Excellent channel. Thanks for the information. How about the wealth tax and inheritance tax? Perhaps you can have an accountant on your channel explaining it?
Great information! We're hoping to move to Italy in a couple of years. Cost-of-living and lifestyle are great considerations. We currently live on my husband's pension, our social security payments, and interest from our 401Ks. If we move to Italy, we won't have to pull from our investments meaning our taxable income in both the US and Italy would be much less.
@@TraveltirementItaly True! You'll get taxed either way sooner or later. At some point I'll be inheriting a portion of my mom's 401Ks too. Then there will be distributions from that to factor in from a taxation point too. It is what it is.
I would like access to the database to identify 7% localities please. Thank youfor this interesting and informative video on taxes. It’s really helpful
Thank you for your notice email on this subject!! So happy you brought this up, cos we were just wondering about it. Thank u for this very informative video!!
Beyond the regions that you cite as being included in the 7% tax regime for retirees, supposedly there are also certain areas of Lazio that also partake of the 7% tax regime … for example, around the city of Rieti. These additional areas, however, tend to be susceptible to earthquakes. I have heard, but cannot confirm, that some areas in Umbria may also benefit from the 7% tax rate. Does anyone have a link to the complete list of these areas??
Go to this article and scroll down to the bottom. You’ll see a list of towns in Lazio, Marche, and Umbria. I have not verified this list FYI. www.studiolegalemetta.com/legal-questions-and-answers/italian-7-per-cent-flat-tax/
Hi Tommy, I discovered your channel recently. I appreciate your input and all of the useful information living in Italy. Do you provide a virtual meeting?
Thanks for watching. I don’t do virtual meetings at the moment. I’m working on a couple of ideas to help people online. I’ll be sharing with my newsletter subscribers soon.
My understanding of social security in Italy is that if your SS is the result of working in private industry, it is taxed at normal progressive tax rates, but if it is from government or civil service, then it is untaxed. If I am incorrect, please post - I think this is what I learned from Essentaxa. I also think they take out the social contribution on top of the tax...taxing your pension for a pension you will never receive. Again - happy to be corrected.
How do they determine what portion of your US social Security is from public service or private? I worked a couple of odd jobs before joining the military-after I retired from the military (after 26 years), I worked for 2 companies.
@@mr-vet Well, your military pension (I assume it is pad separate from SS) should, in my non-expert mind, qualify as a government pension. Your SS may or may not based on where you worked.
@@mr-vet I spoke with an expert in Italy yesterday. His understanding is: • Social Security is taxable regardless of where you worked • Gov't pensions are NOT taxable in Italy (pensions from US Fed gov, State gov, military, police, fire, etc.) Additionally, he said that if you become an Italian citizen, your gov't pensions will then become taxable! Remember, this is education only, not tax or legal advice.
Very informative video and great channel. Qs. Is the income Italy is taxing just the amount you receive in Italy from a U.S. source? For example, if your social security, annuity and other passive income is deposited into a U.S. bank and you only wire 1,500 a month to Italy, would they only tax that amount that you wired to Italy every month?
If you’re a tax resident of Italy you report all worldwide income. You also report worldwide income in the US. But Italy and the US have a tax treaty so you aren’t double taxed.
@@TraveltirementItaly Thanks for explaining that. So, is it like Costa Rica where residents report worldwide income but only pay income tax in one or the other country? Or, for example, you pay the 7% flat tax in Italy and deduct that from your U.S. taxes?
The second option. Pay in Italy. Then file in US, getting a tax credit for what you paid in Italy. So you could still owe in the US if it's higher than the tax paid to Italy.
Hi Tommy, I've applied for my dual citizenship and should have all of my paperwork and Italian passport in about 9 months. Do you have any info on property ownership and taxation for my situation?
What percentage of a year do you need to live in Italy to be a tax resident so for instance, if you buy a property there, obviously, you will be subject to property, taxes and city taxes but if you only live, for example, 90 days a year there, would you be subject to income tax?
Boy, that first property is amazing. Would anyone like to go half and share the property 6 months a year? Maybe rent it out some months? I'm serious! Please respond.
What are your thoughts on putting worldwide assets (in this case property the US, 401K, other investment accounts) into a trust? Would that eliminate the need to report the assets, pay taxes on them?
