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Expats in Italy: The Top 3 Financial Concerns

Being an independent financial advisor who has visited many expats living in Italy, I think I can now say that all expats in Italy face more or less the same financial concerns, regardless of their nationalities, backgrounds or locations in Italy.

In this post, I will run through the top 3 financial worries facing expats in Italy.

1. Taxing Issues

The first and by far the most common issue would be that of tax and the Italian tax system.

Here are some of the most common Italy tax concerns that cause worries for in Italy. I might ask you a few questions so I can understand what you need to do. I might start with this question:

  • Did you make a tax return when you first came to live in Italy?  If the reply is no, your question to me may well be: What will happen if I file a tax return now?

To which you may then add:

  • Is there a chance the Guardia di Finanza tax police will look into my past tax affairs, if I decide to sort out my tax situation now?

Then, after a little more discussion, this question may well arise:

  • What about new taxes on assets held outside Italy?

This is a popular issue nowadays, as you might expect:

  • What about international exchange of tax information? Is it happening and should I be worried?

For answers to your tax questions, contact me.

Tax is a very complex subject and is one which attracts the most attention. But it shouldn’t really. Sorting out your tax situation so you are, as they say in Italy ‘in regola’, is actually very simple and it won’t cost a fortune (aside from commercialisti – tax accountant’s fees).

Yes, the tax rates are not as low as in the UK for example, but they are certainly no higher than in France or Spain and taxes in Italy are actually lower – if you plan properly. The key is to make the tax declarations required of you by Italy’s law, as a someone resident in Italy for tax purposes.  Not making any declarations is by far and away a more hazardous and can be a potentially much more costly issue if you are found out later on.

In short, get your tax situation in Italy sorted out as soon as you can after arriving in Italy. Even better, talk to someone about taxes before moving here – this will save you from some potentially major headaches.

2. Tax Planning in Italy is Possible and Productive

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Not knowing that tax planning exists in Italy comes in at position number 2 in terms of expat tax concerns.

Tax planning advice is hard to come by in Italy because the banks here have a virtual 90% monopoly of  the financial services marketplace. Banks in Italy, as a general rule, have very little interest in financial planning because it takes time and does not provide them with quick and easy profits.

Tax planning is generally a time consuming process which often involves working closely with an individual or family Sometimes tax planning activities do not produce quick results, especially when lawyers and accountants become involved and, complex cross border tax and trust issues need attention.

The good news is that there are tax planning solutions for expats in Italy. More specifically,  tax efficient savings/investment accounts to build capital and generate income do exist. Such accounts do not even need to be located in Italy. Indeed, for those worried about bringing money into the country, provided foreign accounts comply with Italian law, there is no problem and there are no maximum limits to how much you put into these accounts.

Efficient financial planning really can reduce the amount of tax you will have to pay.

3. Last Will and Testament Concerns

At Number 3, is the issue of whether you should make a will in Italy if you own a property here, and/or whether a will made abroard is sufficient.

This is a topic for a lawyer who understands potentially cross border legal issues. Having spoken to lawyers dealing with the issue of wills, I know that a lot depends on your country of origin and its legal system i.e. whether it is a common or civil law system.

If it is a common law system, then quite often you may not need make an Italian will. You may need to make reference, in the will you made in your country of origin, to the fact that you wish the law of your home country to prevail over the distribution of any assets you hold in Italy.

In countries with civil law systems, the situation can be more complex and more investigation may need to be carried out to arrive at a workable solution.

Sorting out issues surrounding wills should not cost a fortune in either case and the thousands of euro’s that many Italian notaries public – notaios – and lawyers charge can often be reduced significantly. If you need assistance with such issues, I know experienced specialists who can help you.

The top 3 financial and legal issues faced by expats in Italy mentioned here can generally be resolved easily enough with a little bit of time, thought and careful planning.

Call Me to Discuss Your Concerns

If you would like to discuss any of these issues I’ve talked about today, or you have your own specific financial matters which need attention, you can contact me, Gareth Horsfall on gareth.horsfall spectrum-ifa.com or telephone me on +39 3336492356

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