# Help with various financial matters



## offtoitaly (Jan 28, 2017)

Hi Folks.

So grateful a forum like this exists as I could really do with some help from soon-to-be fellow expats.

As a brief background, I'm from the UK and I met an Italian girl whilst on holiday. I'm self-employed, so I've been able to rent a very small apartment in Italy over the past year and spend a few weeks there every few months (cheaper than a hotel overall).

However, I've decided I'd now like to move there properly instead of frequent visits. This is because I would like to settle here, but I'm also driven by our impending EU exit. I'm just not sure how easy it would be to nip back and forwards once we leave and I don't want to take the risk.

I'm also keen to apply before the end of March when Article 50 is likely to start. I may be overly paranoid here, but I'm just worried that any residency applications made after Article 50 is triggered may run into issues later down the line (i.e. anyone who has came to the UK/EU past a certain date have to jump through additional hoops, but I just don't know when that date will be). 

Anyway, I'm self-employed as previously mentioned, so my idea here is to set up a limited company in the UK, continue to pay business earnings into that (all clients are UK-based), and then pay myself a small salary in Italy which I'll be taxed on there. So I'll basically be employed by a UK company but working in Italy. 

I've heard nightmares about setting up and running a small business in Italy as a self employed person, so I presume I'm wise to go down this route and avoid all that hassle?

But I'm worried about a few other things:

1). UK bank accounts, credit cards and debts - can I continue to use those? Do I have to inform them of my move? What could the risks be? I do have car finance. Things to do with my home in the UK are easier because I live with my parents.

2). Stock investments. I currently have a portfolio of shares in an ISA with Interactive Investor. Does anyone know what would happen to that, if anything? Do I have to inform them?

Also, how straightforward is the process of applying for residency in Italy as an EU national? I really want to get my residency card so I have that regardless of what happens with Brexit. There won't be any issues with me having had this apartment in Italy for the past year, will there? I've had a codice fiscale since then and it was registered to me when I started renting it, but I've only ever used it as a holiday home with frequent short visits. 

If anyone can think of anything else I've overlooked, it would be appreciated. Thank you so much.

PS: I do intend to eventually move back to the UK in a few years, if that helps (and hopefully bring my Italian girl with me, but that's a whole new topic).


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## NickZ (Jun 26, 2009)

It's been awhile since I looked but controlled companies can't pay out a small salary to the owners . Well they can but they get taxed at the max rate.

You'd have to see if you'll need to pay into INPS.

You'll need to ask your UK bank. If you have an on shore UK account they might want you to shift to an offshore one. I think most of the UK banks offer these out of the Jersey islands. Obviously if you have a new mailing address telling them would be a good idea.

Residency you basically need to prove either income or assets. €6K I think. If you aren't working health care. If you are working you'll be signing up with the Italian system. But this gets back to paying taxes etc. 

Do you know what type of contract you have on the apartment? You'll need one that lets you register for residency.


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## offtoitaly (Jan 28, 2017)

NickZ said:


> It's been awhile since I looked but controlled companies can't pay out a small salary to the owners . Well they can but they get taxed at the max rate.
> 
> You'd have to see if you'll need to pay into INPS.
> 
> ...


Thanks for your reply.

I've spoke to my accountant and he seems to think that the salary route would be okay? I'd own the UK company but be paying myself nothing other than a salary as an employee. I'd earn nothing else as all earnings would be kept in the UK along with the business and taxed appropriately. 

So in the eyes of Italy, I'd assume that they'd see me living in Italy as an employee of a UK company, and I'd therefore be taxed on my personal salary.

All business activities are UK also. The only money to leave the country would be my personal salary, which I'm happy to pay tax on in Italy.

I have heard that I need to have private health insurance. Does this apply regardless of my employment status? 

And the contract should be fine. I started renting it just like any normal apartment. Not cheap considering that I'm only there a few months of the year in total, but it ultimately works out about the same compared to a hotel for the same amount of days. I'll double check though!


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## NickZ (Jun 26, 2009)

There are various kinds of rental contracts. How long is yours? Is it the normal 4 or 3 years? If not it might not be possible. The place also needs to be residential. There are some studio apartments that are zoned commercial. Legally a person shouldn't get residence here. Even if some of them are nicer then some homes.

