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Foreigners in Italy hit by tax changes

Foreigners in Italy will be forced to disclose more information about their overseas assets as part of tax rule changes that will also see authorities monitoring transactions more closely.

Foreigners in Italy hit by tax changes
Photo: Alan Cleaver/Flickr

Foreigners will now have to declare all assets, which would usually include property, shares and savings accounts, regardless of their value, after the €10,000 threshold was scrapped.

Though they won't be charged any extra tax on smaller assets, they face stiff penalties for failing to declare the assets and will likely have to undergo more cumbersome reporting procedures, Gareth Horsfall, a financial planner at Spectrum IFA Group in Rome, told The Local.

“A new internal team of the Guardia di Finanza (finance police) has also been set up to monitor transactions taking place abroad for Italian residents,” Horsfall said.

“This is in line with European and G20 guidelines regarding a free share of tax and financial information.”

In 2012, Italy introduced new taxes on foreigners who have homes overseas (0.76 percent on the rateable value if the property is in Europe and on the market value if it is outside Europe). In addition, they are also taxed on non-property foreign assets at a rate of 0.15 percent, Horsfall said.

Still, foreigners will get some relief after IMU, the controversial property tax, was scrapped in August. It will be replaced next year with a service charge, which is expected to include all local taxes such as waste collection.

“From 2014, it will no longer be the IMU we have known so far,” Italian Prime Minister Enrico Letta said in August.

“It will have a new name, TASER or tax on municipal services.” 

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TAXES

Beskæftigelsesfradraget: What is Denmark’s employment allowance?

Denmark's government may soon announce changes to its tax reform plans, which will give all wage earners a bigger employment allowance. What is this and how will it affect foreigners' earnings?

Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance? 

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes. 

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner. 

How did the government agree to change the employment allowance in its coalition deal? 

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment  allowance to 12.75 percent up to a maximum rebate of 53,600 kroner. 

How might this be further increased, according to Børsen? 

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance. 

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement. 

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.  

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