Bitcoin is exploding again!

 

Bitcoin is exploding again! What is it and should you buy it?  Bitcoin is a cryptocurrency. No physical coins exist, only balances kept on a public ledger which everyone has access to. There are only 18,628,050 Bitcoins in circulation and the maximum number that ever existed/exist is 21 million. The difference between those in circulation and those that ever existed are the Bitcoins which have been lost and which can be mined.  The blockchain Bitcoin uses a technology called blockchain for its security and transparency of transactions and it is why it is being watched carefully by governments around the world as a potential future currency.  I won't try and explain the blockchain, as I really don't understand it myself fully, but what we can say is that it could be a good way for governments to introduce a currency where every coin's movement is recorded and monitored and which governments could access, should they need to, as a way to effectively remove the issue of tax evasion as discussed above.  Should you buy Bitcoin?  You may have seen on the news that Bitcoin is reaching new price heights again in the last month and there appears to be renewed interest in it as a potential investment. Firstly, you should know that Bitcoin is an unregulated investment, so should you lose your Bitcoins (lose your access codes) then you will have no protection from a regulatory authority to get them back. In addition, Bitcoin appears to go through these periods when its price goes stratospheric (let's call this what it is: speculation) followed by a complete slump in price which follows shortly afterwards.  My simple advice would be, if you are keen on buying Bitcoin, then wait for the next slump and don't buy in at today's prices. A slump will come although I can't tell you when. That would seem to be the most sensible point to purchase Bitcoin and then hold.   How much should you invest?  I think the safest answer to that question is however much you can afford to lose. For transparency purposes, I bought Bitcoin a few years ago, and invested a 'very' small amount, which has performed exceptionally well, but it was an amount which I could lose forever should the worst happen.  Bitcoin or Bitcoin cash?  There are now many different cryptocurrencies out there, and I can't comment on any other than Bitcoin and Bitcoin cash, since I know little to nothing about the others.  There is an alternative to Bitcoin, called Bitcoin cash. The main difference is that Bitcoin cash was created to get around the problem of Bitcoin only having a finite number of cryptocurrency coins in circulation and also the time it takes to make a Bitcoin transaction.  To put this into perspective, Visa can process 150million transactions each day, or 1700 per second. Bitcoin can transact a mere 7 times per second and the more interest it attracts the longer the wait is. Hence, it is clearly not a substitute for common currency...yet. The slow rate of transaction boils down to the technology of the blockchain and the amount of data which needs to be stored against each coin (remember the whole history of the coin is registered each time a transaction is made). Bitcoin Cash was created to get round this problem by effectively reducing the length of the blockchain of information and improving transaction times. However, this comes with the risk of being less secure.    Store of value or potential future currency  All this being said, Bitcoin is being touted as a potential store of value as an asset in much the same way as Gold. There is also finite resource of gold in the world and the price swings according to demand. Bitcoin doesn't pay dividends or interest, (like gold) and can't even be made into jewellery!  Bitcoin Cash has much more potential as a mass market tradeable currency! If you feel that you need to buy Bitcoin, or any other digital currency, then the best thing is to do some research, click HERE for details, and trade in when the market collapses. Invest a small amount of money that you can afford to lose and sit tight. Who knows what will happen?    What we do know is that the Chinese government is one of the biggest miners of lost Bitcoins and that governments such as Sweden and Estonia are seriously looking at introducing their own cryptocurrencies. Cryptocurrencies are coming, and clearly have potential, just how much and what part Bitcoin will play in that evolution is anyone's guess. Maybe Italy will be the first to introduce a fully operational cryptocurrency...you heard it here first!   If you want to speak about any of these issues or would just like a general financial planning review for your life in Italy, then you can contact me on email gareth.horsfall@spectrum-ifa.com or message/call me on +393336492356

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Enter the Draghi!

 

There is nothing like a change of administration in Italy to get my fingers tapping away on my keyboard again. Almost as soon as Mario Draghi was announced as the new head of the technocrat government in Italy, then there was plenty to write about again. 

So, what is on my mind so soon after my last blog If you haven't guessed already it's the subject of tax again. 
 

Reforms afoot? 

I think for about as long as I can remember I have been writing about proposed tax reforms in Italy. I remember the tax reforms which never really saw the light of day from 2014 to 2016 when Matteo Renzi was PM of Italy. Equally I remember the flat tax plans of Salvini during his 15 months in power, which once again went nowhere.  

