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bigduckontax
bigduckontax, Accountant
Category: UK Tax
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I live in the Uk I pay tax in the uk , I have a house in Italy

Customer Question

I live in the Uk I pay tax in the uk , I have a house in Italy and I am letting it on sites like Home Away ..the income is not great as its only summer months . I want to declare this income in the Uk but I have been told I need to do it in Italy . The rents are paid in sterling into a uk bank account . Thank you Pamela
Submitted: 1 year ago.
Category: UK Tax
Expert:  bigduckontax replied 1 year ago.
Hello Pamela, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
If you spend more than 183 days in the UK in any one tax year then you are liable for income tax on your world wide income. You must, therefore, declare these rentals on your annual self assessment tax return. That disposes of the UK tax position.
You are also liable to Italian Taxation on the property. Here is an extract from Mobilnet:
'Non-residents who have earned income or who own property in Italy are liable to pay tax to the Italian government, except in the special cases stipulated in any dual-taxation agreements concluded between Italy and their country of residence (all EU countries have drawn up such agreements).'
You will note the mention of a Double Taxation Convention between the UK and Italy. Under that Convention the same income stream cannot be taxed in both jurisdictions. In your case any Italian tax paid is allowed as a tax credit against any UK liability.
Here is a digest from the same source on Italian property taxation:
'Property taxes: Property (land and buildings) located in Italy is considered to generate income even if it is not let out. It is also subject to various taxes:
• Personal income tax (IRPEF);
• Regional tax in addition to personal income tax;
• Local tax in addition to personal income tax;
• Local property tax (ICI).
In the event of transfer (under a 'contract inter vivos' (contratto tra vivi)), property is also subject to the following transfer taxes:
•VAT
•Registration tax
•Mortgage tax
•Land registry tax.
Alternatively, if a property is let out, the rental contract, drawn up privately and independently of the annual rent, should be registered within 30 days from the date on the document at any registry office.
If it is drawn up with the aid of a public official, it must be registered by said official at the appropriate registry office (or tax authority or institute).
Registration tax is equivalent to 2% of the annual amount agreed.'
You may well have to use a local adviser to assist you here. The article from Mobilnet, which you can find here:
http://www.eurocadres.org/mobilnet/english/italy/i-tax-en.htm
is pretty comprehensive. It does mention, however, that where the Convention applies you may not have to actually pay Italian tax. That is where trusted, local advice may be essential.
I do hope my reply has been of assistance.