Hi Theresa,

I don't have the answer to your first question but imagine if you left Italy and returned to the States that you would need to notify your comune in Italy and then be registered in AIRE again.

For this question, "I know I will be required to file taxes in the U.S. and Italy once I establish residency in Italy and am in country more than 182 days."

I believe Doppio told me that as duals, once we register residency in Italy that we are obliged to pay income taxes for the portion of the year that we are in Italy. In my case, since we will be moving in September, I will be liable from Sept through December 2017. However, he mentioned that we are not liable for the wealth tax until the 183 day mark. I hope to consult an accountant soon about all of this.

Doppio, if you see this post, could you weigh in? Thanks very much.

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Hi Lisa,

Is Social Security considered a wealth tax?

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Theresa,

"Is Social Security considered a wealth tax?" No, it is ordinary income, unfortunately. Wealth tax is levied on your bank accounts, investment accounts that you have in the US. There is also a tax on real estate if you own any of about .70 percent.

"Wealth tax on investments held abroad (IVAFE). In addition to income taxes, a Wealth tax is also charged on financial assets held abroad by individual tax resident in Italy(including current accounts). The rate of Wealth tax is 0,20 percent of the value of the financial assets. For bank accounts held in EU/EEA states the tax rate is substituted by a flat rate charge of EUR 34.20 per account. If the annual average in a bank account is less than EUR 5,000, the wealth tax is not charged.

In addition to the Wealth Tax, all foreign investments not held through an Italian intermediary are subject to reporting for fiscal monitoring purposes (Form RW of the tax return). Anyway, in particular case, the monitoring rule does not apply regarding to deposits and bank accounts held abroad whose total maximum value, reached during the fiscal year, does not exceed 15,000 EUR. There is de minimus value for reporting other types of financial investments.

In response to your first question:
Termination of residence:

Are there any tax compliance requirements when leaving Italy?

It is important to proceed with the cancellation from the register of the Italian Resident Population, the so-called "Anagrafe della Popolazione Residente" if the taxpayer has been previously enrolled in it.

What if the assignee comes back for a trip after residency has terminated?

Any day or part of a day spent in Italy during the tax year has to be taken into consideration.

For further info, check out this website. There is similar info on others as well:
https://home.kpmg.com/xx/en/home/insights/2011/12/italy-income-tax.html

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Thanks so much, Lisa. Much to absorb.

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Seeing a commercialista this week. Would like to confirm: Does Italy's wealth tax apply to funds left on deposit in IRA accounts?

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Hi Whidden,

There is no wealth tax on IRA's. I just asked the question to an American tax attorney I have been speaking with in Rome. Here is my question and her reply:

"Is the wealth tax on our existing IRA’s? Someone from a forum I am on said that he has been told by several commercialistas that they are not subject to the wealth tax.

No, there is no wealth tax due on the IRAs."

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I concur, Lisa. My commercialista said retirement accounts are not suject to the wealth tax, although I did have to submit a statement because they need to be reported for "monitoring purposes only." I only paid the wealth tax on savings and retail investment account balances.

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That is good news and one that my commercialista seems to agree with. That's a relief. Now, if I can forestall taking distributions in the immediate future, my taxes on IRAs across the board will be delayed. Thank you, Lisa.

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