Did I understand you correctly, that if I had the required 31,000 Euros needed for the Elective Visa. The first 28,000 is taxes at 23% then the additional 3,000 is taxes at 25%. Or is the entire 31,000 amount taxed at 25%? thx for the video.
It’s progressive. So the first €28k is at 23%. Then the next €3k is at 35%. Note: It also depends on the type of income it is. Above is for ordinary income. Example- Dividends are taxes at a flat 26%, regardless of amount.
Tommy, Are there any taxation aspects that are different for people that have a dual citizenship: one is US and the second is EU member country other than Italy? Are there any advantages for EU citizens when they buy a property in Italy compared to US citizen?
Not that I'm aware of. Citizens from anywhere can buy in Italy. Big differences are whether you're a tax resident of Italy or not. Then you get a lower tax at purchase. Plus no property tax if it's your primary house.
@@josephharmon5542 No double taxation. There is a tax treaty between the US an Italy. You'd pay your taxes in Italy, then when you file in the US, you'd get a tax credit for the amount you already paid to Italy. Works the same for Italians who reside in the US.
So, I would still have to file in both countries and hope the amount that I pay in Italy is the same that I would have paid in the U.S. that year. If Italy tax is lower than I would still have to pay in the U.S.. If Italy taxes are more that I would have paid in the U.S. for that tax year then I lose out. @@TraveltirementItaly
@@josephharmon5542 I don't know your tax situation, but most expats living in Europe pay tax there, then owe little or nothing in the US. Not sure what you mean by "lose out". If you are a tax resident (183+ days) in Italy, you pay your taxes there. You can't be a tax resident of a country, then choose to pay taxes in another country instead of where you reside. The US taxes by citizenship. So unless you give it up, you'd still have to file in the US. But you're unlikely to pay much, if any tax in the US. Because you will have already paid in Italy, and you get a tax credit for that amount. Hope that helps! PS - I'm not a tax professional.
Only the gains. But you’d have to make sure the Italian accountant understands this. If you move to a 7% flat tax municipality you’d pay 7% only on the gains. Good question!
@@TraveltirementItaly so let's say I draw $50k from an IRA and $50k from a Roth, assuming all is gains. I'd be in a 22% bracket in US and 7% in Italy. I'd owe $11k in US (22% of the $50k from IRA) and owe $7k in Italy (7% of both $50k). I pay $7k to Italy and only $4k in US (after the foreign credit). Is this roughly correct? Of course there are deductions for US and not for Italy, etc, etc
@@supermario927 Yes, this is generally correct. Just remember that with a low cost of living in Italy, you’d take less out of these accounts. A couple can live comfortably on $1,500-2,500 per month, including rent.
Often 30-50%. Depending on the bank, they may require a robust level of income. Also, many mortgages are 10 or 15 yrs. Depends on your age. Banks cannot repossess homes in Italy, so they want to be sure you’re a safe bet.
If you are not a resident you don't need to pay your income tax in Italy but you can spend up to 6 months a year split in 2 periods of up to 90 days each
PWC on Taxes Exempt income The following are some examples of income exempt from IRPEF: War pensions. Pensions and allowances paid to legally blind, deaf-mute, and invalid individuals. Social pension. Revenues paid by the National Institute for the Insurance against on-the-job injuries (called INAIL) for permanent disability or for death.
What many do not know is that there is an inheritance law that allows a descendant six generations down from the original owner may reclaim the property if it was abandoned by the owner. Properties like this may be from those who emigrated to other countries and have never returned but had relatives who may have looked over the property in their absence but later they or their descendants abandoned the caretakers role. Their descendants have no claim, only the original owners direct family may file claim. What is not clear is, 1. When one buys property from the Italian government, do they give you clean title to the property in case a family member decides to return to live in an ancestors home? 2. Is the new owner of the property out of the money they spent on restoring the property if the government does not guarantee clean title and a family member comes back to claim the property? 3. If the new owners have done "Due diligence" to confirm with the government and what records they might hold and provide you with that there have been no payments of property taxes for at least six generations which would logically apply to abandonment and a descendant shows up and tries to lay claim, who will protect the new owner? Is it the job of the notary who compiles the paperwork to give clear title or the government?
