Caught in the middle of a tax dilemma

..too bloody honest that's me...

The dual taxation treaty between Italy and UK has a paragraph in it which has no punctuation and therefore is totally opaque. My accountant in Italy- a man of many years experience (who is also the Local authority accountant for our comune) tells us that as tax resident but not Italian citizens ALL private pensions, share dividends etc.are taxed in Italy BUT Public Pensions e.g teachers Policemen and firemen LEA pensions are taxed in UK . We knew that. But State pensions are not referenced specifically...

So .....he state an overarching principal across Italy is :
Private pensions are taxed in Italy
Public pensions are taxed in country where they are paid.

No problems so far except....
Many so-called UK tax advisors state that UK STATE pension should be taxed in Italy based on the Italian 'Worldwide income' principle on Italian tax. Worse still the overseas pension office at the DWP seem to believe UK State pension should be taxed in Italy. but the wording in the DTT, like I have said is ambiguous although it does lean towards supporting my Italian accountants view.
Many commercialistas agree with mine so many people some of whom I know, do not pay or declare the UK pension on Italian tax returns and I suspect - in fact I know - many don't pay it to HMRC either.

Now I have only just started to get my state pension and it would fall within my UK tax allowance anyway and also most of it would be covered under the tax rebate zone in Italy. so I don't care who technically I am liable to declare it to.
My dilemma is if I don't declare in Italy I could get fined ( or even imprisoned) if I should have paid it (even with an accountant completing the returns the taxpayer is responsible) however if I declare and then found out I should not have paid it or worsee have to pay the HMRC it becomes a bureaucratic nightmare reclaiming it.
Everyone seems to have a different opinion.

 

Don’t declare it

 

Having built up a few years of state pension and a tiny bit of private pension back in The Netherlands and now building up to a state pension and a private pension here in the UK, I'm already not looking forward to figuring that one out! "Luckily" I still have a few years of working to do before that would become an issue.

 

Id declare it in Italy if you're under the tax threshold anyway. That's your main residence isn't it?

 

don't declare it...

 

Obviously you should declare it. If you don’t and you should have, you say you may get a fine or prison. If you do and didn’t need to have then you face a ‘bureaucratic nightmare’ - so filling in some paperwork? Which consequence is worse? Especially as you said that you fall below the bracket in the UK so who cares if HMRC then say you should have told them and you said most is covered in Italy anyway. You’re risking prison (and therefore I’m guessing potentially deportation) for basically nothing. Just declare it and forget about it.

 

It sounds to me that you are resident in Italy for tax purposes (how much time do you spend in U.K. each year ?). In which case all income is subject to Italian taxation. There should be no charge to U.K. tax and any that is deducted should be reclaimable from double taxation treaties. I am British, lived in France and worked in Switzerland so I used to have to complete three tax returns ! Thankfully this is down to just pne now as

 

Sorry about the clumsy fingers ! Am now retired in the U.K. hence one tax return - though I'm typing this response from my house in Spain which I've had since 2008....

 

Some people live boring lives

 

Ask the efl.

Seem to be able to put things off and kick cans down the road