| Pages in topic: < [1 2 3 4 5 6 7 8] > | What solution for 85% taxation? Thread poster: Jo Macdonald
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| I agree it's never ending... | Sep 12, 2007 |
I agree it's never ending...
Angioletta Garbarino wrote:
Italian TOTAL taxation burden reaches 67-70% and in some cases 85 is correct.
Some of you insist it is not true, and assume that Jo is wrong even if he has attested many many times he is sure.
I am sure too.
Please check the internet and you will have a confirmation, like I said I can't post the link because it is politics.
Please remember that I am speaking about the WHOLE taxation burden and of course it depends on the turnover amount.
[Edited at 2007-09-12 14:08]
But Jo has stated several times that he is not talking about his total income, but his income after deducting essential expenses. So I'm not assuming he's incorrect, I'm saying that his calculation method is flawed, "anche perché" because it can't be compared against anyone else's.
[Edited at 2007-09-12 14:13]
| | | | | And it continues... | Sep 12, 2007 |
Angio, I had a look around to see which political side insists on us having an 85% tax burden. Since the major opposition party said nothing similar (they were "reigning" until a year ago, so it wouldn't have been good propaganda), I looked further and found one source.
This site gives for 2007 three cases of families with three different income situations. No professionals and no freelancers. (off-topic - typical example of Italian family: working male, with wife (house-wife) and ... See more Angio, I had a look around to see which political side insists on us having an 85% tax burden. Since the major opposition party said nothing similar (they were "reigning" until a year ago, so it wouldn't have been good propaganda), I looked further and found one source.
This site gives for 2007 three cases of families with three different income situations. No professionals and no freelancers. (off-topic - typical example of Italian family: working male, with wife (house-wife) and two kids; how many of these are there around??!!)
Given every possible expense, the overall taxes and similar paid come out to 67-69%. But this includes everything, meaning VAT on everything you buy, food, clothing, gas, electricity, telephone calls, waste disposal, taxes on cars, taxes on cigarettes and alcohol, real estate, university fees, medicines, private medical visits, highway tolls, gasoline. Everything.
Is this the tax burden you are talking about? If so, then we are speaking in different languages. Maybe we need an interpreter! ▲ Collapse
| | | | Jo Macdonald 
Spain
Local time: 04:35
Italian to English
+ ...
TOPIC STARTER
think I ever said that actually. I'm being asked to pay a sum which is 85% of my taxable income.
Other people are saying you can't deduct Gucci bags, never said you could or that I mean 85% of my takings, again never said that, you're assuming because that's the way you want to look at it.
You deduct business expenses and tax allowances in a business to get your taxable income, which is what I'm talking about. I’ve been running a business for 20 years in Italy, payi... See more think I ever said that actually. I'm being asked to pay a sum which is 85% of my taxable income.
Other people are saying you can't deduct Gucci bags, never said you could or that I mean 85% of my takings, again never said that, you're assuming because that's the way you want to look at it.
You deduct business expenses and tax allowances in a business to get your taxable income, which is what I'm talking about. I’ve been running a business for 20 years in Italy, paying tax, keeping the books and I talked to my accountant for at least 2 days about this. I can understand you not believing, I find it hard to believe.
Like I said, if you’re really interested ask you accountant how much your taxable income is (the income the state says should be taxed) then have them calculate what percentage you are paying in taxes.
If anyone has informed, constructive advice please speak up.
I'll be finding out about opening up in the Uk in the next few days, then hopefully closing down in Italy as soon as possible. ▲ Collapse
| | | | | Not meant for you Jo | Sep 12, 2007 |
Jo Macdonald wrote:
think I ever said that actually. I'm being asked to pay a sum which is 85% of my taxable income.
Other people are saying you can't deduct Gucci bags, never said you could or that I mean 85% of my takings, again never said that, you're assuming because that's the way you want to look at it.
My last post was not for you Jo (your reasoning was quite clear), but for Angio. They sound similar, but gender differs...
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Francesca Pesce wrote: Is this the tax burden you are talking about? If so, then we are speaking in different languages. Maybe we need an interpreter!
