# Italian accounts



## DanT99 (Aug 27, 2008)

Hi,
I have a business with villa rentals in Italy. We have someone helping us in Italy who we pay the expenses for for the work she does (ie if she drives somewhere to help a client, we pay her petrol expenses). She is registered as an agent, but her accountant has told her she has to pay tax not only on her income but also on her expenses (at about 40%!)
I think this is insane but dont understand the Italian system. Does anyone else have similar experiences or think this is wrong?


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## dario (Jul 16, 2008)

Expenses which are not included as costs on her tax returns can be charged to you, her client, as a VAT exempt income and will not be part of her taxable income, providing that she can prove that she only received money as a refund for expenses and nothing in excess of that. 
If, however, she includes petrol expenses as a cost, then when she charges that to you then obvioulsy that refund can no longer be tax exempt else she will receiving cost deduction AND getting money back as a refund. Pratically she's be earning from it.
She would have to charge expenses to you but not put the petrol costs etc,. amongst her expenses.


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## DanT99 (Aug 27, 2008)

Dario - Thank you so much for this excellent advise, I will tell her


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