Since the recent exchange of information between HMRC and the Italian tax authorities on UK rental property owners, I have been asked the question whether rental income (when taxed principally in the UK) will be taxed again in Italy as an Italian resident.
Rental income from properties is dealt with according to the law of the state where the property is situated. This means that you can deduct your expenses in the UK, in entirety and in line with UK law, and then the NET income is declared to HMRC in the UK.
When it comes to the Italian tax declaration the NET UK rental income needs to be declared, along with the tax paid in the UK.
This income is put together with any other income you may have for the year, to be declared in Italy,and a credit is given for the tax already paid in the UK, and the tax is calculated on the normal IRPEF rates (income tax rates in Italy).
In short the NET UK rental income position is what needs to be declared in Italy.
Given the recent clampdown on people who are not declaring their UK rental income in Italy, as Italian residents, this information should help to ease any thoughts of having to pay tax twice.
Of course, all this applies to properties held in other countries as well and not just the UK.
The bottom line is get your affairs 'in regola' because it is unlikely to cost you any more than it would in the UK, and you can sleep easy knowing you have done the right thing.
Businesses will oftentimes benefit from obtaining business management consulting services. These services are especially advantageous to those businesses that are new to the industry. From marketing strategy development to client management to... prize bond result
ReplyDelete