It isn't
I think I already explained what I meant.
Bye bye all again
| | | | | Yes, I know, I can be very tiring at times | Sep 12, 2007 |
Jo, I have been translating financial stuff all day - on and off from my posts, of course - and I have been thinking over and over about your interventions in this forum, because, although I fully understand your position, and am sorry you received such a blow, I keep on thinking there is something missing in your reasoning.
There is no such thing as a universal taxable income (nor, obviously a sort of right to taxation according to that taxable income). The State doesn't recognise ... See more Jo, I have been translating financial stuff all day - on and off from my posts, of course - and I have been thinking over and over about your interventions in this forum, because, although I fully understand your position, and am sorry you received such a blow, I keep on thinking there is something missing in your reasoning.
There is no such thing as a universal taxable income (nor, obviously a sort of right to taxation according to that taxable income). The State doesn't recognise at all that you have a "taxable income" on which it or you should calculate what is due.
In other words, each different tax has its own taxable base, decided according to the finality that tax was introduced for. This means that if you base your calculations (the famous 85%) on the income tax base, the result is completely flawed.
So, for example, income tax (IRPEF) is determined on your total income, minus certain expenses, certain tax allowances - INPS contributions mostly, health expenses, life insurance, family benefits, etc. For free-lancers, of course, because if you are a salaried worker in Italy you certainly cannot (and in theory why shouldn't you?) deduct travel expenses to go to work, nor clothing, meals, etc.
INPS contributions are calculated on a higher base, mostly because obviously you cannot deduct the INPS contributions paid the previous year (this is quite obvious: no tax permits to deduct itself from the base).
IRAP is calculated on again another base, completely different from the previous ones. It's finality was completely different.
So, in the end you (we all) pay lots of taxes, but the total percentage can and should only be calculated on your gross income. Any other system makes no sense.
It might make sense for you in your mind. Maybe because you really think that the difference between 50,000 and 30,000 euros (gross income and taxable income, respectively, in your example) was just used for your work and not to live and provide for your family, but things are not always so clear-cut in reality.
Numbers or not, you are obviously convinced that you are paying too many taxes overall, that don't make the effort worthwhile. But this is totally another story. ▲ Collapse
| | | | Samuel Murray
Netherlands
Local time: 04:35
Member (2006)
English to Afrikaans
+ ...
| The situation in South Africa | Sep 12, 2007 |
Jo Macdonald wrote:
One example my accountant gave me yesterday after I'd been arguing with them all morning: "One of our clients made 40.000€ last year and has to pay 32.000€ tax."
No doubt LL will tell me if I'm wrong, but AFAIK, the following is the situation in South Africa:
http://www.sars.gov.za/it/Brochures/Residence%20Basis%20of%20Taxation%20-%20Brochure%20-%202000.htm
http://www.sars.gov.za/it/Brochures/2007/Income%20Tax%20and%20the%20Individual%20-%202007.pdf
If you're a South African resident, then you pay tax on offshore income in the same way as you pay tax on local income. I myself pay about 30% income tax. In other words, for tax purposes, I would add up all my income (local and offshore), deduct allowed deductions, and pay 30% of what's left to the taxman. [1]
If I pay any tax in a foreign country, I can deduct that tax from the amount of tax that I need to pay in South Africa, and I can carry over amounts unaccounted for until the next tax period (for up to 7 years).
I am regarded as a South African resident if I spend more than 91 days in any single year and more than 549 days over the past three years in South Africa.
Apart from paying only 30% income tax, I can deduct certain expenses from my taxable income. This includes certain medical expenses, certain expenses relating to home improvements, portions of my professional expenses, etc.
If you're late in paying my taxes, the taxman can charge 10,5% interest on the outstanding amounts. If you're late in submitting the tax documents, the taxman can charge an additional tax equal to 200% of the outstanding tax. Other penalties also apply. You generally get my tax documents about 4 months after the end of the financial year, and you have an additional 2 or 3 months in which to submit the documents again, so there's really no excuse for being late. In addition, you can apply for an extention (so that you don't have to submit the documents for another 3 or 4 months), which is usually granted if you apply on time and give a reasonable reason.
