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To declare or not to declare

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ilpablo

Active Member
May 19, 2021
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Sofia
#1
Hi guys, here i'm asking for your best advices on what to do with this situation.

Basically in 2019 I opened an LTD company in UK from my homecountry.

That year my italian solo entrepreneur business was still active and I made just a few thousands bucks with the UK company (and I've got roughly 3/4k) on my Revolut account as dividends.

The plan was to move out the country in 2020, so I did close the Italian VAT by the end of 2019 planning to move out the country in March.

Then the fucking covid came to life and I WAS FORCED against my will to stay in my home country till June and then obviously for the tax purposes it means that I spent the fiscal year there.

Just right before the lockdown I've got around 15k in dividends as well on my foreign Revolut account.

I invested that money in stocks with a good gain of about 20k.

In 2021 I finally moved out.

Now it's time to present my fiscal declaration for the past year and I don't know what to do.

Some people told me to pay for the dividends and that's it, while some others told me to pay for the dividend and also the capital gains made.

Some other people told me to DO NOT declare anything, since can trigger an investigation for the foreign company on my name and just lead to more troubles.

The fines for not declaring anything are around 2/3x of what you should pay.

Taxes are 26% on everything: dividends, capital gains and corporate taxes.

I'm not even sure that Revolut was communicating with the country at that time, since they sent me a message just few weeks ago, telling me that they should start to do so, and to confirm my fiscal address (which now is not the Italian one anymore).

What would you do in my position?

Practically speaking if I don't declare anything I risk to get fined and pay 2/3x what I shoud.

If I declare something they said the tax guys could tell me that my company should be in Italy at that time since I was living there, and this could be a big mess.

Please help me to solve this puzzle :D
 
#2
ilpablo said:
What would you do in my position?
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Declare everything. As much it may hurt let the Italian taxman eat their last supper from you and move on from it.
 
#3
Martin Everson said:
Declare everything. As much it may hurt let the Italian taxman eat their last supper from you and move on from it.
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Yes that's what I would do, but they can still get me in troubles just because i own the company abroad and people telling me to avoid to do so, basically are arguing that I'm putting myself under the radar declaring this income and i might be safe without doing it.

So I'm really afraid to do any of my options
 
#4
ilpablo said:
Yes that's what I would do, but they can still get me in troubles just because i own the company abroad and people telling me to avoid to do so, basically are arguing that I'm putting myself under the radar declaring this income and i might be safe without doing it.

So I'm really afraid to do any of my options
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If you're going to live to another country, pay the taxes you owe them and then forget about them, you can be under their radar as much as they want to, but as long as you're not a tax resident there, you can kindly tell them to f**k off
 
#8
ilpablo said:
All my transactions were made on TW and Revolut foreign accounts. So i can't really decide what to do
Click to expand...
I will say what I already said but you seem to have ignored it.

You have two options:

1. Pay your taxes, get out of the country and have peace of mind.
2. Take the risk and not declare anything. If this goes wrong, you may end up paying a lot of money

I've done the latter and trust me you won't sleep well unless you accept that someday you may get caught.
 
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#9
legrant said:
I will say what I already said but you seem to have ignored it.

You have two options:

1. Pay your taxes, get out of the country and have peace of mind.
2. Take the risk and not declare anything. If this goes wrong, you may end up paying a lot of money

I've done the latter and trust me you won't sleep well unless you accept that someday you may get caught.
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I appreciate your honest advice (i didn't ignore it on first place, just I didn't share these details yet)
 
#10
ilpablo said:
I appreciate your honest advice (i didn't ignore it on first place, just I didn't share these details yet)
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IMO do not declare anything since you're already moving out the pothole. No need for bureucracy, investigations, yadda yadda ciao bella and walk out
Prudency is to be exercised with serious amounts (north of 1M as a rule of thumb, though some argue that in the era where college students sell their homemade website to JustEat and co for 10M+ this is barely a cookie) AND in cases you want and live there for life: have mansions, villas, supercars and boats around the coast. You are leaving in a wheelcar like a cattle nomad some decades back, what tax you should pay?? Zero.

Tnx

p.s. Let's suppose he is moving to Dubai...How will the gov enforce their 10-15k claim? It's like a 1 day of work of a local lawer in UAE...and the sheiks would laugh in face of the gov who went after their citizen over something like...0.02M ??? What we're talking about...get me an expresso :D
 
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#11
newNomad said:
IMO do not declare anything since you're already moving out the pothole. No need for bureucracy, investigations, yadda yadda ciao bella and walk out
Prudency is to be exercised with serious amounts (north of 1M as a rule of thumb, though some argue that in the era where college students sell their homemade website to JustEat and co for 10M+ this is barely a cookie) AND in cases you want and live there for life: have mansions, villas, supercars and boats around the coast. You are leaving in a wheelcar like a cattle nomad some decades back, what tax you should pay?? Zero.

