foreign taxpayers to their local authorities rather than directly to the US authorities.  The Foreign Account Tax Compliant Act (Fatca) originally required foreign funds to enter into an agreement with the IRS or otherwise face hefty tax penalties. Under the new proposals, firms in Fatca-partnering countries will not have to enter into a detailed agreement with the IRS, but only "register" with the tax authority.

The Foreign Account Tax Compliance Act,  (FATCA) a US law passed in 2010 that targets tax dodgers using foreign accounts, had originally required overseas financial institutions to provide information directly to the IRS, potentially in breach of their home countries' privacy laws. Those that did not comply faced, among other penalties, a 30% withholding tax on payments received from the US.


This might open up the road for European companies to start doing business with US citizens resident in foreign countries, once again.

UK Quantitative Easing and Inflation

The Bank of England is expected to launch the sixth round of quantitative easing this week. This is likely to take the total of its money-creation programme to a minimum of £325billion, the equivalent of more than 22% of GDP. This figure means that for every £1 in £5 that the nation earns, the Bank has conjured £1 out of thin air. 


As the old saying goes, 'for every reaction there is an equal and opposite reaction'.  Hold onto your purses, inflation is coming and it is not going to be pretty.  For those who lived through the 70's double digit inflation, the future might not look too dis-similar. 


Inflation is just another tax dressed up as something different. 

The Spanish tax man

You might be thinking, what on earth could the Spanish tax man have to do with the Italian tax man and the relevance to you.

Well, very simply it is a fact that 300,000 letters were recently sent by the Spanish tax authorities ( The Hacienda), to expats living in Spain.  Each expat was listed with the land registry as having a permanent residence in Spain.  The only issue is that the Hacienda could not find any record of a tax declaration of income.

What went well in 2011?

As we look back on 2011, let's do so with a little bit of investing fun and games.  Write the following assets down on a piece of paper and then mark which of these you think performed better than the others in 2011 (to date): 

Shares (Globally):
Cash in the bank
Global Corporate Bonds
Commercial Property
Residential property prices
Industrial metals
Food commodities
Gold
Silver
Government Bonds

There are 11 options.  List them down and write 1 - 11 (1 being the best performer and 11 being the worst performing in 2011, to date)  And then compare your answers with the correct answers below:

How to cope with investment stress in 2012

The overly excitable press have already started their deluge of drivel about the precarious situation in Greece, the sale of Italian Bonds, the downgrade of most European sovereign bonds, slowdown in Chinese exports, pick up in US job figures...and the list goes on.

How can I possibly fit into this melee and write something remotely interesting?  Well, over the Christmas period I have been thinking about my e-zine.  In 2012 I am going to concentrate a little more on tax issues (I think these are going to become more relevant in Italy in 2012, with ‘Monti’s Manovra’).  In addition to that I am going to add in some general financial planning info, financial housekeeping tips and more updates on investments.