Andrà Tutto Bene. Italy and the Corona Virus


Andrà Tutto Bene. It means – Everything is going to be ok. This has become the unofficial response from ordinary Italians to this nationwide and worldwide crisis. These homemade banners have been appearing everywhere.

As of today, we have officially been on nationwide lockdown for a week. These steps have been taken for several reasons. We know that we cannot simply stop the virus, but the hope is that it can be slowed dramatically. Up in the north, in the region of Lombardy in particular, the hospitals were getting close to collapse. The Corona Virus attacks the lungs, and in people with respiratory problems, or other immune system weaknesses, it does not just send them to the hospital, it sends them to the ICU, and the ICU cases rapidly progress to where a respirator is needed. There have been a few heartbreaking stories where doctors were faced with situations where they had more patients than respirators and there were none to be had from anywhere else. It turned into what they described as battlefield triage where they were forced to decide who would get access to the machines. (Side note, this story may have been the source for some disgusting tabloid garbage I have seen going about social media about Italy denying care to people over 65. This is a Catholic nation for heavens sake!!) So the lockdown is a last chance attempt to slow the spread to a manageable rate, and also to try and stop it from racing down to the south of Italy where the percentage of older people is much much higher than in the north and the hospitals are not as well equipped.

How are the Italians reacting to this? Frankly, I am incredibly proud of the country I am now calling home. Overwhelmingly people have taken this calmly. It is kind of spooking seeing the streets so empty though. There has been no panic buying like in the United States. The stores are fully stocked.

I took this photo in the local supermarket, the toilet paper isle. They only let a certain number of people into the store at one time. We line up outside and the security guy sends us in groups of two or three. I waited about ten minutes to get in. The store had maybe about a third of the normal amount of people usually in it.

Come to Abruzzo! We have toilet paper.

This is the produce section. Hard to see, but maybe a dozen people total were in this section. Knowing that there are no shortages in the stores goes a long way to reassure people that they don’t need to panic or horde. Plus there seems to be more of a ‘us’, mentality in Europe than there is in America where so many of the posts seem focused on people taking a how does this affect ‘me’ mentality.

The Italians have faced this crisis with resilience and defiance. A week ago there was a nationwide movement to all go to our balconies and play music or sing. All over Italy people came to their balconies to say and sing in unison. “Yes, we are still here!” 

The rest of the world seems to be about three weeks behind Italy for some reason, Perhaps it is the amount of tourism. The measure of a people is not how they behave in the best of times, but how they deal with the worst of times. 

Documents and Registrations

Taxes for Expats

Taxes for Expats Information and links to help you understand and plan for Italian taxes. 7% Tax Program There is a program for expats moving to Italy who receive pension and other passive income to only pay a 7% tax. It lasts for a ten year period. No catches, this is an excellent program. Click the Icon for the Document Tax Guide Click the Icon to open a document that gives a summary of taxes in Italy. It is a little old, but the rules and rates are valid. US Italy Tax Treaty Click the Icon to open the IRS page containing the US-Italy Tax treaty. You will of course want the 1999 version and the Technical Explanation gives more in depth detail Guide for U.S Tax Returns Click the link to see an ebook guide about all the various in’s and out’s for filing your U.S, Tax returns while you are an expat in Italy. Who is this for? Primarily this page and guides are for Americans. Much of the information regarding who has to pay and the tax rates are applicable to most people however.  Who has to Pay Taxes in Italy. Non EU Citizen Working Italy Anyone who has earned income (income from working) will be taxed on the income they earn while working in Italy. This applies from day one, Euro one. Working in Italy also includes remote work. To be clear, even if you are working for a non Italian company and getting the money deposited into a non Italian bank account, you are considered working in italy if you are physically in Italy while doing the work. This applies from day one, no matter what type of visa you are on. [Lets be reasonable though. No one is going to chase you down if you deal with work emails and tidy up some loose ends while in Italy on vacation.]  There is such a thing as a Digital Nomad Visa, but Italy is not yet part of the handful of EU countries that offer this.  Non EU Retired The key figure to remember is: 183 days in a Calendar Year.  Anyone who spends more than 183 days in Italy must pay tax on their Worldwide Income. Because things vary from region to region, I know there are some (mostly pre-Brexit Brits) who have resident cards, but spend less than 183 days in Italy. I only mention this because a resident card is not a trigger for tax liability. It is triggered by physical presence. (There are a couple other triggers, but they have to do with more obscure events like center of economic interest and other things that would apply only to people with much more complicated situations.) A Tax Summary for Expats Types of Income When you are a Tax Resident (in Italy more than 183 days) you will pay tax to Italy on your worldwide income. Because this guide is targeted to expats who are retired and here on an Elective Residence visa, we will be discussing only Passive Income. (Income not coming from doing work.) Pension Income: The primary source will your Social Security. This IS taxable by Italy. [If you are a dual citizen it is ONLY taxed by Italy]. Social Security: This IS taxable by Italy as normal income. [If you are a dual citizen it is ONLY taxed by Italy].  Government Pensions: Government sourced pensions [Federal or State. Examples would be Military, Teacher, Other Federal or State Employee.] are NOT taxed by Italy. They will not be listed on your Italian tax return  Other Pensions: Taxed by Italy as normal income Interest: Taxed by Italy at a rate of 26% Dividends: If you have substantial dividend income [More than 2% of the voting rights or 5% of the capital in an Italian owned company OR 20% of the voting rights or 25% of the capital of a non-Italian company you will want professional assistance) Otherwise, the Italy will tax Dividend income at 26%.  Rental income: This is for people who keep and rent out their homes back in the U.S. for income. Useful guide here In particular, if the income deriving from the rented real estate owned outside of Italy is subject to foreign rental income taxes in the foreign country, the same taxable base utilized in the foreign tax return is subject to taxation also in Italy. This income is then included in the Italian ordinary taxable base and taxed at progressive tax rates.In this case, the taxpayer is entitled to claim for the foreign tax credit in the Italian tax return in order to avoid double taxation (if any). The said deduction is limited to the proportion of the Italian tax corresponding to the ratio between the taxable income produced abroad (and subject to double taxation) and total income. The foreign tax credit cannot, in any case, exceed the net Italian tax due on the foreign source income. IRA and 401k: Withdrawals from these accounts are treated as normal income by Italy. If you have withholding taken by the U.S. on the withdrawal you can claim that as a credit against Italian taxes  Roth IRA: Italy does not recognize the tax free nature of a Roth IRA. You should therefore be expected to pay tax on the growth/earnings of the account. Very good record keeping will be the key here. You will be paying tax on the growth even if you do not take distributions. Basically you are paying the tax when earned and none when you take withdrawals. Here is a link to a very good source on the subject.  Capital gains made as of January 2019 will be taxed applying a flat tax rate of 26% on the whole capital gains amount. The 2018 Italian Financial Bill introduced a final WHT at 26% both to tax resident and non-tax resident individuals for capital gains deriving from a qualified and a non-qualified shareholding (starting from 1 January 2019). Applies to both Qualified and Non-Qualified shares.

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