If you're on contract you shouldn't need private health care. 

Your account said the UK would treat you that way? Or that the Italian tax authority would treat you that way?


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## offtoitaly (Jan 28, 2017)

NickZ said:


> There are various kinds of rental contracts. How long is yours? Is it the normal 4 or 3 years? If not it might not be possible. The place also needs to be residential. There are some studio apartments that are zoned commercial. Legally a person shouldn't get residence here. Even if some of them are nicer then some homes.
> 
> If you're on contract you shouldn't need private health care.
> 
> Your account said the UK would treat you that way? Or that the Italian tax authority would treat you that way?


Hi Nick.

Thanks again for your help.

It's a 4 year contract (but with a 6 month get-out clause which is why I went for it despite its length). It was originally on the market on estate agent websites as a normal home for rent, and it's in a residential block with Italians as neighbours on all sides.

It was also done through an estate agent (myself and the landlord sat in their office to sign everything over).

I did hear that any EU national wanting the 5 year residency card needs to fulfil certain requirements, i.e. to be earning above a certain amount of money and also to have private health insurance so they aren't a burden on the state. Is that correct?

In regards to tax, I will need to find out more about this, but I assumed that as an employee of a limited company in the UK (even if I own it), I'd be taxed on my personal income. 

I know Italy taxes on worldwide income, but as the company is a separate legal entity, anything the company earns is not my income. It will only earn from clients in the UK (no money at all being earned in Italy itself and then being moved to the UK), and the income will be kept in the company.

All I will earn is a salary I'll pay myself, which I'm happy to be taxed on in Italy, so I won't touch or personally earn a penny which hasn't been put through as official income in Italy.


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## NickZ (Jun 26, 2009)

Five year residency card IIRC comes after. The residence requirements are income or cash of €6000 (I think that's right) health care. A place to stay.

The company may be legal separate but it's something that creates a fairly easy tax dodge.

Company provides you with a car at the companies expense.
They may provide you with other benefits. Place to live for example.

Paying all these things out the company ends up with near zero in income.

You the "employee" have a small income and pay very little of any income.

That's why Italy taxes controlled companies differently.

You should speak to an Italian tax accountant. You're company will be controlled and operated from Italy


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## offtoitaly (Jan 28, 2017)

NickZ said:


> Five year residency card IIRC comes after. The residence requirements are income or cash of €6000 (I think that's right) health care. A place to stay.
> 
> The company may be legal separate but it's something that creates a fairly easy tax dodge.
> 
> ...



That's true. Obviously if this was a situation where my core business activities were based in Italy (i.e. clients) and then I set up a UK company to funnel funds out of Italy to the UK company, then I'd expect that to cause concern.

However, my thinking here is that the core activities and clients are all UK-based, and will be established before I leave for Italy to apply for residency, so I'm not sure how the Italian tax authorities could claim that the UK-based company should be taxed in Italy (and if they did, what HMRC would have to say about it).

I'll try and get a proper consultation from an Italian accountant. Best to be sure!


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## Bevdeforges (Nov 16, 2007)

I don't know how things are in Italy, but in many countries (many European countries, perhaps), the rule of thumb is that you are considered to be "working in" whatever country you are physically present in whilst doing whatever work you do. The location of the customers doesn't matter.

If you have, indeed, set things up so that your employees back in the UK are doing all the work, then the proceeds you receive are likely to be considered "dividends" of a UK company rather than salary. That can complicate things a bit - but check the Italian tax laws, and especially any tax treaties between the UK and Italy. (Italy does has a tendency to take taxes from just about any money coming into Italy from outside, and ask questions later.)
Cheers,
Bev


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## NickZ (Jun 26, 2009)

There is a rule of thumb dealing with control. 

Corporate Tax Residence – HMRC turn up the heat

"Additionally, for those companies not incorporated in the UK, they will be considered UK tax resident if they are centrally managed and controlled in the UK."

Replace UK with Italy.

The only thing the client location relates to is VAT. The EU keeps changing this so you should surf over to the EU website and do a search on cross border VAT. 

When I buy from Amazon.uk they charge me Italian IVA /VAT instead of UK VAT.


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