@@Subgunmanthat's why you use a notary to clear any claim on the property, once that has been done you are covered, notary in Italy are public officials and the situation you describe is not common at all. The reason many properties are cheap is because of demographic reasons and because are moving to larger cities not because houses have claims
Very helpful. 👍 You presented some good points with the taxes Liked the properties you showed as well.😊
Thanks for saying that.
I’m happy you watched!
Excellent channel. Thanks for the information.
How about the wealth tax and inheritance tax?
Perhaps you can have an accountant on your channel explaining it?
Great suggestion!
Yes, please share the Italian government database & how to video. Thank you for all of the information you provide.
I’m working on it. Stay tuned!
Great information! We're hoping to move to Italy in a couple of years. Cost-of-living and lifestyle are great considerations. We currently live on my husband's pension, our social security payments, and interest from our 401Ks. If we move to Italy, we won't have to pull from our investments meaning our taxable income in both the US and Italy would be much less.
That’s a huge benefit. Of course, at some point the US government makes you take RMDs from the 401k accounts.
But you can delay as long as possible!
@@TraveltirementItaly True! You'll get taxed either way sooner or later. At some point I'll be inheriting a portion of my mom's 401Ks too. Then there will be distributions from that to factor in from a taxation point too. It is what it is.
Thanks for the info and beautiful homes. We’re wanting to buy in Italy and from the US.💫💖
I’m excited for you! Thanks for watching.
I recently found that Piedmont property and almost forwarded it to you! Great video, sir!
Thanks so much for watching!
Thanks for all the information.
You’re welcome! Thanks for watching. 😁
I would like access to the database to identify 7% localities please. Thank youfor this interesting and informative video on taxes. It’s really helpful
You can find the Italian population database here: esploradati.istat.it/databrowser/#/it
Look under "Dati".
Thanks for watching!
Thank you for your notice email on this subject!! So happy you brought this up, cos we were just wondering about it. Thank u for this very informative video!!
Thanks for watching and joining the newsletter!
Subscribed because you gave such a thorough property review & google street etc. You are our favorite channel! Keep it up!
Welcome aboard!
Beyond the regions that you cite as being included in the 7% tax regime for retirees, supposedly there are also certain areas of Lazio that also partake of the 7% tax regime … for example, around the city of Rieti. These additional areas, however, tend to be susceptible to earthquakes. I have heard, but cannot confirm, that some areas in Umbria may also benefit from the 7% tax rate. Does anyone have a link to the complete list of these areas??
Go to this article and scroll down to the bottom. You’ll see a list of towns in Lazio, Marche, and Umbria.
I have not verified this list FYI.
www.studiolegalemetta.com/legal-questions-and-answers/italian-7-per-cent-flat-tax/
Great information, thanks
Glad it was helpful!
Hi Tommy, I discovered your channel recently. I appreciate your input and all of the useful information living in Italy. Do you provide a virtual meeting?
Thanks for watching. I don’t do virtual meetings at the moment.
I’m working on a couple of ideas to help people online.
I’ll be sharing with my newsletter subscribers soon.
My understanding of social security in Italy is that if your SS is the result of working in private industry, it is taxed at normal progressive tax rates, but if it is from government or civil service, then it is untaxed. If I am incorrect, please post - I think this is what I learned from Essentaxa. I also think they take out the social contribution on top of the tax...taxing your pension for a pension you will never receive. Again - happy to be corrected.
That is my understanding too. I'm chatting with another Italian accountant this week to get some clarification if possible.
Thanks for watching!
How do they determine what portion of your US social Security is from public service or private? I worked a couple of odd jobs before joining the military-after I retired from the military (after 26 years), I worked for 2 companies.
@@mr-vet Well, your military pension (I assume it is pad separate from SS) should, in my non-expert mind, qualify as a government pension. Your SS may or may not based on where you worked.
@@mr-vet I spoke with an expert in Italy yesterday.
His understanding is:
• Social Security is taxable regardless of where you worked
• Gov't pensions are NOT taxable in Italy (pensions from US Fed gov, State gov, military, police, fire, etc.)
Additionally, he said that if you become an Italian citizen, your gov't pensions will then become taxable!
Remember, this is education only, not tax or legal advice.
