Hi All,
I threatened to do this tax post online in order to force me to follow through in a more or less timely manner, so here goes. This could turn out to be long.
This is not meant to be a comprehensive overview of the issue of Italian tax filings and payments by Americans or other expats. Other expats may have their own national tax treaty with Italy; I know nothing of that. And it is not comprehensive because it is limited to only my own experience.
THE REST OF THE STORY: I WAS THERE AT PAYING ITALIAN TAXES
2018 was the first full year of Italian residency for us. Fortunately, our income is limited to SS (plus some interest and royalties barely worth mentioning) and the amount received did not rise to the threshold required to pay taxes (or even to file) in the US. This story is thus limited to our attempts to figure out what to do over here in Italy.
First off, I requested some info on commercialistas on this forum back in April or May. I received some responses and e-mailed a number of the commercialistas. I found that the rates charged were generally around EU 300-400. We always filed jointly in the US; there is no such filing status here, apparently, except in limited circumstances that did not apply to us. What this means is that each person must file on his or her own. What THAT means is that one can double the cost of filing from a commercialista. It would have cost us EU 600-800 just to get the filing done for both of us, exclusive of any payment determined to be due from us. That seemed like a lot to shell out for a minimal SS income.
So we went to the CAF (Centro Assistenza Finanziaria) office in Selvazzano Dentro. The lady there declined to help us with the filing and told us to call a commercialista, and gave us a number. She just didn’t want to do it and gave us excuse after excuse. Fine. We left without accomplishing anything at all. My wife made an appointment at another CAF office in Abano Terme, not far from us. We had to wait a few weeks in order to get the appointment. When we arrived at the second CAF office, we were surprised to find the same lady, who gave us the same commercialista name and the same number and the same sob story about not being able to do it. Clearly, this woman wasn’t about to do our returns.
On the way home, we passed yet another CAF office, this time in Tencarola, where we live. This lady wanted to do a bit of research first on any tax treaty between California and Italy. I tried my best to explain that we had no obligation, legal, moral, or otherwise, to California, but she insisted. I knew this wasn’t going to work (CA can't enter into a tax treaty with Italy), and so it turned out.
So far, we were batting zero at the CAF offices. We hadn't struck out, but the count was 2-and-3. At some point, we’d gone to the Agenzie delle Entrata and spoken to a man who was very generous with his time, and very professional (and VERY patient with me!). I had the documents and the numbers, so he did a quick guesstimate of our taxes, without going into the finer details (though he did punch in the numbers and do the math). In truth, it was nothing more than a ball-park number, omitting, for instance, my wife's medical receipts and the interest we accrued and such. But is served to give us a general idea of the money we’d need to spend.
After the third failure at CAF, I wanted to hire a commercialista who had offered to do the tax returns for EU 100 apiece. He at first wanted me to enter into a year-long contract for financial services for EU 240 each, but we have no need of such services. So I wrote back and forth with him and he finally gave me a number I could live with just to do the taxes. We ended up not using him because it would have meant travel to another city a few hours away in order to meet with him, and I got the impression that he was sort of new to this business. Mind you, he stated outright that he had the experience, so maybe it was just me. At any rate, I was ready to try him because the deadline was becoming a Sword of Damocles hanging over our heads with little Time left to support it.
Instead, my wife wanted to try yet another CAF office in downtown Padova. This is the main office, and, finally, they were able to get it done. I’m not sure they did it right, because the woman spoke English like I speak Italian; badly, at best. Maybe she did it right, maybe not. But if I hear about any problems, then I have the backup that CAF did it for us. The individual numbers (ie- mine and my wife’s) came out differently than the ball-park estimate from the Agenzie delle Entrata, but the total was just under his total estimate. My SS income is a bit larger than my wife’s, and she had more medical receipts that were deductible. In the end, she paid nothing, either in taxes or for the tax prep. That was nice. I paid EU 85 for the tax prep, and will pay the taxes in installments.
Here are some notes:
There are two tax forms; the 730 and the Unico. The 730 is for income earned in Italy, from work and such. It is for people who had taxes taken out (like “withholding” in the US) of their paycheck or who receive an Italian pension. The Unico is the form we were required to file. Each has a different deadline; the 730 was due in June, I think, or early July. The Unico is due in mid-September. However, the deadline for payment was on July 31, which led to some uncertainty. How can we pay when we don’t even know how much we owe? My only answer to that is to get it done early, before the July 31 payment deadline. And be sure to leave enough time to make that payment; one wants to avoid penalties for non-payment. I would advise leaving a week or so between the filing and the payment, at a minimum. Things happen.; the person at the bank is on holiday, the computers are down for the day or week, and etc..
Apparently, in Italy, taxes are paid up front (ie-for the succeeding tax year) and adjustments are made on your next filing, which may mean either an additional sum due or else a refund of excess payments made. Because this was our first year, I was happy to hear the lady tell me that I’d owe about what I expected to owe, only to be followed a moment later by a doubling of the amount. I had to pay for 2018, since it was my first year here, and also pay in advance for 2019, also because this was my first year here. This is something I hadn’t seen mentioned anywhere before, so it came as a bit of a shock. An understandable shock, but a shock nonetheless. So anyone making plans to move here or retire here should keep this initial double-payment in mind. I suspect that each year from here on out will be more or less normal (ie-one payment only).
For those who operate as self-employed, be advised that one must get an IVA account prior to commencing business. I thought about that for awhile, but declined, in the end, because the income I made as an author was insubstantial; the real money came from the deductions allowed under US law against any other income I’d had in the past. But I didn’t need to file in the US and wasn’t going to do so solely on an author’s income. This IVA account applies to any self-employment, as I understand it. I have no idea where to get this IVA account, but would try the Agenzie delle Entrata first.
The woman who prepared the taxes offered me four different pay-dates, so that the tax burden I’d pay would be distributed over the year, or at least over several months. I opted for two dates, even knowing I’d have to pay double this year. She gave me three dates. The first was July 31, the next is September 2, and the final date is December 2. At that point I will be done with 2018, and mostly done with 2019.
When your taxes are done, you will get a Form F24, in triplicate, for every due date you choose. You take this form to the bank and pay; they keep a copy, send a copy along to the proper agency, and I get to keep a copy, duly stamped and signed, as a receipt for my payment. I was in the bank to make the first payment when I noticed that there were two F24s for July 31. I thought the extra was a copy, but asked just to be sure. It wasn’t. I needed to pay for each F24 that was due on July 31. Glad I asked. I did a quick calculation, and found that the numbers added up to what the CAF lady had said, so it was OK. I figured to put it on the credit card (for the loyalty cash-back), but the bank does not take credit card payments INSIDE the bank!! Strange. Fortunately, I’d brought cash enough for one form and the money for the other came out of my wife’s account at that bank. These are just the little things one must be aware of when paying. Had I been there on the due date for payment, I could have been stuck with a late payment and penalties. But I like to get things done early whenever possible, because little things like this always seem to come up in Italy. Be Prepared.
Finally, I am confused about the true name of the place we had our taxes done. I’ve seen “CAF” on the outside window, but the envelope containing my tax forms says “CAAF” under the “CGIL” acronym, which I’m told stands for a worker’s union of some sort. At any rate, they help folks with their tax returns at a small cost (EU 85 for me this year), but each office may not be able to do the tax return needed for an American in Italy. Give yourself plenty of time (we started in May) to discover who can do it and when. I cannot say how widespread these offices are, or, indeed, if they are anything more than local, but I get the sense that they are national, so look around.
I think that’s about it. Hope this helps.
Cheers, John.
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