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.......

WHY WE ARE NOW IN REGOLA!

Why? Because we were caught by the Agenzia Entrate, that's why.  We don't know whether they were just fishing, or had accessed the UK  Inland Revenue's data base about us, as they can do under EU Law.  Either way, the letter enquiring about our UK letting properties arrived all the same.  As Non-Residents at that time we had assumed that our UK holdings were nothing to do with them.  WRONG.  We should have submitted an Italian Tax Return including this information, and this ommission cost us dearly.  The fine for non-declaration was equal to the amount of tax we found out we owed - a large 5 figure sum.  We also discovered that it is the Tax Authorities who decide the issue of Residency, not the individual, and we had been declared residents behind our backs.

When I bemoaned our fate to our Milanese friend, she asked about our other assets - the usual Shares, Bank and Building Society Accounts - she was horrified.  "Don't you have any Life Insurance?"  Of course we have Life Assurance, but as we struggled with the terminology (never mind the 2 languages!) we began to realize that, in Italy, Life Insurance is not to be confused with Life Assurance as we know it in the UK.  Life Assurance is something that every Italian has, which helps them avoid (NOT evade) paying tax; it is completely legal, but, it seemed one accessed it via the Banking system.  Not wholly trusting of Banks these days perhaps, and we needed to be absolutely certain we understood what would happen to our carefully husbanded security if we invested in one of these policies.

Fortunately, a month later we attended one of Gareth's seminars, and had a light bulb moment.  Life Assurance, in Italy, is a Tax Wrapper.  One puts one's money into a policy which legally protects the investments from the Italian state from over-taxing your hard earned cash.  One can move the investments around inside the wrapper, for the best return, but only pay a reduced level of tax when money is taken out.  Forget everything you ever knew about provision for your old age in the UK.  The rules are completely different here on the Continent.  Consult the professional, he is worth his weight in gold.  

Hope you won't get caught?  We were.  Don't want to pay, so pack up and go back home?  Fine.  But remember that the Agenzia now have computers and they will follow you wherever you go for their pound of flesh.    We are all tax payers in our home countries and, therefore, sitting ducks here.  Get reliable advice whilst you can still afford the fine.  Talk to Gareth.