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TaxRobin
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Category: Tax
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Experience:  International tax
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I am an Italian citizen that has been living in the

Resolved Question:

Hello
I am an Italian citizen that has been living in the UK since 2000. I have been working full time since 2004. I had a saving account in italy (mainly with money left as inheritance from grandparents) - from last year this account has been closed and opened as an international saving account with some money invested. Please can you advise if I have to declare such account to the HMRC and if I will need to pay uk tax on it. Please can you also advise if I will have to declare the old account that has been closed and if I am liable to pay taxes on it. I thought that there is no double taxation between UK and Italy. Thank you
Regards
Daria
Submitted: 2 years ago.
Category: Tax
Expert:  TaxRobin replied 2 years ago.
Hello and thank you for allowing me to assist you.
You can certainly have an account in another country. There is nothing wrong with having accounts overseas, as long as you declare all taxable income and gains on your UK tax return.
You would need to declare the account you have and you would be taxed on the gains or earnings form the account.
There is a tax treaty between the UK and Italy but that does not mean you do not report income form Italy. It would mean that when income is taxed in both a credit would apply to your resident country.
The treaty states as follows:
ARTICLE 11 Interest
(1) Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
(2) However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed 10 per cent of the gross amount of the
interest.
So Italy would lower the tax rate on the interest.
Under the Double taxation part of the treaty, if you received dividends then you would receive a credit in UK for that tax.
Customer: replied 2 years ago.

Hello Robin,

Thank you for the feedback. Please can you clairfy will I need to declare also the past 10 years of the account that has been closed? Some of the money invested on this old account was on my and my brother's name, he still lives in Italy. Would I need to declare only my share? I also had a CURRENT ACCOUNT that didn't pay anything and on which I just had some money that was just sitting there - woud I need to declare that one too?

Please can you also let me know if there is exchange of information between HMRC and the italian revenue office. I dont know if I need to fill in an italian declaration form too.

Thank you

Regards

Expert:  TaxRobin replied 2 years ago.
Hello
The account you have now any interest would be reported. Yes UK does have information sharing as do many countries.
Customer: replied 2 years ago.

Hello

thank you but you have not advised if I need to report the acccount that has been closed too. I need to know as I need to go to Itay to collect all the documents. Or I only have to report the account that is operational?

thank you

regards

Expert:  TaxRobin replied 2 years ago.
You do need to report the interest or earnings from the account that is operational now.
If you did not move any of the money from the account to the UK in a prior year then you would not need to report the closed account.
Customer: replied 2 years ago.

Hello

Thank you. Sorry one more last question. With the operational account and the closed one, the money hasn't been moved to the UK. All the interests gained have stayed in that account in Italy - no money has been transfered to the UK from those accounts

Am I still liable to declare the operational account?

Thank you

Expert:  TaxRobin replied 2 years ago.
Hello,
Now you are because of changes in income and what is taxable.
Foreign income is anything from outside England, Scotland, Wales and Northern Ireland - the Channel Islands and the Isle of Man are classed as foreign. This includes interest and capital gains.
Customer: replied 2 years ago.

Thank you - so even if interests and capital gains dont come into my account into the Uk I still have to declare it for the operational accout in Italy - correct?

Please can you advise when this has change has taken place as I am going to see the bank in Italy next week and they will ask these details.

thank you

Expert:  TaxRobin replied 2 years ago.
The bank should know already but all you need for UK is the information as it relates to the account (interest earned).
The bank may require a certificate of residence which you can request from HMRC site.
The exact date I do not have on hand. In April 2013 the UK along with France, Germany, Italy,US, and Spain - announced an agreement to develop and pilot multilateral tax information exchange based on the Model Intergovernmental Agreement to Improve International Tax Compliance
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