EU savings tax directive - ITALY

[Bionicle]

Hi ...does anyone know if the italy government is following up on interest earned in another EU country under the EU savings tax directive, eg. if the Channel Islands banks disclose info to the italian tax authorities?

[rjnpenang]

As far as I know your Channel Island bank HAS to notify the country you reside in if you have an account & how much interest you earned last year OR you can instruct your bank to deduct the interest themselves, but that is increasing every year. You can of course form an offshore co., the bank will arrange it for you, cost less than 1,000 US dollars a year. Its not ilegal to have an offshore co. so long as you declare the interest!!!!!.

[Bionicle]

Thanks for the reply..!
I was wondering if the italian government acts on the information provided to them under the directive and then automatically charge you interest. I guess that's quite difficult to know or find out. The other option is to pay the withholding tax, but like you say it is 20% and rising to 25% in 2011.
I am searching for the best savings interest for UK£. I have a current & savings account in the UK, but it seems that I cannot open another higher interest savings account if I am not UK resident. Therefore an offshore account seems the only option.
Do you have any experience with this?

[Bevdeforges]

One caveat on the offshore accounts - I haven't checked recently, but in the fine print of the ads for these accounts, you will often find a list of countries whose residents or citizens are excluded from the "offshore accounts."

I'm not sure of the legal basis of this, but I suspect the banks just don't want to be bothered with long, involved "discussions" with the tax authorities in certain countries. I've never check for Italy being one of the listed states, but can assure you that citizens of the US are often excluded, as are residents of France. (Then again, with Berlusconi back in charge, you're probably ok there. )
Cheers,
Bev

[hp30hb]

The institution were you have an account, for example the bank or government (bonds, debentures) is obliged under the EU dircective to inform the government (tax authority) in the country of your residence WITHIN THE EU that you have an account with them. The goovernment in your country of residence (within the EU) will expect you to declare interest in this account and may contact you if you do not. There is no obligation for actual sums to be declared. I understand that certain institutions merely provide a list of names on a CD to fulfil there obligation to the EU directive. This directive applies to PERSONAL ACCOUNTS only. There are, at present, no directives concerning company accounts and the advice given to you by another expat in this repect is good. It will cost you about £2,000 to open an offshore account and about £1,000 pounds per year to run it. You can obtain the interest as "return of investment" up to the maximum you invested, and then you will be obtaining interest that, officially, should be declared. For example, if you invest £1,000,000 you will be able to obtain a return of £50,000 per annum interest at 5% tax free (certain countries have no comapany tax) and take this out for 20 years as return of investment before you are actually obtaining interest. This is all perfectly legal. A law is a law and you are entitled to move around them but not break them. In addition to the institution not having an obligation to inform an EU country about a company account, they also have no obligation, yet, to declare the directors of the company. If money is placed in the company it belongs to the company and not the directors of the company. Therefore, the interest earned belongs to the company and not the individual investor (who may, by coincidence, be the director and in control of company finance/investment!). The directors can pay themselves a salary, but this should be declared legally - not necessarily a good idea. If you have a passport from outside the UK you will be in a better position. EU institutions have no obligation to inform nations outside the EU of investors. You may want to look at places like the Isle of Man and Gibraltar. You can obtain more detailed information from one of the offshore investment lawyers.