# Italy Taxes



## brozilla (Sep 25, 2010)

Hello:
Wife and I are considering a move to Italy and I am confused about the taxes.
Our current income is retirement benefits from state of California plus soon to be retirement income from Federal social security.

It looks like we could remain in Italy up to 6 months without any tax issues, and after
6 months, is where we are confused.

Is our retirement income subject to Italy taxation if we live there full-time? Or is only income earned in Italy subject to Italy taxes after x amount of months living there..??

Thanks!
David B from California


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## NickZ (Jun 26, 2009)

If you're tax resident in Italy you pay taxes on worldwide income.

The US/Italy tax treaty is fairly stock. Nothing special in it.

The obvious issue is you'll need a visa. Getting a visa means being resident.


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## aRoma (Feb 6, 2013)

*2 year tax break?*

I've been told that there is a tax break agreement between the US and Italy for the first two years of employment in Italy. Could someone explain what that means in practical terms? To whom would I (US citizen working in Italy) be liable/tax free for those first two years? And what is the possibility this would vanish anytime soon given the current economic climate?

Thank you!


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## BBCWatcher (Dec 28, 2012)

I'm not sure what that tax break could be. Do you have a Web link to more information?


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## aRoma (Feb 6, 2013)

I've just had a bit of clarification but I do not know the specific agreement to which this refers. It is tied to residency; an American, and apparently citizens of several other countries who have signed this agreement, can work for up to two years in Italy but declare residency back in their home country and then choose to pay taxes only in that country. It is a one-time, two year benefit and cannot be repeated again later.


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## BBCWatcher (Dec 28, 2012)

Are you referring to Article 20 in the U.S.-Italy Tax Treaty? That article provides a two year exception to certain professors and teachers in particular circumstances. (I would also look at the technical explanation.)

There are a few other treaty benefits in particular circumstances, but I'm not aware of any general two year benefit between those two countries.


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## brozilla (Sep 25, 2010)

aRoma said:


> I've been told that there is a tax break agreement between the US and Italy for the first two years of employment in Italy. Could someone explain what that means in practical terms? To whom would I (US citizen working in Italy) be liable/tax free for those first two years? And what is the possibility this would vanish anytime soon given the current economic climate?
> 
> Thank you!


lol
thread hack. Im not working when we move.:focus:


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## sim0670 (Apr 20, 2009)

aRoma said:


> I've been told that there is a tax break agreement between the US and Italy for the first two years of employment in Italy. Could someone explain what that means in practical terms? To whom would I (US citizen working in Italy) be liable/tax free for those first two years? And what is the possibility this would vanish anytime soon given the current economic climate?
> 
> Thank you!


Not sure about the two year rule, all i know is once you take residency you are treated as an italian and taxed like one. Can't see how you can live here any other way. No residency, no health cover and so on. 

Further more if you do take residency here in Italy. Find yourselves a good accountant. one who knows cross border laws. Regarding your worldwide assets, dont forget to disclose the value of all of these in the RW section of your italian tax return. Heavy fines are imposed for none disclosure of any assets and taxes due from such assets. Fines can be anywhere between 5% and 50% of their value. 

Trust me on this i am in this position now thanks to a 6 month investigation by the guardia finance. They also told us they regularly exchange information with tax offices in other countries. They are trying to nail italians taking money out of italy. The problem is Expats get caught in the net too. I know one or two other expats who have been caught out with this situation. It was all part of the mario monti's austerity package, lets get Italy back on track using expat cash! Also, don't forget you will need to pay imu tax ( ivie)on your houses abroad ie (usa) if it applies to yourselves too. 
Welcome to Italia !


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## aRoma (Feb 6, 2013)

I am now happily living and working in Rome and can confirm that BBCWatcher is right. Article 20 of the 1999 convention of the tax treaty between Italy and the US provides for a two year period for educators to opt to pay their taxes to the US rather than Italy. Since I need to have residency for family reasons, I can tell you that the amount Italy gets from my pay is stunning, but residency lets me enroll in ASL so I'm not paying for health insurance. If you stay past the two year mark, they can retroactively go after the taxes you did not pay.


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