Will we have to pay taxes to Italy

Over 25 million Italians have emigrated between 1861 and 1960 with a migration boom between 1871 and 1915 when over 13,5 million emigrants left the country for European and overseas destinations.
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Squigy
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Will we have to pay taxes to Italy

Postby Squigy » 13 Apr 2011, 21:32

I've decided I want to start the process of getting dual citizenship, soon. Hopefully, this year.

Most of my relatives are on board. My siblings, my mother, and my grand uncle are all excited about the idea. The one concern my uncle expressed was whether or not we'd have to pay taxes to Italy. If so, how much would this generally cost us each year?

Thanks!!
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Re: Will we have to pay taxes to Italy

Postby johnnyonthespot » 13 Apr 2011, 21:46

If you take up full-time residence in Italy (defined as spending more than 183 days of a calendar year), then you will pay Italian income taxes on your earnings, no matter where your employer is located. Technically, you would also owe US taxes on your worldwide income, no matter where you are resident, however the first ~$91,000 of income taxed by another country is exempted.

The US-Italy Tax Treaty covers all of this in detail. See http://www.irs.gov/businesses/internati ... 01,00.html

Until such time as you actually become residents of Italy (if ever), the only "tax" you currently need to worry about is the annual marca da bollo (tax stamp) required to keep your Italian passport current. It costs €40,29 if I recall correctly and can only be purchased at a consulate or embassy (unless you are in Italy in which case it can be purchased at many, many, locations). You need to have a current marca da bollo affixed to your passport whenever you enter or leave Italy; you can happily let the bollo expire until you actually need one for travel.
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Re: Will we have to pay taxes to Italy

Postby Squigy » 13 Apr 2011, 21:56

johnnyonthespot wrote:If you take up full-time residence in Italy (defined as spending more than 183 days of a calendar year), then you will pay Italian income taxes on your earnings, no matter where your employer is located. Technically, you would also owe US taxes on your worldwide income, no matter where you are resident, however the first ~$91,000 of income taxed by another country is exempted.

The US-Italy Tax Treaty covers all of this in detail. See http://www.irs.gov/businesses/internati ... 01,00.html

Until such time as you actually become residents of Italy (if ever), the only "tax" you currently need to worry about is the annual marca da bollo (tax stamp) required to keep your Italian passport current. It costs €40,29 if I recall correctly and can only be purchased at a consulate or embassy (unless you are in Italy in which case it can be purchased at many, many, locations). You need to have a current marca da bollo affixed to your passport whenever you enter or leave Italy; you can happily let the bollo expire until you actually need one for travel.


Thanks, Carmine!!

I may move to Italy one day, but I doubt my uncle ever will. So basically, if he doesn't move there, the only tax he would need to pay is to keep his passport current (and only if he plans on visiting). That's good, he'll be glad to hear that.

Now if I ever move do move to Italy, I just have to make sure I make under $91,000. Don't think I have to worry too much about that!!! :lol: :lol:
My Italian surnames:



Caserta: Maietta, Rossano, Tessitore, Negro, Peluso, Musone



Campobasso: D'Andrea, Barile



Catanzaro: Fiorelli/Fiorillo, Romito

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Rodio
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Re: Will we have to pay taxes to Italy

Postby Rodio » 13 Apr 2011, 22:02

Carmine--I have read on other forums the marca da bollo for passports is needed only when leaving Italy, AND your final destination is outside the Schengen zone. I cant find the exact link on this, and even if I could, my Italian is very basic at this stage, and I don't trust the online translators for long pages of legalese.

Any thoughts?

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Re: Will we have to pay taxes to Italy

Postby johnnyonthespot » 14 Apr 2011, 14:48

Rodio wrote:Carmine--I have read on other forums the marca da bollo for passports is needed only when leaving Italy, AND your final destination is outside the Schengen zone. I cant find the exact link on this, and even if I could, my Italian is very basic at this stage, and I don't trust the online translators for long pages of legalese.

Any thoughts?


My understanding is similar to yours with the distinction that there is "the law" and there is the "practical application of the law".

I don't think an Italian passport is valid for use of any kind at any time unless it has an unexpired marca da bollo affixed. However, as a practical matter, the only time this is likely to be noticed is if you are traveling from Italy to a non-Schengen destination. For travel within Schengen countries, you don't need to present your passport at all - an Italian Carte d'Identita (identity card) is sufficient. You must be resident in Italy (or EU?) in order to obtain a Carte d'Identita.

I have also seen it argued that the moment you (a US citizen living in the US, for example) gain Italian citizenship, you are in violation of Italian law because you are outside Italy/Schengen and not in possession of a valid Italian passport. When you get your first Italian passport, you will pay not only the fee for the 10-year passport, but also the fee for the first year's marca da bollo.
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Re: Will we have to pay taxes to Italy

Postby MST995 » 14 Apr 2011, 15:36

Squigy wrote:Now if I ever move do move to Italy, I just have to make sure I make under $91,000. Don't think I have to worry too much about that!!! :lol: :lol:


Just to clarify.... even if you make more than $91,000.... it really doesn't matter; you will receive a tax credit for the Italian taxes you pay on your US income tax return... For example; you make 100k USD per year in Italy; your italian tax rate is 35% and you end up paying 35k in taxes to Italy.... now lets say your U.S. tax rate is 30%... you would receive a credit for the 35,000 you paid in Italy on your U.S. return and since the Italian tax rate in this example is higher, no payment to the U.S. is required, although you must still file. The only time you may owe an additional amount is if the U.S. tax rate is higher than Italy's... in which case you would only owe the difference... so I guess a rule of thumb would be that you would end up physically paying whichever tax rate is higher, U.S. or Italy.... but NO double taxation would occur.


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