So, can Mario Draghi push through some well needed reforms in one of the world's most complicated tax codes, systems of deductions, detractions and incentives? Let's have a look at what is currently being discussed. 

Tax free allowance in Italy? 
Firstly, Draghi and his team want to re-structure the income tax code in Italy to make it more favourable for the mid-low income earners. They purportedly want to keep the current system of progressive tax rates (because it is fairer) but modify them to a) assist lower-mid income earners and b) also provide stimulus to workers so businesses can grow and flourish early on rather than, as is presently the case, taxing income too high, too quickly. 

The talk is that Draghi is very keen on the German model of progressive tax rates which can be seen below: 

Taxable Income for single taxpayers: 

Income Band                               Tax Rate
€0         to €9408                            0%
€9409   to €57051                         14% - 42%*
€57052 to €270500                       42%
€270502+                                      45%

* Your rate of tax in this band is determined based on your total income.
° Married and civil partnership couples are assessed together and the band levels above are doubled (not the tax rates!)
 

You will notice that the German progressive tax rates have a nil rate band, otherwise called a tax allowance, similar in structure to many other progressive tax regimes, e.g. the UK and USA.  

The nil rate band is particularly popular because it means that the first 'x' amount of income is not taxed for anyone.  Presently, Italy has a system of tax credits, which mimic the tax allowance for some people, but mean that income is still taxed, even at a lower level, and then a tax credit needs to be applied for each year.  
 

Funding the shortfall 

The big question is how does the Italian government fund this tax change, because it is a tax reduction for most people. They will purportedly do it in 3 ways: 

SIMPLIFYING A COMPLEX SYSTEM

It is assumed that the currently complex system of deductions, detractions and bonuses/credits etc will be overhauled and that a number of them will be pulled altogether or simplified. Personally, I am in favour of simplification. The current system is far too complicated and I often find that people have not applied for, or haven't deducted expenses for certain benefits to which they are entitled, but no one has informed them (a.k.a. their commercialista). Hence a simplified tax code would likely benefit more people who need it.  
 

PROPERTY TAXES

This is always a sensitive subject for political parties in Italy but one of Draghi's ideas is to reintroduce the idea of a tax on the Prima Casa: IMU. I am sceptical as to whether he would get that through because it is such a political hot potato in Italy, but it is being thrown about as an option. However, the other idea is to review and revise the system of valore catastale. This value, which is used for a number of taxes (see below), has not been revised for many years and so is usually a value which can diverge widely from the true market value of a property.   

A revision to bring the valore catastale and the market value of a property more in line with each other would be a clear increase in taxation and would increase the following imposte:

Successione:              

The tax  calculated on a property in Italy on death (succession or inheritance).
Donazione:                 

Calculated in the same way as the above, but rather than the tax paid on death, it is paid when a property is donated during the life of an individual. 
Imposta di Registro:  

The tax paid to register the atto when a property is bought.
Imposta Ipotecaria:    

Tax paid when a property is re-registered. 
Imposta Catastale:     

Similar to the imposta ipotecaria for a transfer of a property into another's ownership. 

(All the above are calculated using the valore catastale as their base value, with various coefficients applied to arrive at the correct taxation). 
 

Most of the taxes listed above are for one off events, such as purchase or re-registration of a property. The valore catastale would also affect the ongoing taxes for property owners which are payable each year, namely: 

TARI:  The refuse tax
IMU:  The tax on second properties (currently!) 

FLAT TAX REGIMES

One last tax reform could be the possibility of bringing a stop to various flat tax regimes.  Currently, Italy offers a range of flat tax offers to various categories of people.  The ones that mainly affect my clients are:

1. The regime forfettario flat tax regime of 15% taxation on incomes up to €65000pa.
2. The 7% pensionati flat tax is the offer of a 7% taxation for a period of 10 years for anyone who is taking a pension income and takes up residence in a southern state in a comune with less than 20000 registered abitanti.
3. The €100000 per annum for 15 years, flat tax regime, to attract the wealthy to transfer their residency in Italy.

If the noises that are currently being heard are correct, then Mario Draghi is not a great fan of flat tax regimes and he may look to overhaul the system with these in mind.

CLAMPING DOWN ON TAX EVASION 

The third, and more important way that Draghi is proposing to raise tax revenue, without raising taxes on the most needy, is to clamp down on tax evasion.

