International Taxation

Our international tax services cover international business tax planning; tax treaties; international tax compliance, reporting and disclosure of foreign assets and income; individual, trust and family tax planning and advice; international tax audits and litigation

 

If you are a resident person or company with activities, investments or operations abroad or a nonresident person or company with income, investments or operations within the U.S. or Italy, you are confronted with a vast array of legal and international tax issues. The tax treatment of your income, investment or business activities is determined by the application of the internal laws of the country of which you are resident and the foreign host country co-ordinated and limited under any applicable double income tax treaty.

Foreign companies entering the U.S. market or foreign nationals moving to the United States on temporary assignments or a more long term basis have to deal with international tax issues arising from U.S. internal tax laws and the Tax Treaty between the United States and their country of origin, understand their tax obligations in the U.S., and make sure they plan their activities properly and comply with their tax duties  as arising under U.S. law.
That is the situation of Italian or U.S. domestic companies with investments or operations abroad and foreign companies with investments or operations in the U.S. or Italy, and resident individuals working abroad on a temporary assignment or a more permanent basis or non resident individuals relocating in Italy or the U.S.

Domestic companies doing business abroad must plan their operations in a way to minimize negative tax impacts under foreign jurisdiciton and in their home country.   
Within the EU the legal and tax treatment of a transaction is also affected by EC law, interpreted and enforced by the European Court of Justice, which override the internal laws of EC Member States.

U.S. citizen and resident alien individuals with assets or income outside of the United States are subject to extensive international tax reporting and disclosure obligations, which are subject to stiff penalties if neglected. Similarly, U.S. citizens living in Italy are subject to international reporting obligations under Italian tax law. Automatic exchange of information with foreign banks reporting accuonts held by U.S. citizens to the Internal Revenue Service, and between U.S. and Italy under the new treaty implementing FATCA legislation, create enormouns pressure toward full and timely  compliance with international tax reporting rules.

U.S. citizens and resident alien individuals with assets or investments outside of the United States, and U.S. citizens in Italy, are subject to extensive and far reaching international tax reporting obligations, now effectively enforced through a system of automatic exchange of information concerning foreign financial accounts and associated income      
International tax audits, both for global companies and individuals, are on the rise, and so is the risk of adverse tax assessments in the absence of expert advice and support on complicated cross border matters often going beyond the day to day work and understanding of tax agents. Tax administrations around the world have more effective tools to enforce their international tax rules and have increased international tax enforcement dramatically.

International tax enforcement and audits are on the rise, with additional risk of adverse tax assessments in the absence of a correct understanding of complex international tax issues.
Without adequate advice and tax planning you may easily end up incurring broader and unexpected tax liabilities or suffering double taxation. When a transaction involves three or more jurisdictions the issues multiply exponentially.

In this challenging area of international law we provide the full range of international tax and legal services for our corporate and individual clients engaged in international activities or facing international tax issues, as needed to properly plan cross border activities. In particular we cover the areas described below.

Areas of Practice

International Tax Planning, Reporting and Compliance for Individual Taxpayers
Foreign taxpayers (nonresident individuals) who move to Italy or the U.S. for a limited period of time or to live there permanently are exposed to the risk of being subject to tax in Italy or the U.S. The actual tax treatment they are subject to eventually depends on how much time they spend in Italy or the U.S. in one or more tax years; what kind of work or activities they perform there, and what kind of income from source located in those countries they may earn. Similarly, they may be subject to various internarional tax reporting and compliance obligations.

Italy determines the tax residency of individual taxpayers under three different and alternative tests (registration, fixed home and domicile) one of which (the registration test) is mechanical and bright line, and two of which (fixed home and domicile) are heavily dependent on the facts and circumstances of each individual case. Once you become a resident on Italy for tax purposes, you are subject to tax in Italy on your worldwide income, and you are required to report on your Italian income tax return all of your assets, weherever located in the world.

The U.S. determines the tax residency of individual taxpayers based on the days of presence in the United States, computed by taking into account the days spent there in the current year (which are counted in full) and in each of the two immediately preceding years (counted for 1/3 and 1/6 respectively). If the total equals or exceeds 183, you are terated as a resident alien individual, subject to tax on your worldwide income and required to reportyour financial accounts wherever located in the world, on form finCen 114 and form 8938 of your U.S. income tax returns. Additional reporting is required in case you onw interest in foreign partnerships or stock in foreign corporations or receuved a gift from a foreign estate or trusts.

International tax reporting rules are pervasive, very wide in scope and aggressively enforced by the tax amdinistrarions, who can count on automatic and bilateral exchange of banking and financial information pursuant to bilateral agreements entered into under following the enactment of FATCA in the United States. 

Failure to report is severly sanctioned, regardless of the liability for income taxes associated with it.
 
"We assist clients dealing with the tax issues that arise in connection with their moving across borders to or spending periods time in Italy or the U.S. and properly planning their move and change in tax residency in advance to minimize adverse tax consequences. On the other side, we also advise Italian and U.S. residents who move to a foreign country and are exposed to similar issues while still being subject to tax in Italy or the U.S."
Also, individuals residing in Italy or the United States having financial interests or even just signatory powers on investments or accounts outside of Italy or the United States are subject to significant reporting and compliance obligations. In Italy, Italian residents with assets, accounts or investments abroad must report them on a special section of their individual income tax return (Section RW), together with any transfer into or outside Italy or abroad concerning those assets, accounts and investments. Failing to file report is heavily sanctioned.

Similarly, U.S. citizens (living in the U.S. or abroad) and residents must report their foreign financial accounts by filing a special form (Foreign Bank Account Report) separately from and in addition to their individual income tax return. Also, starting with tax year 2011, they will have to file an additional report under the new FATCA legislation.

"We assist our clients to comply with their international tax reporting obligations or go back in compliance by filing missing, delinquent past returns while avoiding or minimizing penalties".
Taxation of Portfolio Income and Withholding Tax Issues
Global and International Tax Planning and Structuring of International Transactions
Taxation of Business Income and Permanent Establishment Issues
Taxation of Outbound Investments and Activities
Tax Treaties and Competent Authority Procedures
Transfer Pricing
International Tax Audits for Companies and Individuals