Restructuring bonus for the home abroad, when it is exempt for IRPEF purposes

Is the restructuring bonus received for the home abroad taxable or exempt for IRPEF purposes? What makes the difference is the qualification of the income pursuant to the provisions of the TUIR. To explain it is the Revenue Agency, with the response to the question n. 99 of 9 March 2022.

Renovation bonus for the home abroadincome to qualify to determine if it is exempt or taxable for IRPEF purposes in Italy.

For the purposes of correctly identifying the treatment for tax purposes of the earnings from foreign sources it is therefore necessary to evaluate how the income qualifies received pursuant to internal legislation, and subsequently examine any conventional provisions against double taxation in force between Italy and the reference State.

The same is true for the contributions recognized for the property renovation owned overseas by subjects residing in Italy.

The answer of theRevenue Agency to the appeal n. 99, published on March 9, 2022.

Restructuring bonus for the home abroad, when it is exempt for IRPEF purposes

A taxpayer asks for clarification resident in Italyowner in Spain of an apartment for which he obtained a public grant similar to ours renovation bonus.

In Spain, the recognized contribution is subject to taxationwhich for non-residents is equal to 19 per cent.

What are the rules to be applied in Italy?

What makes the difference is the qualification of the income receivedin parallel to conventions against double taxation stipulated with the issuing State.

As highlighted by the Inland Revenue with the response to question no. 99 of 9 March 2022, pursuant to article 1 of the TUIR, the prerequisite for taxation in Italy is the possession of income, in cash or kind, falling within the categories listed in article 6, namely:

  • land income;
  • capital gains;
  • income from employment;
  • income from self-employment;
  • business income;
  • different income.

Income that does not fall within the income categories listed above is not subject to taxation.

So it is also for the public contribution disbursed by way of bonus for the renovation of the house owned by an Italian taxpayer residing abroad, as in the case set out in interpello no. 99 of 9 March 2022.

The benefit obtained by the instant, considered “Patrimonial guarantee” in Spain, it is taxed locally for both residents and non-residents, and the latter are required to pay a sum equal to 19 per cent of the income paid.

Revenue Agency – response to question no. 99 of 9 March 2022
Tax treatment applicable to the public grant paid in Spain to a tax resident in Italy for the renovation of the common parts of the condominium building in which his apartment is located

Bonus for foreign restructuring without taxes if it does not fall within the categories of income indicated by the TUIR

The contribution recognized by the Spanish public body for the renovation of the common parts of the condominium of which the applicant’s apartment is part pursues the aim of favoring:

“The restoration of common elements and the improvement of the habitability of buildings for residential use, mainly aimed at communities of owners and properties with members in vulnerable situations.”

The goal is promote the rehabilitation of the existing building stockthrough the granting of subsidies and aid to owners, calibrated according to the subjective conditions of the beneficiary.

A contribution then paid for general purposes pursued by the providerwhich is not attributable to the income from employment and similar referred to in Articles 49 and 50 of the TUIR or to the other income categories listed above.

It is therefore excluding the taxation of sums received by the taxpayer resident in Italy, which do not contribute to the formation of the tax base for IRPEF purposes.

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About David Martin

David Martin is the lead editor for Spark Chronicles. David has been working as a freelance journalist.

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