The Common Reporting Standard 

Apart from the usual issue of payment in cash in Italy which is beyond the scope of my E-zine, the main thing to note about the tracking down of undisclosed financial information, particularly abroad, is the 2016 Common Reporting Standard. This is a multilateral agreement between almost all countries in the world, to share financial information with one another based on the residency of any individual and not the location where an asset is held.   
 

 

In Italy, it is evident that it is in full force and I have seen, on a number of occasions, that it works seamlessly.  
 

 

Not a week goes by when I am not contacted by someone who has assets reported incorrectly or have failed to declare them in Italy. In many cases it is done unintentionally, but the tax code does not make exceptions for the unintentional or 'I didn't know I had to do it'. The question I am asked is 'will they be able to find out?' and my response is always 'I think we can assume that they know, and if they haven't contacted you then it is their choice not to do so rather than a question of them not knowing'.  

Low hanging fruit

Given that Draghi is stating that he wants to go after undeclared assets, then I would suggest that based on the multilateral share of tax and financial information agreements, undeclared or incorrectly declared assets will be low hanging fruit for the Agenzia delle Entrate and easy pickings. So, as I reported in my previous  E-zine:
 

'If in doubt, declare the account'
(and your income/assets/gains too)

Tax savings for most 

I am regularly accused of being a bit of a doomsayer on my E-zine but I am only trying to report the information and we mustn't forget that should these tax reforms proposed by Draghi and his team then it would most likely mean a net reduction in tax for most people. By how much, we will have to wait and see. 

The bigger question is to what extent the proposed reforms will gain parliamentary approval and to what degree they will be watered down. I am naturally pessimistic when it comes to this particular point, but I have been surprised by the actions that Italy has taken on a few occasions in the past. The most recent of course, was the decision to go into hard lockdown at this time last year due to the spread of the virus. Italy was viewed as a leper by most other nations around the world, but the decision was quickly replicated and acknowledged by other nations as the best and most sensible option at the time. 

If you want to speak about any of these issues or would just like a general financial planning review for your life in Italy, then you can contact me on email gareth.horsfall@spectrum-ifa.com or message/call me on +393336492356

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OFFSHORE TERRITORIES AND AGENZIE DELLE ENTRATE

 

UK Offshore territories For anyone holding money in the UK offshore territories: Jersey, Guernsey, Isle of Man, British Virgin Islands, Cayman Islands etc,  you should be aware that the EU voted to put these territories back on the EU black list as of the 1st February 2021.     https://www.theguardian.com/world/2021/jan/22/meps-vote-to-add-channel-and-british-virgin-islands-to-tax-haven-blacklist I suspected that this would be the case once the UK lost its protected status in Brussels and these territories, which depend on the UK, have been now put back on the EU's black list.  Essentially this means that they do not share adequate financial information and lack sufficient fiscal transparency. By keeping arrangements in these jurisidctions you will be subjecting yourself to punitive tax rates as a resident in Italy.  If in any doubt then you can always contact me on +39 3336492356 or on email gareth.horsfall@spectrum-ifa.com Letters from the Agenzia delle Entrate  Someone forwarded me a forum discussion chat the other day which was discussing the fact that British citizens around Italy were receiving letters from the Agenzia delle Entrate and being targeted in a campaign  for undeclared finances.  Firstly, I should say that I do not have any insight into what the Agenzia delle Entrate (AdE) is doing or thinking, but can only hypothese based on past experience.  One thing I think it is fair to say is that I don't think that the AdE is actually targeting British citizens living in Italy as a result of Brexit.   What is more likely the case is that the AdE are doing what they do most years, at the start of the year, and send out standardised letters to foreign citizens resident in Italy with the hope that they will pick up somebody who has undeclared income/assets and/or gains.  I myself have received 2 of these letters in the past.  The first proved to be a mistake, the second however, put me in such a panic that I went back over my finances for the previous year with a fine toothcomb and realised I had mistakenly failed to declare a small dividend payment in the UK,  but it should be said that there was no mention of this error on their letter.  The letter itself was a standard letter merely saying that as a result of information gained from the exchange of information between tax authorities, it was 'believed' that I may have undeclared assets/incomes and/or gains and that I needed to regualrise my affairs. It was enough to make me look back over everything and get everything 'in regola' .  I know that in the last few years the Italian authorities have become more sophisticated with the information that they have received and so should you receive a letter with specific figures mentioned, then I think it is fair to say that you have been caught and you will have to provide the information requested. It would also make sense to get a commercialista to help submit the information and negotiate with them on your behalf, if required.  However, if you receive the generic letter  then it could just be that they are on a 'fishing' mission.   Setting a cat amongst the pigeons, pick one off and the rest become so much more wary. In my opinion, any letter from the Agenzia delle Entrate should not be ignored.   It could certainly be the case that they are party to information which has been shared by tax authorities in other countries where you hold assets and so to ignore such a communication could land you in very hot water indeed.   My simple message for anyone, to prevent ever receiving a letter from the Agenzia delle Entrate is    'If in doubt, declare the account'  (And don't forget your other worldwide assets/gains and income too)   Imposte and Tasse Do you know the difference bettwen your 'imposte' and your 'tasse'?'. In English they are both taxes, but in Italian they have different meanings and so it is probably a good idea to understand what the difference is.  Tasse are taxes which are collected to fund a specific part of the Italian state. A good example is TARI (Tariffa sui Rifuiti) or even airport taxes. They are collected for the purpose of funding a specific part of the Italian state infrastructure.  Imposte,on the other hand, are generic taxes which are charged but which have no specific objective in mind, other than to fund the ongoing cost of the Italian state. These would include things like IRPEF (income taxes) IVAFE (wealth taxes) and IVIE (a tax on property).   So, the next time you have a chat with your commercialista, or  when you are chatting in the bar about how much we have to pay in taxes in Italy, you can make sure that you use the right terminology for the correct type of of tax!

