Warning: This is not a tax guide, it is a brief explanation of choosing a property in Italy!

Before you buy a property in Italy, you need to decide for what purpose you are buying it. This is not a simple question and depending on the answer you may differ, for example, the amount of the one-off purchase tax provided for by Italian law. This is not the only difference, but rather one of the various other differences and different areas and terminologies of your life, including the concept of “tax residency”.

Let’s deal with that “tax residency” first!

If you are planning to buy a “holiday home” or “second home” as it is commonly called here, and you intend to live in Russia for more than 183 days a year, you will remain a tax resident of the Russian state. Accordingly, you will be fully subject to Russian law in the taxation of all your income.

What should you expect in this case? That you will have to pay taxes in Russia, both on income in Russia and on income in Italy and “abroad around the world”.

So in brief, if you bought a “holiday home” in Italy (you paid 10% (9% in Campione) of the cadastral value of the property to the Italian treasury as a one-off purchase tax). A Russian citizen and tax resident of Russia may be charged personal income tax for:

• rental income from a property you bought in Italy;
• for the profit realised on the sale of Italian property (if any);
• on “savings” in loan interest if you bought the property using loan funds (but this is only if “certain terms” are met).

Foreign property is not subject to personal property tax in Russia. You will pay tax for a house bought in Italy every year at your local tax office in Italy.

Russian law does not provide for authorisation to purchase property “abroad”.

It is compulsory to register with the tax authorities an account opened by you with an Italian bank. Moreover, you are obliged to submit an annual report on the movement of funds on this account to your Russian tax office.

If you intend to buy your “first home” and move to live in Italy, and after buying the property you will spend more than 183 days here, you will become a tax resident of Italy, and will be subject to local tax laws and you will need to take care of the registration of residence permit and resident identification card in time.

When you buy a property, you will pay a one-off purchase tax of 3% of the cadastral value of the property (2% in Campione).

So what awaits you when you open an account with a local Italian bank?

Russian citizens BUT tax residents of Italy (living in Italy for more than 183 days), do not notify the Russian tax authorities about the opening of accounts in Italy, and are not obliged to provide reports on the movement of funds in their accounts opened in Italy. But they are obliged in turn to notify the Italian tax authorities about the existence of accounts in Russia or in other countries and annually provide data on the movement of money in these accounts to the Italian tax authorities.

You will need to file an annual income and assets tax return for your income and assets in Italy.

A competent tax agent (commercialista) will calculate all your taxes for you. He will offer you different variants of calculations depending on your income. He will take into account , in accordance with your practice , the Convention between the Government of the Russian Federation and the Government of the Italian Republic of 09.04.1996 “On the avoidance of double taxation in respect of taxes on income and capital and the prevention of tax evasion”, the Tax Information Exchange Standard or Common Reporting Standard (CRS) and many other local and global tax laws.

In these times, you need to be literate or entrust your affairs to a competent professional. This is the message of this article!

P.S: Time flows and changes. Along with it, our world and ourselves are changing. All over the world, people have bought, are buying and will continue to buy property in alluring faraway countries.

And Italy has always been and will always be attractive for investors and private buyers, a country of delicious products, sea and sun!

Come and choose the house of your dreams, and we will make sure that you live here in peace and comfort, despite the introduction of conventions everywhere!

We will make sure that all these laws work in your favour.

Have a good day and a great mood everyone!