What are the towns or regions that pay you to move or buy there? Thanks!
I’m not sure. That’s a future video!
That wouldn't help him to make any money on overpriced dumps.Don't hold your breath
Very informative video and great channel. Qs. Is the income Italy is taxing just the amount you receive in Italy from a U.S. source? For example, if your social security, annuity and other passive income is deposited into a U.S. bank and you only wire 1,500 a month to Italy, would they only tax that amount that you wired to Italy every month?
If you’re a tax resident of Italy you report all worldwide income.
You also report worldwide income in the US. But Italy and the US have a tax treaty so you aren’t double taxed.
@@TraveltirementItaly Thanks for explaining that. So, is it like Costa Rica where residents report worldwide income but only pay income tax in one or the other country? Or, for example, you pay the 7% flat tax in Italy and deduct that from your U.S. taxes?
The second option. Pay in Italy. Then file in US, getting a tax credit for what you paid in Italy.
So you could still owe in the US if it's higher than the tax paid to Italy.
Hi Tommy,
I've applied for my dual citizenship and should have all of my paperwork and Italian passport in about 9 months. Do you have any info on property ownership and taxation for my situation?
Anyone can own property in Italy. No citizenship needed.
You have to pay some tax when buying a property. Just depends on your residency status.
What percentage of a year do you need to live in Italy to be a tax resident so for instance, if you buy a property there, obviously, you will be subject to property, taxes and city taxes but if you only live, for example, 90 days a year there, would you be subject to income tax?
Only on income that was earned in Italy. If from outside Italy, you’d pay where it’s earned.
Then you’d JUST pay property tax.
Boy, that first property is amazing. Would anyone like to go half and share the property 6 months a year? Maybe rent it out some months? I'm serious!
Please respond.
I do love that one!
Does Italy have a wealth tax like Spain? If I still had a house in the US or elsewhere or stock funds would they tax it?
Yes they do. It’s not much.
Go to this article and scroll down:
taxsummaries.pwc.com/italy/individual/other-taxes
What are your thoughts on putting worldwide assets (in this case property the US, 401K, other investment accounts) into a trust? Would that eliminate the need to report the assets, pay taxes on them?
I don’t know the answer to that.
Something else to research and learn!
Did I understand you correctly, that if I had the required 31,000 Euros needed for the Elective Visa.
The first 28,000 is taxes at 23% then the additional 3,000 is taxes at 25%. Or is the entire 31,000 amount taxed at 25%? thx for the video.
It’s progressive.
So the first €28k is at 23%. Then the next €3k is at 35%.
Note: It also depends on the type of income it is. Above is for ordinary income.
Example- Dividends are taxes at a flat 26%, regardless of amount.
Tommy,
Are there any taxation aspects that are different for people that have a dual citizenship: one is US and the second is EU member country other than Italy? Are there any advantages for EU citizens when they buy a property in Italy compared to US citizen?
Not that I'm aware of. Citizens from anywhere can buy in Italy.
Big differences are whether you're a tax resident of Italy or not. Then you get a lower tax at purchase. Plus no property tax if it's your primary house.
Would I still have to pay taxes in America on my passive income if I became a full time Italian resident? Taxation without representation?
Yes, if you keep your US citizenship.
If I keep my American citizenship and reside in Italy, I would be paying taxes in both countries on the same income?@@TraveltirementItaly
@@josephharmon5542 No double taxation. There is a tax treaty between the US an Italy.
You'd pay your taxes in Italy, then when you file in the US, you'd get a tax credit for the amount you already paid to Italy.
Works the same for Italians who reside in the US.
So, I would still have to file in both countries and hope the amount that I pay in Italy is the same that I would have paid in the U.S. that year. If Italy tax is lower than I would still have to pay in the U.S.. If Italy taxes are more that I would have paid in the U.S. for that tax year then I lose out. @@TraveltirementItaly
@@josephharmon5542 I don't know your tax situation, but most expats living in Europe pay tax there, then owe little or nothing in the US.
Not sure what you mean by "lose out".
If you are a tax resident (183+ days) in Italy, you pay your taxes there.
You can't be a tax resident of a country, then choose to pay taxes in another country instead of where you reside.
The US taxes by citizenship. So unless you give it up, you'd still have to file in the US.
