June 30 is the annual deadline for foreigners who are tax residents in Italy to file, together with their tax return, the Voluntary Disclosure form (RW Form) that includes income related to investments held abroad and taxes related to these assets.
It is often the case that foreign nationals who are tax resident in Italy still own assets in the country of origin, or in other countries where they may have lived for work purposes, and have purchased a property or left a current account.
First of all, it is important to clarify the obligations and duties of people who are foreign nationals but resident in Italy but with assets held abroad. Each year from the first tax period in which the foreigner is considered to be tax resident in Italy, they must compile and submit the RW form in order to comply with tax monitoring obligations and the two national taxes on assets held abroad, IVIE (tax on value of property located abroad) and IVAFE (tax on the value of financial assets held abroad).
This year, the Voluntary Disclosure form also contains boxes for the setting out of the taxes on the foreign goods mentioned above, namely IVIE and IVAFE.
The assets to be declared are those held abroad directly by the person who is resident in Italy, without the intervention of any intermediary who is also subject to tax in Italy. If there is an intermediary, then he or she will fulfil the obligations arising from the possession of the assets, including the settlement of the taxes due.
The RW Form must also contain the values of individual assets as of January 1 or from the day of commencement of ownership and those at the end of the tax period (December 31) or on the day on which the asset was sold or disposed of or that it is “physically” returned to Italy.
In addition to this information, it is also necessary to identify the foreign country where the assets or activities are allocated. If the assets are denominated in currencies other than the euro, currency conversion is required. In this case, both the initial value as of January 1 2016 or the start date of the ownership of the assets if later and the value at December 31 or earlier if the date of transfer or termination of activity is earlier, must be converted.
The exchange rate to be used will be the average for December 2015 (for assets held on January 1 2016) or of the month in which the ownership of the activity started or ceased, or that of December 2016 (in case of ownership as of December 31 2016 – see Circular No. 38/E/2013).
It should be noted that it is expressly set out in the legislation that, for the purpose of compiling the RW Form, the exchange rate on a particular date cannot be used, only the monthly average. Once the values of individual assets have been determined, it is important to remember that there are exemptions from declarations or tax for certain categories of goods or below certain quantitative thresholds.
Particular attention is paid to identifying the person that is the “actual owner” of the right or asset. Ministerial Circular no. 38/E of 23 December 2013 deals in part with this concept and its implications in operational and disclosure terms. The Circular strongly states that “not only the ’formal’ owners and the persons who have access to the foreign asset have to disclose it, but also those who can be considered the ’actual holders.’”
This definition of “actual owner” has been borrowed from the anti-money laundering regulations, and therefore shareholdings or assets held by foreign companies or trusts should also be declared if the holding is considered to be significant (more than 25%). The distinction in the declaration between the insertion of the shareholdings or the individual assets will depend on whether the host country allows exchange of tax information or not.
In the case where this is allowed, it will be sufficient to indicate the shareholding, otherwise the individual assets will have to be set out.
For those who have omitted to file or filed incomplete RW forms, it is possible, through starting remedial action, to remedy both omission and incompleteness by paying a significantly reduced sanction.
Finally, the rates for the individual taxes due are: IVIE is 7.6 per thousand of the taxable base (except for the main residence the rate for which is 4 per thousand of the value of the property), while IVAFE is 2 per thousand of the relevant value (except for current and savings accounts for which the fixed tax of €32.40 is due). Taxes are due in proportion to the days of possession during the year and to the percentage of ownership by the taxpayer.
di Stefano Mazzocchi & Roberto Viscomi
fonte: Il sole 24 ore
The season for automatic exchange of financial information, for tax purposes, of non-residents in Italy starts April 30. In fact, by that date, financial intermediaries must have sent the Italian Revenue Agency all information to implement the law of June 18 2015 n. 95 and Directive 2014/107/EU, which amended Directive 2011/16/EU on the automatic exchange of information in tax matters (in particular through the Common Reporting Standard – CRS).
This information will then be transmitted, by September 30 2017, to the authorities of the jurisdictions that adhere to the automatic exchange of information.
This exchange of information falls within the scope of international cooperation that is emphasized by both the OECD, through the CRS, and the United States with the signing of intergovernmental agreements for the implementation of the US legislation, Foreign Account Tax Compliance Act (FATCA).
In general the following personal data must be disclosed: name and surname, jurisdiction of residence, tax code identifying the country where the person resides, date and place of birth.
The financial data that must be exchanged are the account number, the name and tax code of the financial institution that is obliged to send data and the balance or the value of the account as at December 31 2016.
In the case of custody of financial assets, the gross revenues from portfolio management in addition to the balances must also be shared. The financial intermediary must also indicate the currency in which the data was collected.
It will be relevant to all the relationships with banks (i.e accounts, savings deposit and similar) in place after January 1 2016. For the relationship existing by December 31 2015, the law makes a difference between relevant accounts with a balance of $1,000,000 and not relevant when the balance is below that amount at the date above.
Depending on whether the account is relevant or not, there are higher or lower requirements regarding the verification to be carried out by the intermediary that has to send the required information.
Financial intermediaries will therefore be obliged to carry out and report on a type of tax due diligence on all accounts held by non-residents where the main duties consist of: a) verifying the truthfulness of the tax residence declared by the taxpayer who must show the residence certificates issued by the public institutions of the country in which he or she claims to be resident; b) the correct identification of the “Account Holder” who is the actual beneficiary regardless of the person who has the powers to manage the use of the sums in the account.
The regulation, among other things, provides that every year the actual account holder must be contacted at least once a year to verify the accuracy of the information required by the tax due diligence procedure. This must be done for at least 10 consecutive years from when the account is identified as an account subject to exchange of information on the basis of the rules described above.
From a look at the annexes to the legislation, today there are more than 90 states that have pledged to exchange information, with a division between those who will exchange information in 2017 (and therefore also for 2016) and those which have pledged to do so from 2018 which will cover information from 1 January 2017.
It should also be stressed that this regulation applies to both our citizens resident abroad for tax purposes and to foreign tax residents in Italy.
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Di Stefano Mazzocchi e Roberto Viscomi