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There is a new technocrat government in Italy!

 

I thought I would write about the colour yellow in this E-zine. 

I never knew how much I liked the colour yellow. It had never really come on my radar until Lazio moved into 'zona gialla' again on the 1st February. 

This lockdown has been quite challenging in many ways but it has really made me appreciate the small things which enrich our daily/weekly/monthly lives and break the daily monotony. For me, it's those meals out with family, friends and clients, those mid-week trips to the cinema to see a film that has been newly released or a special theatre trip because some performing artists are in town.  And I have to admit (I never thought I would ever write this) that I actually miss those kids parties when the parents lurk around at the back of the room talking and  the fathers sneak off to have a beer or a glass of wine (or 2).   Oh, and not forgetting those little trips, overseas or in Italy, that have been off the table now for sometime, but are the icing on the cake of life.  I long for the day when I can make, even short trips away, with the family and friends again. 

Anyway, enough of my Covid colour thinking.

Well, if you have missed it, there is a new technocrat government in Italy. This time under the supervision of Mario Draghi. For anyone who is unfamiliar with Mario Draghi, he is the last ex-President of the EU Central Bank, previous head of the Bank of Italy, previous economist for Goldman Sachs and has also worked at the World Bank.   If you are interested, he also has a house somewhere near Citta delle Pieve, Umbria.

What's interesting about this appointment is that he was the man who pretty much stopped the EU crisis  of 2012, merely by announcing that the 'Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough'.   With those words he stopped the attack on Spanish and Italian government debt, being launched at the time by the worlds financiers, and prevented a complete meltdown when Greece was also in fear of default. 

There is no doubt that 'Super Mario' (his other widely known name) is a very adept politician and economist who has the ability and knowledge to get Italy out of it's current predicament, as a result of Covid.   

It was Matteo Renzi who pulled out of the coalition which was keeping Giuseppe Conte in power and managing the Covid crisis, but Renzi being a 'supposed' pro-business politician didn't think that Conte had the ability to manage the €266 billion Recovery fund which is shortly arriving from the EU, and which will be used to help rebuild the economy.   I happen to agree (although I think Conte has done a good job of managing the pandemic in Italy) and also believe that Mario Draghi is probably the best person for the job. 

However, to what extent he will be prevented from doing so by the warring parties is anyone's guess.  He is a no nonsense economist/politican and has already made it clear that he wants to surround himself with capable people, and not politicans who are looking to advance themselves or their parties. 

I suspect he will get some new and interesting projects approved by Parliament, but like the technocrats before him (Letta and Monti), will eventually be stopped by the other political parties who will want to merely push their own agenda and take power. 

