# ER visa - should I delay entry into Italy to stay under 183 days?



## sancerre

I am awaiting the decision on my Elective Residence visa application (hopefully) and currently have a flight booked on June 14 with arrival in Italy on June 15. After learning about and reading the threads here regarding the 183 day rule, I’ve recently started thinking that maybe I should possibly delay my entry into Italy a few weeks later, to stay under 183 days in 2016. I will have worked here in the US for about 5 months, so will have US taxes to pay next year and after all I’ve been reading these past 6 months here on this board, it seems it might make sense for me to not have to worry about sorting this out, at least my first year in Italy. I know I will incur the cost of the ticket change and will be paying rent in Italy for 2 weeks when I’m not yet there (seems commonly to happen with this visa), but it seems it might be worth those costs to keep my days to 183 or less in 2016. Would love to get advice and opinion of experts on this board.

Question 2: If approved for the ER visa, do you have to enter Italy on the exact date that your visa starts, or can you enter a few weeks later?

Question 3: I will have to come back to the states in the fall for a family wedding. Do those days out of Italy (10) subtract for my total number of days in Italy for 2016?

Thanks very much for your thoughts on this issue. I’m still learning about all of this so appreciate your help!


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## BBCWatcher

1. You can do that. However, part of deciding whether to continue living in Italy includes the tax experience. Also, _financially_ Italy's tax code is generally fairly kind to ERs from the U.S. So if you're out of pocket much then I wouldn't bother.

2. You can. Ordinarily you have 12 months to enter. The visa itself will indicate when it expires.

3. No. If, for the greater part of the year, you are (a) registered as a resident, (b) resident, or (c) domiciled in Italy, then you are a tax resident of Italy. You'll satisfy at least one of those conditions while you attend that wedding, so the only remaining question is the "greater part of the year" question.


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## sancerre

Thanks very much for comments, BBC Watcher. Very helpful.


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## sancerre

BBCWatcher said:


> 1. You can do that. However, part of deciding whether to continue living in Italy includes the tax experience. Also, _financially_ Italy's tax code is generally fairly kind to ERs from the U.S. So if you're out of pocket much then I wouldn't bother.
> 
> 2. You can. Ordinarily you have 12 months to enter. The visa itself will indicate when it expires.
> 
> 3. No. If, for the greater part of the year, you are (a) registered as a resident, (b) resident, or (c) domiciled in Italy, then you are a tax resident of Italy. You'll satisfy at least one of those conditions while you attend that wedding, so the only remaining question is the "greater part of the year" question.


BBCWatcher, I have now received my ER visa so that is good news! 
So , as you say, I know that I will eventually have to experience the tax situation in Italy, but I was thinking since this year I will have worked 5 months Fulltime in the US, and had a good salary, it might make sense to not start my tax year in Italy until next year, when my only income will be from dividends. This seems like the sensible thing to do to me, to keep it 182 days or less this year and then dive into the tax situation next year when my income will be quite low. Does this make sense?


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## BBCWatcher

Maybe. It depends on what you lose by waiting and how you assess the value of what you lose.

To pick an example, enrollment in Italy's public medical system requires an annual enrollment fee. That fee is not pro-rated. If you enroll in December it's the same price as enrolling in May. The U.S. side, and the medical insurance you had to obtain for your visa, are different. They can be cancelled at any time (after you're enrolled in the Italian system), with corresponding financial savings. (Or, worse, being uninsured or inadequately insured for a longer period of time.)


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## accbgb

BBCWatcher said:


> Maybe. It depends on what you lose by waiting and how you assess the value of what you lose.
> 
> To pick an example, enrollment in Italy's public medical system requires an annual enrollment fee. That fee is not pro-rated. If you enroll in December it's the same price as enrolling in May. The U.S. side, and the medical insurance you had to obtain for your visa, are different. They can be cancelled at any time (after you're enrolled in the Italian system), with corresponding financial savings. (Or, worse, being uninsured or inadequately insured for a longer period of time.)


Surely, you jest.

The benefit of delaying the arrival date from June 15th to July 2nd is potentially very substantial and likely to exceed any extra "cost" by a wide margin.


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## BBCWatcher

accbgb said:


> Surely, you jest.


No, I don't. Italy's tax code is generally fairly kind to foreign retirees' passive income, which is what Elective Residents are and have. On the other hand, ERs are moving to Italy precisely to enjoy its many wonderful attributes. If they want to start enjoying those wonderful attributes sooner rather than later -- and are already paying anyway (e.g. leases, potentially duplicative medical insurance) -- then why not?

Maybe means maybe. In my view whether you have to file a 2016 Italian tax return or not is a rounding error in this overall calculation.

Most people get _way_ too hung up about taxes (which, financially anyway, don't really apply here -- or at least don't apply much). Honestly, they're really not that important, at least not in comparison to living and enjoying life.


