A ruckus over 20% tax

There are many new things to learn about living in Italy, and one of them is how to assimilate into, and make sense of, our place in the ex-pat community.  Ex-pat is a word many object to, in that it implies a social class that differenciates ex-pats from immigrants. Although I am aware of the class distinction, for clarity I will use the word ex-pats.  So. Our ex-pat community here is mainly made up of English people who have lived in Umbria for a long time.  Most of them live out in the country, up in the hills above the Niccone Valley.  They are a fairly tight community and pass on information to one another, provide security warnings, and generally keep one another apprised of the events that are happening in the community.

We are on the peripheral of this group, not being English, not living up in the hills with kids in school, and not living here long.  This past week we were included in a bit of a wild fire ruckus in the ex-pat community regarding taxes. It seems that the former prime minister, Letti, before his departure from office, passed a law that said that any money transferred in from outside of Italy, would be subjected to a 20% withholding tax that the bank would impose and collect on the wire transfer. The reasoning of the government was that there are many ex-pats who are not paying money on investments made abroad, and it would be the job of the bank to withhold the 20% and then people would have to document at the end of the year, that the money should not have been with held.  Hope you followed that.  The US has a trade agreement with Italy that we are not subject to double taxation. So if we pay 20% capital gains tax on our investments in the US we should not have to pay the 20% here.  Now a big however, if you are a resident of Italy, which the Stoic One will be this year, you must pay Italian tax, and then deduct that from your US tax.  Oh, mamma mia...one can see the cost of accountants going up now.  Everyone was in a tizzy about this.  The Italians said, the law will never change, you will have to pay your 20% and they will never give you your money back in your life time.  I believed them.

So I called the best financial advisor in the world, Will Wolf (WilliamWolf@MyInsightAdvisor.com)
and asked him about all of this.  We had an hour of financial therapy. I felt so much better talking to him.  Then this morning, miracle of miracles, the Italians "suspended" the law requiring the 20% hold back.  We live in a strange, global world.

Speaking of strange...

 Cigarette smoking reducing fertility should be the least of the negative effects, but I guess this is more scary than lung cancer!