But, let's not take this step for granted because if Mario Draghi is given enough leash to enact some serious recovery plans, and real effects can be seen, then they may give him more leash than we might expect.   

My thinking is that alot of the burden will now be placed on his shoulders, and should he be able to magic the economic bunny out of the crumbling Italian economy top hat then the other political parties will quickly amass like children around a fresh birthday cake, to benefit from his good work and look to ultimately grasp power and take all the credit.

It's all to play for.  I shall be watching this one carefully. I think like most of us who have been living in Italy for quite some time, we really hope that something significant happens because we see so much potential for change. 

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DISCLAIMER The views expressed here are my own. They are not necessarily shared by The Spectrum IFA group or any other company named or implied. They are subject to change at any time based on market and other conditions. This is not an offer or solicitation for the purchase or sale of any security and should not be construed as such. Neither should this be considered tax advice. If in doubt we always recommend that you consult a suitably qualified tax consultant. References to specific securities or companies are for illustrative purposes only and are not intended to be, and should not be interpreted as recommendations to purchase or sell such securities REGULATORY INFORMATION

Brexit - Important financial news - Part 2

 

Tax on UK domiciled assets  This is probably the most revealing piece of information that we have discovered, and whilst it is new for UK residents, it has always been the tax case for other non-EU Italian residents e.g. US citizens. And very important information it is as well for the holders of UK domiciled non-property assets (excluding bank accounts). We are not sure if most commercialisti are aware of what we discovered and so we encourage you to have a discussion with yours if you think you might be affected!   Essentially, if you hold non-EU approved investment funds in a portfolio with a bank or an asset manager, then these same assets must meet 3 simple rules for the flat 26% tax treatment for investment income and capital gains to be applied, in Italy.  1. The fund or collective investment must be established in a member state of the EU or EEA 2. It must be sold in Italy under the relevant distributions guidelines from the regulator CONSOB 3. And if you are working with someone who manages your money they need to be subject to EU authorisations in the country in which they operate from And the important point to note is that any investment fund must be covered under all 3 criteria and not just one! What is the consequence if your collective investments don’t meet these criteria? Very simply all your investment income and capital gains are added up and taxed at your highest rate of income tax! They are added to all your other income for the year and taxed accordingly. For someone who is earning up to €15000pa (pensions, rental income and/or employment income) then this would be advantageous, but for any figure above then your tax rate will be higher than the 26% currently charged on the same asset. How can you check if you have a non-EU domiciled collective investment asset?   Very simply, all securities are allocated an International Securities Number (ISIN code). You will need to check that yours starts with an EU approved code, such as IE, LU, FR, IT etc. For any UK citizen living in Italy holding securities/funds or assets, whose code starts with the letters GB, then it might be time to take another look at your financial planning as a resident to try and mitigate any future tax charges on these assets.  And that's it for this blog! There are quite a few financial planning considerations to be taken into account here and so I will elaborate on them in future blogs, but if you have any doubts as to whether any of these topics may apply to you, or want some help looking into anything, then I would suggest you get in touch.    You can contact me in the usual ways on cell +39 333 649 2356 or on email gareth.horsfall@spectrum-ifa.com. SIGN UP TO MY EZINE.  If you received my Ezine from family members, friends, or it was forwarded to you then feel free to sign up yourself.  Just click HERE

Brexit - Important Financial News - Part 1

 

 

I normally like to start a new blog with a story or some kind of recent experience to try and provide context to what I am about to write. However, because of my lack of travels, I am lacking stories at the moment. In fact, I am now starting to believe that there is a government conspiracy to bore me to death, or they are in collaboration with Netflix to lobotomize me with endless series and films. Lockdown phase 2 is proving somewhat monotonous! 

So, with the fact that there isn't really much to tell you other than work related matters, then we might as well crack on, because the truth is that as a result of Brexit a number of financial things have changed. A lot of my clients are now non-EU citizens (i.e. Brits), and so a better understanding of Italian tax legislation is essential. We have done some extensive digging in this regard and our investigations have sprung up some unwelcome news for some. 

The information we found was buried so deep in Italian tax law text that it took us (in reality my colleague Andrew Lawford ended up discovering it through sheer determination and persistence) quite some time to dig it up. So make sure you read the whole E-zine as something might be relevant to you.