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## pablock007

sancerre said:


> BBCWatcher, I have now received my ER visa so that is good news!
> So , as you say, I know that I will eventually have to experience the tax situation in Italy, but I was thinking since this year I will have worked 5 months Fulltime in the US, and had a good salary, it might make sense to not start my tax year in Italy until next year, when my only income will be from dividends. This seems like the sensible thing to do to me, to keep it 182 days or less this year and then dive into the tax situation next year when my income will be quite low. Does this make sense?


sancerre, congrats on ER visa! I am in similar situation waiting for next interview with Italian Consulate. Any chance we can speak live for a few minutes? I'm happy to call you, wherever you are. Please let me know, thanks! Patty


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## accbgb

BBCWatcher said:


> No, I don't. Italy's tax code is generally fairly kind to foreign retirees' passive income, which is what Elective Residents are and have. On the other hand, ERs are moving to Italy precisely to enjoy its many wonderful attributes. If they want to start enjoying those wonderful attributes sooner rather than later -- and are already paying anyway (e.g. leases, potentially duplicative medical insurance) -- then why not?
> 
> Maybe means maybe. In my view whether you have to file a 2016 Italian tax return or not is a rounding error in this overall calculation.
> 
> Most people get _way_ too hung up about taxes (which, financially anyway, don't really apply here -- or at least don't apply much). Honestly, they're really not that important, at least not in comparison to living and enjoying life.


We are not talking about passive income. Sancere said, "I will have worked here in the US for about 5 months..." - that income would be taxable in Italy if he/she spends more than 182 days of calendar year 2016 in Italy. Depending on the dollar amount and other specifics, there could be a very substantial "penalty" if forced to pay taxes at the Italian rate vs. the US rate.


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## BBCWatcher

accbgb said:


> Sancere said, "I will have worked here in the US for about 5 months..." - that income would be taxable in Italy if he/she spends more than 182 days of calendar year 2016 in Italy. Depending on the dollar amount and other specifics, there could be a very substantial "penalty" if forced to pay taxes at the Italian rate vs. the US rate.


Fair point, but a couple points in reply:

1. There's no social insurance tax (INPS) owed. The U.S. and Italy have a social security treaty, and U.S. Social Security and Medicare payroll taxes apply to that income, exclusively. INPS would be a heavy blow to be sure (and with no reasonable prospect of future retirement benefits for an ER), but INPS doesn't apply here.

2. The absolute worst case is to pay any gap between the ordinary Italian and U.S. income tax rates on that income. That's assuming the U.S.-Italy tax treaty offers no protection. (It might!)

3. What I also had in mind is the fact that the half year threshold isn't crossed until December assuming a June entry. It's not as if you step off the airplane in Italy and your tax return is due at 5:00 p.m. that day. If you move to Italy and hate it for whatever reason(s), and leave before the 6 month mark, you aren't required to file an Italian tax return for 2016. (Well, absent significant Italian source income, and I suppose that's theoretically possible even for an ER.) But if you love Italy, then would you also love the extra month (June)? Undoubtedly so. Maybe enjoying yourself is the right answer for you! "It depends."


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## NickZ

Top Italian rate is 43%

Top US Federal and Oregon state rate? Almost 50%


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## accbgb

NickZ said:


> Top Italian rate is 43%
> 
> Top US Federal and Oregon state rate? Almost 50%


Lol.

I believe for most normal, non-one percenters, the Italian tax rate will more than likely exceed the combined US and Oregon taxes.

Certainly, Sancere should make the necessary comparisons. However, keep in mind that the US will give her a credit for taxes paid to Italy, so there is no money to be saved by deliberately filing in Italy. As for Oregon, from what I have read in the past, not many states (none?) allow you to escape state taxes on income earned while residing in the state regardless of your current residence. In other words, Oregon income taxes will be owed regardless, so the only question remaining is will Sancere be better off paying US or Italian income tax on 5 months of income. I strongly suspect the answer will be US.


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## BBCWatcher

accbgb said:


> I believe for most normal, non-one percenters, the Italian tax rate will more than likely exceed the combined US and Oregon taxes.


OK, but ERs tend to skew _toward_ the one percenters, if not right into the one percent zone. One does have to consider the context. 

The rest of your post I didn't follow at all. U.S. federal and Oregon will be paid, first. The only financial question is whether the net effective Italian tax rate on that income will be higher. Maybe, maybe not. It won't be higher because of INPS -- that's off the table.

Best guess is this is a tie breaker sort of question. If you're eager to move to Italy, then move to Italy. Whether a 2016 Italian tax return needs to be filed or not isn't actually going to be a _weighty_ issue in these circumstances (best, educated guess). There's still an "out" with a departure in, say, November, and 2017+ Italian tax returns are surely in your future if you're going to stay in Italy. We've already heard there are some costs in delaying a departure, so...either way.


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## NickZ

Looks to me anybody with a chance of an ER visa is going to be paying at least a combine 35% Federal and state. Similar tax bracket in Italy is 38%. That's close enough that any deductions are likely bigger.

OTOH non of this matters. Employment income is first taxed in the place of work.


