When you want to make a property purchase abroad, or in this case in London, a tax is due on the value of real estate located outside the Italian territory, which is called V.I.E. Before going into the specifics, we need to illustrate the substantial difference between the levy and the tax.

Definition :

By levy we mean a tribute paid to the State or to a public body, by private citizens in order to use a service; the criterion of counter-performance therefore applies.

By tax is meant the compulsory levy of wealth and therefore an expression of the power of imperium attributed to the State.

Subjection :

Specifically, the Tax on Immovable Property Situated Abroad is payable by the following persons :

• natural persons;
• holders of certain rights in rem;
• simple partnerships, general partnerships, limited partnerships (effective from 2020);
• who are tax resident in Italy and are holders of a title or right in rem to any type of property.

What is meant by tax residence in Italy? A tax resident in Italy is anyone who for the majority of the tax year, i.e. 183 days out of 365 days, has their civil residence in Italy.

The rate correlated to the tax is 0.76% of the cadastral value of the property; in the specific case of a property in London or in the United Kingdom, since the cadastral value does not exist, the value attributed by the various Council Tax brackets is taken as the taxable reference base (in any case much lower than the real market value).

Non-applicability:

The tax is not due if the total amount does not exceed EUR 200.00.

The tax is also not due if an S.P.V. (legal entity) is used to carry out the real estate purchase abroad, in this case under English law.

The only obligation of the taxpayer resident for tax purposes in Italy is to declare the shareholding of the English company to the Italian tax authorities in the R.W box of the tax return.

Subsequently, we will illustrate the conditions and procedures under Italian law for not being considered tax resident in Italy and we will elaborate on the different tax residency regimes in the UK.

All the regulations on the applicability of the tax on the value of property situated abroad can be consulted on the website: https://www.agenziaentrate.gov.it/portale/