Tnx

p.s. Let's suppose he is moving to Dubai...How will the gov enforce their 10-15k claim? It's like a 1 day of work of a local lawer in UAE...and the sheiks would laugh in face of the gov who went after their citizen over something like...0.02M ??? What we're talking about...get me an expresso :D
Click to expand...
LOL thank you for your contribution as well
 
#12
newNomad said:
IMO do not declare anything since you're already moving out the pothole. No need for bureucracy, investigations, yadda yadda ciao bella and walk out
Prudency is to be exercised with serious amounts (north of 1M as a rule of thumb, though some argue that in the era where college students sell their homemade website to JustEat and co for 10M+ this is barely a cookie) AND in cases you want and live there for life: have mansions, villas, supercars and boats around the coast. You are leaving in a wheelcar like a cattle nomad some decades back, what tax you should pay?? Zero.

Tnx

p.s. Let's suppose he is moving to Dubai...How will the gov enforce their 10-15k claim? It's like a 1 day of work of a local lawer in UAE...and the sheiks would laugh in face of the gov who went after their citizen over something like...0.02M ??? What we're talking about...get me an expresso :D
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If he ever wants to go back to Italy though, if he purchases anything (property, wage, etc), government will take it till the fines or what is owed is paid off
 
#13
legrant said:
If he ever wants to go back to Italy though, if he purchases anything (property, wage, etc), government will take it till the fines or what is owed is paid off
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here you are in theory right, THOUGH I read in the press that precisely Italy is famous for having programs every X years where all those gov claim files are completely dismantled if the debtor is not able to pay and reset to 0. Called something like "Salva Suicidi"
 
#14
newNomad said:
here you are in theory right, THOUGH I read in the press that precisely Italy is famous for having programs every X years where all those gov claim files are completely dismantled if the debtor is not able to pay and reset to 0. Called something like "Salva Suicidi"
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I think that applies to people who can't pay the fines/debts because of economic issues, not to someone who goes to another country to avoid paying taxes and has assets in another country/ies. I may be wrong though.
 
#16
legrant said:
I think that applies to people who can't pay the fines/debts because of economic issues, not to someone who goes to another country to avoid paying taxes and has assets in another country/ies. I may be wrong though.
Click to expand...

you might be actually right, but the catch is that the foreign assets are also not declared so they first need to know about each asset of yours, then it need make sense (cost efficient) to be able to reach you, then they need fight all the red tape internationally and have enough time to get the injunctions, and then...might be you already converted the asset last minute to crypto and the wallet got hacked and you have no assets..
 
#18
newNomad said:
you might be actually right, but the catch is that the foreign assets are also not declared so they first need to know about each asset of yours, then it need make sense (cost efficient) to be able to reach you, then they need fight all the red tape internationally and have enough time to get the injunctions, and then...might be you already converted the asset last minute to crypto and the wallet got hacked and you have no assets..
Click to expand...
Yeah, that's not the problem, they won't try to seize assets outside of Italy unless it's in the millions. The problem is that if you want to go back to Italy and live there, they'll seize your wage, property, etc. A person I know (in Spain) has had his income from renting a property taken away because of just a 1500 Eur debt to the taxman.

So, if @ilpablo doesn't think he'll ever touch Italy again, not declaring it should be fine, however, there's a risk of them seizing your assets (if you stay in Europe) if they get cocky and if you ever want to go back to Italy they'll 100% get their money back.
 
#19
legrant said:
So, if @ilpablo doesn't think he'll ever touch Italy again, not declaring it should be fine, however, there's a risk of them seizing your assets (if you stay in Europe) if they get cocky and if you ever want to go back to Italy they'll 100% get their money back.
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well yes, what needs be better studied is if there is (and probably there is) some time limit after which non serviceable debts to public administration are cancelled. They call it a "rottamazione"
From time to time there are these initiatives so a plan would be to, in case you ar eheld liable, adhere to some of these future initiatives to pay only a small % to close the case or get the cancellation based on outdatedness.

Let's say taxes are X
Taxes + fines + interest 3*X
Manage to close the dispute at 30% of the face value 0.30*3*X = 0.9X. I apply high discount factor since you will have upper hand in negotiating since not anymore resident in Italy
I.e. in the end you would pay less than the original tax.

If you declare -> The probability that you need and will pay tax is close to 100%
If not declaring, the probability of being caught is let's say, to be rigorous though it might be less, 20%

So expected end game tax outlay is 0.20*0.9X =0.18X compared to X i.e. your expected saving is 82% :) Faulty logic?
I should work in KPMG ahaha

Disaclaimer: Not to be treated tax advice :)
 
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#20
newNomad said:
moving out is actually quite common, not sure why this would in itself trigger an audit..but this can know only someone working as a taxman :D
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simple. Tax inspector will get information through CRS or some other way that person has income and there is no declaration. So they will ask to evidence of emigration, etc
 
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