The reasons that can push a person to move to another country are many: economic reasons, business, study and, why not, sentimental reasons.
The fact is that in addition to a careful examination of all the paperwork needed to relocate (visa, driving license, pet transportation, new residence… etc.) it will also be necessary to evaluate all legal, fiscal and economic aspects of the destination country to avoid any false move.
What is the healthcare system like in that country? Will insurance be necessary?
Once resident, what needs to be done to be completely compliant and able to work or start your own business?
How do investments and taxation work?
Sometimes it is not possible to evaluate every single detail before relocating. Some things are often discovered along the way and, if the language itself may not be a problem, the desire to do everything by yourselves, without the help of a professional, could be.
One of the most critical aspects is, above all, double taxation. Especially for US citizens residing in Italy, it could be a real pain in the neck.
Actually, American regulation requires that the tax return has to be made in both countries even if no taxes are due in one of them.
An analysis of the situation and a guide to avoid serious consequences are strongly needed. American tax legislation has never been soft, and it will not be even in the future (although recent tax exemption policies could make people think otherwise).
Any properties in Italy/USA must be carefully adapted to current laws as Expats can be subject to thorough inspections in both countries. Not to mention the investments that a US Expat in Italy could make in the United States at a later stage. Income can move around as well as investments, but American tax authorities are always very aware of these situations.
That is the reason why the Foreign Account Tax Compliance Act (FATCA) has been issued in 2014: to ensure strict supervision on US Expats’ income.
At the same time, besides all the obligations to the American or Italian tax authorities, advantages can be gained in both countries.
With a life between two countries managing an important business in Italy and investments in the USA for example, valuable information can be missed along the way as well as precious opportunities to save on taxes or access business benefits and facilities.
This type of analysis should certainly be delegated to a professional who is experienced in both tax systems and always up-to-date with all changes concerning tax and business.
Moreover, there are other issues that may require the help of an expert, such as:
– Starting a company in the US while living in Italy
– Selling Expats’ properties in Italy
– Benefits for American citizens who want to move to Italy once retired
– US/Italy real estate taxes
– Any issue on keeping bank accounts in the USA and Italy at the same time
Having everything under control is possible. But not by yourselves. As already mentioned, a professional is needed to manage every situation in the best possible way and accordingly with both legal systems.
Our firm can offer personalized consultancy and advice and ensure our clients will be continuously followed in all those matters requiring a detailed and well-organized approach: business, real estate and income.
The advice of a professional who is always up-to-date on these subjects will allow you to live peacefully in your chosen country (Italy in this case), without having to worry about US taxation any more.
Thanks to its strong expertise with US Expats in Italy, our firm can be the perfect ally, partner and strategist to guarantee support and solutions to its specific client niche.
For a first consultation contact us immediately.
We will be happy to introduce ourselves, analyze your situation and explain all the benefits of a potential collaboration.READ MORE
We work with many clients living abroad for most of the year, and one of the questions we are often asked is how to consider the income produced abroad and then transferred to Italy.
Many of them wonder if such income can be declared only in the country where it was generated, or should it also be taxed in Italy?
First of all, it is useful to define when a person is a resident or not resident in the State.
For income tax purposes, individuals are considered residents when they are registered with the Registry of the Resident Population, or have their domicile (principal seat of his affairs and interests) for most of the tax period (therefore more than 183 days in a calendar year).
When this is the case, the taxpayer is subject to Italian taxation for his property and for the income he receives, irrespective of the place where it was generated.
If for more than 183 days, the subject is not registered among the resident population, he has no habitual residence and domicile in Italy, (for example, because he is employed in another country), then, in this case, he is a “non-resident”.
Consequently, as “non-resident,” he will be subject to Italian taxation only as regards the portion of income that is considered to be produced in Italy (whether it is income from employment or self-employment, capital, business, land, etc.).
Moreover, if while abroad, the taxpayer needed to transfer a sum of money to Italy (to pay management fees for some of his properties, for example), this sum would not be taxed in Italy, as it would not be considered income.
Our studies are available to help you find out more about this topic and all the issues related to it. Contact us.READ MORE