I should add that the financial services industry is still trying to work itself out and we should remember that there is no deal for financial services as part of the Brexit trade agreement. A lot of hope is being placed on a potential trade agreement being reached on financial services by the spring, as professed by Rishi Sunak, but I have my doubts.    

 

 

So, what are the concerns? 

Let's start with the one that got the most press leading up to Brexit. The automatic closure of UK bank accounts for EU residents. 

There is not much to say here, other than the main culprits seem to be Barclays, Lloyds, Nationwide, Royal Bank of Scotland and Halifax. To date, my experience with clients is that the closure letters are a bit of a scattergun approach. Not everyone I know with an account in these banks is being approached to close it. 

I am asked a lot about the possibility of using a UK address of a relative or friend and whether this would alert the bank to you living in the EU or not? The likelihood is that it will for 2 reasons. The first is that under the Common Reporting Standard (International sharing of tax and financial information) banks only need to 'suspect' that you are resident in another country. This might be determined from activity on your account, or other financial information that they may receive from foreign tax authorities. The second reason is that ultimately you should be asked to prove the address you provide. A simple check on the land registry can avert them to the fact that you are not the registered owner of the property. A standard requirement is to request a copy of a utility bill showing your name and address on it or some kind of official tax authority document. If you are unable to prove these, then the chances are that the banks will catch up with you sooner or later.

So, what are the alternatives? I have recommended Fineco as a good Italian bank alternative (for transparency purposes, I have been an account holder for approx 10 years) but I believe that more of you than ever are finding it easy to open and use Transferwise as a transitionary online solution. But it's NOT a bank, so beware! There are online banks as well, such as N26 and the online offshoots of the regular Italian banks. There are certainly lots of options available although finding a non-UK alternative that will allow UK direct debit payments is pretty much impossible.

UK property ownership 

I have written previously about this and the increased wealth tax that will now be charged on UK property ownership for Italian residents. 

To recap, in a pre-Brexit world a UK property owned by an Italian resident would have had a wealth tax charged against it each year, in Italy. The value for calculating this charge was 0.76% of the council tax value of the property. This is considerably lower than the market value in most cases. However, now that the UK has left the EU the method for calculating that wealth tax changes. 

Properties that are located outside the EU are subject to the same charge, 0.76%, but in this case the valuation basis moves to the purchase/acquisition value of the property, where provable, and the market value otherwise. For most people I am finding that this is quite a difference, and for anyone who has bought in the last 10 years or so, this means a mostly, higher annual wealth tax charge. To date, I have only come across one person who retired to Italy and had retained the family property in the UK for many years, and could benefit from a very low purchase value for calculation purposes, hence a net tax benefit as a result of the tax change post Brexit. Most are going to find that their cost of holding UK property will increase as a result of the UK leaving the EU.

 

Tax break 

For anyone inclined to sell their UK property then we shouldn't forget that there is the possible 'sale-of-home' tax break as an Italian resident. If you have owned the home for more than 5 full tax years then Italy does not consider a property sale speculative (even a property located overseas) and so no capital gains tax is charged in Italy. You may have tax applied in the country in which the property is situated, in which case you would need to check the local tax laws. In the case of the UK, a property sale as a non-UK tax resident means capital gains tax would be charged on the property, but only from the date at which the legislation was introduced: 6th April 2015. What this means is that any gains made up to that point can effectively be written off, and the cost value for the purposes of calculating the capital gain would be the value as at the 6th April 2015 or later, depending on when you bought the property. A handy tax break for anyone who has held property in the UK for more than 5 years. 

 

 

UK IFAs

Now, we come onto the more technical points and an area which I see evolving over the coming year/years: UK IFAs (Independent Financial Advisers). 

Even when the UK was inside the EU it was not uncommon for me to come across people who had existing relationships with UK based IFAs who advised them on their finances, in the same way that I do for my clients living in Italy. But, even inside the EU most firms were not licensed to work with clients who were living in an EU state (it was easy enough to check on the Financial Conduct Authority website in the UK), and even in the few limited cases where they had the licence they did not have any experience of the Italian tax and financial system, so their advice was mainly useless and normally bad for the client. However, many continued to operate regardless, protected (loosely) by being a member of the EU. 

Fast forward to a post Brexit world and the fog has cleared. If you are working with a UK based IFA, and living in Italy, then you should not be receiving any advice from them. They will not have the necessary authorities or licences to operate in the EU, and as such, you as a client are not protected for any advice that they give you. This has been very clearly highlighted in a Banca D'Italia document which was released at the end of last year. 

