It is always best to seek advice from an international tax expert if moving to any foreign country. Moving to Italy, just like moving to any new country, offers fresh opportunities for legal but favorable tax planning. In order to get the best out of your personal situation, it is advisable to obtain professional income tax advice before moving to Italy, as there are often a variety of things that you can do in advance to reduce your tax liability, not just in Italy but anywhere classed as ‘abroad’.
Tax Evasion in Italy
As an example, it could be possible to avoid paying full tax on a business abroad if you establish both residence and address within Italy before you sell your home. Yet, on the other hand, if you should sell a foreign home after establishing your principal residence in Italy, it becomes a second home and you may then be liable for capital gains tax abroad.
Ensure you speak to a tax advisor who is familiar with both the Italian tax system and that of your present country of residence. You should inform the relevant tax authorities in your former country of residence that you are going to live permanently in Italy, if that is the case.
Tax evasion is rife in Italy, where avoiding taxes is so popular that the Italians are viewed as the best in the world at giving the government the slip. The worst offenders are business owners and self-employed individuals, and it’s common knowledge that tax inspectors will accept bribes to turn a ‘blind-eye’ to certain tax evasion techniques; depending on the bribe amount, naturally.
The tax authorities often estimate your taxable income amount based on your perceived wealth. All tax payers must list (on a ‘riccometro form’) their possessions and liabilities (such as cars, homes, motorbikes, boats, hired help for the house, working spouses and their wage, dependent family members and so on. This all contributes to determine your financial situation and whether you are entitled to certain social services. Therefore, if you are indeed a millionaire – don’t think about claiming the income of a street vendor while living in Turin and driving a Range Rover and a Ferrari.
Severe sanctions, including ridiculously big fines, were introduced for those evading tax during 2000.
For further information, contact Euro Consulting or the local tax offices in Italy.
For more information on Italian Payroll, Working in Italy or Contracting in Europe visit the Euro Accountancy & Finance Services website.