But you're unlikely to pay much, if any tax in the US. Because you will have already paid in Italy, and you get a tax credit for that amount.
Hope that helps!
PS - I'm not a tax professional.
Please let me know how i can determine which towns have fewer than 20,000 residents. Thank you.
I'm putting together a course that will show you this and many other important things. It will be out in late January.
Just found your channel, interesting information. I am retired
Happy to have you!
Is crypto "interest" considered "interest", or is it a very specificly sanctioned definition?
I don’t know. If it’s recurring income it may be considered interest. If it’s from selling some crypto it would be capital gains.
I am a Disabled Vet and draw SSD, so I do not pay tax. would I in Italy?
I’m still researching this question.
If so, you may still “net” more money if the cost of living is much lower.
if I draw money from a Roth, will it be considered taxable income in Italy?
Only the gains. But you’d have to make sure the Italian accountant understands this.
If you move to a 7% flat tax municipality you’d pay 7% only on the gains.
Good question!
@@TraveltirementItaly bummer
@@TraveltirementItaly so let's say I draw $50k from an IRA and $50k from a Roth, assuming all is gains. I'd be in a 22% bracket in US and 7% in Italy. I'd owe $11k in US (22% of the $50k from IRA) and owe $7k in Italy (7% of both $50k). I pay $7k to Italy and only $4k in US (after the foreign credit). Is this roughly correct? Of course there are deductions for US and not for Italy, etc, etc
@@supermario927 Yes, this is generally correct.
Just remember that with a low cost of living in Italy, you’d take less out of these accounts.
A couple can live comfortably on $1,500-2,500 per month, including rent.
@@TraveltirementItaly thanks! so not a bummer after all (and some thinking) now I need to figure out year 11...
As an American Looking to purchase a vacation home/rental property what is the down payment percentage required?
Often 30-50%. Depending on the bank, they may require a robust level of income.
Also, many mortgages are 10 or 15 yrs. Depends on your age.
Banks cannot repossess homes in Italy, so they want to be sure you’re a safe bet.
Can you spend 5 months in Italy and not pay taxes on income? Facts, U.S. or Canadian citizen but also citizen of another European country. Thanks
If you are not a resident you don't need to pay your income tax in Italy but you can spend up to 6 months a year split in 2 periods of up to 90 days each
Yes. If you stay less than six months (2 X 90 day periods), and no income is made in Italy, you would not pay taxes there.
PWC on Taxes Exempt income
The following are some examples of income exempt from IRPEF:
War pensions.
Pensions and allowances paid to legally blind, deaf-mute, and invalid individuals.
Social pension.
Revenues paid by the National Institute for the Insurance against on-the-job injuries (called INAIL) for permanent disability or for death.
Yes, this is correct. Everything listed is from Italy, I believe.
Not US Social Security. Only Italian Social Security is exempt.
as Italian I advise you, never buy a property in Italy if you do not want to struggle with bureaucracy for the rest of your life. Stay away
Thanks for watching!
What many do not know is that there is an inheritance law that allows a descendant six generations down from the original owner may reclaim the property if it was abandoned by the owner. Properties like this may be from those who emigrated to other countries and have never returned but had relatives who may have looked over the property in their absence but later they or their descendants abandoned the caretakers role. Their descendants have no claim, only the original owners direct family may file claim. What is not clear is,
1. When one buys property from the Italian government, do they give you clean title to the property in case a family member decides to return to live in an ancestors home?
2. Is the new owner of the property out of the money they spent on restoring the property if the government does not guarantee clean title and a family member comes back to claim the property?
3. If the new owners have done "Due diligence" to confirm with the government and what records they might hold and provide you with that there have been no payments of property taxes for at least six generations which would logically apply to abandonment and a descendant shows up and tries to lay claim, who will protect the new owner? Is it the job of the notary who compiles the paperwork to give clear title or the government?
That's a very dumb statement
@@Subgunmanthat's why you use a notary to clear any claim on the property, once that has been done you are covered, notary in Italy are public officials and the situation you describe is not common at all. The reason many properties are cheap is because of demographic reasons and because are moving to larger cities not because houses have claims
@@Subgunman I'm not familiar with this. Can you share a link with information or source for my research?