If you do work with any UK based financial professional it would be in your interests to contact them and ask if they have an EU based entity to ensure they can continue to work with you. In much the same way as the banks are pulling out of the EU (the ones that have no intention to develop or maintain their existing EU business), IFA firms (small or large) should also be doing the same.  

I have to admit, that I have benefited from this because a number of UK firms with Italian resident clients have already contacted me about passing on their clients because they are no longer able to work with them. I expect this to continue as more firms understand their legal liability of working with clients in an un-licensed capacity.  

If you are in this situation please speak with the firm and/or send me a message and I can help you to look into it in more detail. 

Asset managers

This is a category, very similar to UK based IFAs. These are firms which generally manage sizeable portfolios for clients and have a direct relationship with the end client. To date there are mixed messages coming out of this sector. Some asset managers are aiming to pass EU based clients to EU based firms, like ourselves, others are clinging onto various legal loop holes to retain business. If you have a portfolio managed by a UK based asset manager directly, then the best you can do is to contact them and ask them what their post Brexit plans are. We expect that over time the EU will develop a more protectionist and hardline stance on working with non EU based firms.T his will ensure that they can more readily protect their EU residents and citizens and also win business from the UK. 

Where UK asset managers are used inside Italian tax compliant accounts, in the way that we mostly structure assets for our clients, then you do not have to worry as the provider of the account will be keeping abreast of legislation as it changes. 

***For all my clients, please be aware that we are on top of any changes in this regard and you do NOT need to contact your asset manager as a result of the content in this blog. If anything changes we will notify you as soon as we become aware. We also have contingency plans in place should any changes need to be made*** 

You can contact me in the usual ways on cell +39 333 649 2356 or on email gareth.horsfall@spectrum-ifa.com.

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UK IFA's - we can take your clients!

        

ARE YOU A UK IFA WITH CLIENTS LIVING IN ITALY? 

ARE YOU UNABLE TO SERVICE THESE CLIENTS POST BREXIT?

  At The Spectrum IFA Group (Italy) we can look after your clients long term as a licensed and regulated financial advisory operating in Italy! 

The things you should know before you contact us for our help: 

• We operate in Italy under the EU Freedom of Establishment from our head office in France.  Our regulatory status is NOT affected post Brexit
• We have a registered and fully operational branch working in Italy and are registered on IVASS (The Italian regulator)
• We are 2 advisers for The Spectrum IFA Group in Italy: myself, Gareth Horsfall (manager) and Andrew Lawford.  We cover the whole of the country and help clients plan their full financial arrangements forlife in Italy. 
• As a firm we work with a number of the biggest assets management firms in the world; Blackrock, Jupiter, Fidelity, Schroders etc.  For clients with larger portfolios we will use Discretionary Portfolio Managers such as Rathbones, Smith and Williamson and Quilter Cheviot.  
• You can be assured that once someone becomes a client of The Spectrum IFA Group in Italy they will be serviced under our terms of business, which we agree in advance, and we will look after them long term if we agree to take them on. 
• We are NOT an offshore broker.   We do not use UK dependant territory (Isle of Man, Jersey, Guernsey etc) products as they can produce adverse tax consequences for clients living in Italy.   We would advise that you don't use any of these structures for your clients if they are resident in Italy. 
• We only use Italian compliant products which are designed specifically for residents in Italy. 
• We work on a transparent charging structure with clients.   Upfront charges are made for the initial planning and restructuring work and ongoing service charges are agreed with the client.   All charges are deducted directly for the financial vehicles we se up.  We do not invoice separately. 
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Since Brexit day is rapidly approaching we would ask that, where possible, you contact us as soon as you can to allow us time to do any restructuring necesssary before the start of the next tax year.  (The tax year is the calendar year in Italy!).   From the 1st January Italian resident clients enter their next fiscal tax year and therefore, if there are any tax planning opportunities in the current tax year (2020), we would ask that you contact us in reasonable time to be able to deal with these.   If this is not possible, contact us anyway and we will see what we can do. 

If your clients are resident in Italy or intending to become resident then please feel free to contact us for a no obligation chat to determine if we can look after your clients post Brexit.   You can contact me on gareth.horsfall@spectrum-ifa.com on cell +39 333 649 2356.  I am also available on whatsapp.