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## accbgb

BBCWatcher said:


> OK, but ERs tend to skew _toward_ the one percenters, if not right into the one percent zone. One does have to consider the context.
> 
> The rest of your post I didn't follow at all. U.S. federal and Oregon will be paid, first. The only financial question is whether the net effective Italian tax rate on that income will be higher. Maybe, maybe not. It won't be higher because of INPS -- that's off the table.
> 
> Best guess is this is a tie breaker sort of question. If you're eager to move to Italy, then move to Italy. Whether a 2016 Italian tax return needs to be filed or not isn't actually going to be a _weighty_ issue in these circumstances (best, educated guess).


A three week delay in Sancere's plans is unlikely to seriously impact his enjoyment of Italy but may save him some tax dollars.

Now that we have (yet again) beaten this topic to death, I suggest that enough is enough.


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## BBCWatcher

Oh, I don't know. Had my wife delayed her international move even a relatively short amount of time we never would have met.

What's about a month more residence in Italy -- for somebody who has gone to considerable trouble to move to Italy -- worth? More than zero. How much more? I don't know. And we're not even clear on whether there would be any additional tax owed in Italy for 2016 with a 183+ day 2016.

There's no right or wrong answer here, truly.


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## accbgb

BBCWatcher said:


> _Oh, I don't know. Had my wife delayed her international move even a relatively short amount of time we never would have met._
> 
> What's a month more residence in Italy -- for somebody who has gone to considerable trouble to move to Italy -- worth? More than zero. How much more? I don't know. And we're not even clear on whether there would be any additional tax owed in Italy for 2016 with a 183+ day 2016.
> 
> There's no right or wrong answer here, truly.


Oh, come on! Now you are just being silly.

Yesterday afternoon, on a road that I travel everyday, a car crossed the center line while rounding a curve and collided head-on with a car coming from the other direction. Both drivers were killed. This all happened, as nearly as I can make out, just minutes before I reached the scene; had I left work a few minutes earlier - or not got caught at that damned traffic light that always seems to turn red just as I approach it - I might not be here typing this now.

Sancere has already figured out - with the help of another forum where she received many well-reasoned replies - that it is in her best interest to delay her arrival a few weeks.


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## sancerre

pablock007 said:


> sancerre, congrats on ER visa! I am in similar situation waiting for next interview with Italian Consulate. Any chance we can speak live for a few minutes? I'm happy to call you, wherever you are. Please let me know, thanks! Patty


Hi Patty - thank you! Yes, would be happy to speak live. Why don't you send me a private message with your phone number and I'll give you a call today.


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## sancerre

BBCWatcher said:


> Oh, I don't know. Had my wife delayed her international move even a relatively short amount of time we never would have met.
> 
> What's about a month more residence in Italy -- for somebody who has gone to considerable trouble to move to Italy -- worth? More than zero. How much more? I don't know. And we're not even clear on whether there would be any additional tax owed in Italy for 2016 with a 183+ day 2016.
> 
> There's no right or wrong answer here, truly.


Hi all, thanks all for your feedback and comments on this topic. I thought I would be a little more specific here (if you don't mind), as I just did the math yesterday. So with work this year, bonus, payout of unused weeks of vacation, etc. the total income will be about 105k. Compared with next year, I will be living on savings and will have under 10k income from stock dividends (living on savings for 10-11 years before dipping into 401k and starting to receive social security benfits). I'm not yet familiar with Italian taxes, but just on the surface, it would seem worth it to me to delay entry so I don't have to deal with taxes in Italy on this income for 2016. I know I will have to face this next year (and years to come), but would rather face it with this very small income. Plus, I can work one or two more weeks here at my current job if I delay my departure date, which I think would make up the difference of flight change fee, dual payment of rent for last two weeks of June, etc.


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## NickZ

The Italian bit of that is fairly straight forward. 26% flat rate. The question is what will the US try and tax you ? If you weren't an US citizen you'd pay 15% with holding to the IRS and that would offset an equal amount of Italian taxes.


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## misha38

sancerre said:


> Hi all, thanks all for your feedback and comments on this topic. I thought I would be a little more specific here (if you don't mind), as I just did the math yesterday. So with work this year, bonus, payout of unused weeks of vacation, etc. the total income will be about 105k. Compared with next year, I will be living on savings and will have under 10k income from stock dividends (living on savings for 10-11 years before dipping into 401k and starting to receive social security benfits). I'm not yet familiar with Italian taxes, but just on the surface, it would seem worth it to me to delay entry so I don't have to deal with taxes in Italy on this income for 2016. I know I will have to face this next year (and years to come), but would rather face it with this very small income. Plus, I can work one or two more weeks here at my current job if I delay my departure date, which I think would make up the difference of flight change fee, dual payment of rent for last two weeks of June, etc.


just wanted to check and see if entering after Jul 1st worked for you not to pay any Italian tax for 2016? I was afraid that since ER visa is given to people who wish to live in Italy long-term they may attempt to tax me disregarding the 183-day rule stating that my habitual abode was in Italy as soon as I entered since I intended to remain forever. i ran the #s and difference btw the US and Italian taxes in my cases is huge and is definitely worth the wait. 
Thanks!


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## NickZ

All three of the residence tests are covered by 183 days. If you don't pass the test for at least 183 days you aren't resident for tax purposes.


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