It will be much more complicated. You will pay US taxes on all your income, and depending on whether you do work in Italy, you will pay taxes to Italy as well. Lots of info on this forum about the nut and bolts so I won't reinvent that wheel here. You will likely pick up extra expenses in having professional management of your tax obligations.

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Once you obtain residency, you will owe Italian taxes on any income you receive during the period you are in Italy - Social Security, pension checks, etc. And, if you are in Italy more than 182 days in any calendar year, you will owe Italian taxes on your worldwide income for the entire year - even if you leave on the 184th day.

Also, Italy does not permit you to be legally "resident" in more than one place at a time. Assuming you establish residency in Italy, every time you leave Italy and return to the US, you will have to effectively give up your residency status and report yourself as, once again, an "Italian Citizen Residing Abroad". If you don't do so, then you run into the 182 day rule I mentioned above.

You want to be very careful about this; if not, you run the risk of eventually being hit with a huge tax bill.

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So if you have unearned income ie US Social Security Disability you have to pay taxes on it? That seems odd as you do not in USA or other EU countries.

If you are a residency in Italy you are not allowed to travel or leave Italy at all for any amount of time? So if one lives in Italy and you travel to visit UK for a few days you give up your Italy residence?

These sound odd to me, but i would like to know if this is true.

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FeliciaOni,

Yes, it is true. Italy will tax your US Social Security and pension benefits (except for most government and military pensions) and 401k/IRA distributions as well.

The rules are quite different for dual citizens vs. US citizens living in Italy on some sort of visa/PdiS. What status do you fall under?

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Felicia,

As to your other question, "If you are a residency in Italy you are not allowed to travel or leave Italy at all for any amount of time?"

No, this is not the case. Of course you can leave for extended periods, vacations, etc.

The point was, if you claim Italian residency, the you owe Italian taxes; the only way to avoid paying Italian taxes for the full year (as in the case of the person who wants to live 5 months in Italy and 7 months in the US) is to relinquish Italian residency during the time you are out of the country.

For the person above, this gets very complex and, frankly, probably not worth the trouble as the benefit gained from part-year Italian residency would be more than offset by the detrimental effects - substantially higher income tax rates in Italy, the need to file complex tax returns in both Italy and the US, etc., etc.

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Hi DoppioCittadino! My commercialista said that some types of disability income are excluded from Italian taxation. I asked for a friend and the commercialista said that he would need to see the specifics of the type of disability in question. My friends haven't taken it further, so I'm interested to know if you've received a definitive answer on the taxation of Social Security disability benefits vs. regular Social Security retirement benefits. Thanks.

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I am asking as my father and i are thinking of moving to Italy.

He gets USA Social Security Disability that is permitant and also VA Disability which is also permitant and both those are from the government and considered unearned income and is not taxable in USA or in most EU countries at least.

So that is why i find it odd that in Italy suddenly it would be taxable?

Yes he is a usa citizen only and this is what i thought was the case for all usa citizens?

It is good to know you can leave Italy! he hee.

Yes i guess many people are dual citizens which neither of us are. We would travel to visit other places in Europe but we never go back to USA at all. But i do understand many expats have family and stuff back in USA so the travel would be more an issue.

I will find out about this SSD thing more!

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FeliciaOni, as DoppioCittadino stated, Italy does tax Social Security benefits and it has always been that way since the tax treaty was signed decades ago; it's not "sudden." That is the agreement made between the two governments. Italy taxes just about everything except those pensions earned from U.S. government employment (which includes retired military). As to disability income derived from the two sources you mentioned, my commercialist (Italian tax accountant) said that SOME disability income is not taxed in Italy and he would need to see the type of disability plan in question to determine whether that income would be taxable in Italy. I suggest that you contact a very competent Italian tax accountant (there are some that can be found in the U.S.) versed on that subject and get a definitive answer. Italian tax laws are very complicated. As an aside, there are other taxes in question: city, regional, wealth tax on investments made outside of Italy, foreign (U.S.) bank accounts, etc. that you should also we aware of to determine if whether your Italian tax liability is "doable" before you move to Italy. Good luck.

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This forum is probably not a particularly useful place to hash out the taxability status of different types of Social Security benefits. One will be needing a competent tax preparer to reconcile the dual returns and determine tax liabilities. One might also ask, in regard to the question, is the five month term a non negotiable item? If tax liabilities are truly a make or break issue, then the most simple solution is the obvious one of limiting the stay to the 90 day tourist visa allowance.

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Dual Citizens - recommended Accountants Southern Marche/Northern Abruzzo

Dors anyone have recommendations for accountants who are well- versed in US/Italian tax code? We need to file tax returns in both countries.

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JacksterJam

Thanks for the info. We will find some tax experts on Italy to get exact answer yes. We do not live in USA so that is why i was asking.

Rsetzer99- yes i was curious about residence more so that is why i was asking about if you get residence in Italy why you could not visit other countries! But each country is different with rules so i would never assume things at all.

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FeliciaOni,

"I am asking as my father and i are thinking of moving to Italy. "

May I inquire as to your ages?

Will you have any income in your own name? Not income from work, as you will not be permitted to work in Italy nor, legally, even an online job while in Italy, if you are there on an ER visa.

Assuming you are US citizens, your only practical option for residing in Italy is on "Elective Residency" visas, each of which must be applied for separately (since you are not a married couple) and each of which requires - as a start - significant *guaranteed* annual income, generally reported at around $30 - $35,000 per year.

Search this forum for "elective residency" and/or "elective residence" for a number of threads on this subject. Also please visit http://vistoperitalia.esteri.it/home/en scroll to the bottom of the page and go through the questions and answers section for more info.

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Yes thanks for the info, that does seem doable.

Is their an age restriction on these ER visas in Italy? I ask why the inquiry of our ages?

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Felicia,

It seems that the younger you are, the more they will be looking for in terms of financial resources.

For example, $35,000 per year may be enough to keep a 65 year-old off the public dole for the remainder of his/her natural life, but not nearly enough for a 35 year-old.

Also keep in mind, as I mentioned earlier, there is no legal way for you to work in Italy while on an ER visa. And, working, means *any* form of work - it has been suggested that even authoring a book for eventual sale would fall under this heading.

An ER visa for a 21 year-old (frankly, probably even a 35 year-old) would be an extremely rare thing.

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