According to The Telegraph, under the previous taxation system in Italy, only expat assets over the value of €10,000 (£8,400) had to be declared to Italian authorities. This would typically include overseas property, shares and savings accounts.
This minimum threshold has now been scrapped, meaning an individual with a UK bank account with only a small balance will have to report it to the Italian tax authorities.
While expats won't be taxed any extra on these smaller assets, they face hefty fines if they fail to declare them – and tax returns could prove to be more of a headache.
All assets held outside Italy must be declared on the foreign asset monitoring return form, which is filed along with the Italian tax return by September 30 each year.
Italy’s fiscal monitoring regime also requires Italian tax residents to report cash or investment transfers coming in and out of Italy. This too had a €10,000 reporting limit, which has now been scrapped. As a result, it appears individuals will have to report all foreign assets transactions, regardless of the size.
The one piece of good news is the scrapping of the controversial municipal real estate tax (IMU) for the 2013 fiscal year for home owners. IMU is an annual levy paid by the property owner.
Yet, second homes or holiday homes will continue to be subject to IMU for 2013. IMU will be replaced by a service tax, which comes into force next year.
The service tax is expected to combine all present local taxes, such as waste collections, in one bill. While calculated on a national basis, it should allow more autonomy for municipal authorities to set the tax rates.
COMMENT: Italy's Deputy Economy Minister Pier Paolo Baretta confirmed that IMU will be superseded before the end of this year by the service tax.
This could spell bad news for expats who rent property in Italy or are provided with accommodation by their employer. Under the IMU regime, the tax was payable by the property owner, not the tenant. With the service bill, however, the burden shifts to the occupant.
Currently, tenants are only liable to pay rent, condominium charges, and a refuse tax. Alex Gómez, a British student living in Rome, said: “Italian taxes are really confusing and this year even more so. But it looks like tenants will have to pay this service tax on top of the other expenses or be fined.”
It is incumbent upon expats living in Italy who possess assets of means to seek out an Italian tax adviser well in advance of tax time in Italy.