On the other hand, you are more likely to get raped or killed in South Arica, so I guess you get what you pay for.
==
[1] Now if I had been earning $80 000 a year like Alex Eames did, I would have been paying 45%...
[Edited at 2007-09-12 18:47]
[Edited at 2007-09-12 18:56]
| | | | Andrzej Lejman
Poland
Local time: 04:35
Member (2004)
German to Polish
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| This discussion becomes boring meanwhile... | Sep 12, 2007 |
I think you should cancel the existing state of Italy and create a new one. Unfortunately, no idea how to achieve it.
If things are really as bad as you present them, there is no other way out. Paying taxes on non realized income is an absurd; paying 85% taxes is another absurd. How about next elections? Maybe you should fire all politicians and elect new ones? OK, an unworkable idea. But instead of looking for workarounds, maybe you should start something like civil disobedience?
<... See more I think you should cancel the existing state of Italy and create a new one. Unfortunately, no idea how to achieve it.
If things are really as bad as you present them, there is no other way out. Paying taxes on non realized income is an absurd; paying 85% taxes is another absurd. How about next elections? Maybe you should fire all politicians and elect new ones? OK, an unworkable idea. But instead of looking for workarounds, maybe you should start something like civil disobedience?
My condolences
and my sympathies
Andrzej ▲ Collapse
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Latin_Hellas (X)
United States
Local time: 04:35
Italian to English
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| Been There, Done That, Failed | Sep 13, 2007 |
Dear Andrzej,
Some Italians tried all that in the early-to-mid 1990s after the infamous Tangentopoli scandal broke out. A few years later the bulk of the population wound up voting back into office the same ilk of a ruling class, in some cases different faces, different party names, but the same class of people, and those who argued most forcefully for reform were bought off and co-opted.
The majority of Italians chooses to defend the status quo in a fast-changi... See more Dear Andrzej,
Some Italians tried all that in the early-to-mid 1990s after the infamous Tangentopoli scandal broke out. A few years later the bulk of the population wound up voting back into office the same ilk of a ruling class, in some cases different faces, different party names, but the same class of people, and those who argued most forcefully for reform were bought off and co-opted.
The majority of Italians chooses to defend the status quo in a fast-changing world (some would call it "mediocrity"). A legitimate, democratic choice that must be respected, and the consequences, for better and for worse, will last for at least another generation. Those who cannot accept the rules of the game must leave.
Italy's corporate sector has recovered, but the most successful companies invest abroad and shelter their domestic-market revenues as much as they can through complicated international legal structures. The little guy normally cannot do that, in most circumstances he must choose between one place or another.
And that is why Jo is investigating setting up shop in the UK.
[Edited at 2007-09-13 09:45]
[Edited at 2007-09-13 09:46] ▲ Collapse
| | | | Ralf Lemster
Germany
Local time: 04:35
English to German
+ ...
| Please respect the ProZ.com scope | Sep 13, 2007 |
I understand that discussing taxes without reference to political decisions (or those making them) can be difficult. Nevertheless, I would remind all of the ProZ.com scope.
Thank you.
Best regards,
Ralf
| | | | | Wonderful and constructive criticism! | Sep 13, 2007 |
Thank you both Andrej and bale002 for your objective, very useful, informed and constructive analyses and criticism. And for your suggestions of course. (Ralf, I don't understand your reminder: these posts are really so constructive and useful. Wow!). And not so boring as just speaking about tax pressure.
I am sure that if every forum was like these last two posts, we would all be very much better off, full of bright ideas and suggestions on how to make this a better world (oops, ... See more Thank you both Andrej and bale002 for your objective, very useful, informed and constructive analyses and criticism. And for your suggestions of course. (Ralf, I don't understand your reminder: these posts are really so constructive and useful. Wow!). And not so boring as just speaking about tax pressure.
I am sure that if every forum was like these last two posts, we would all be very much better off, full of bright ideas and suggestions on how to make this a better world (oops, sorry, I'm getting it wrong: we were not talking about improving the world: it was something like our individual personal lives.)
Are there any best practises and success stories you could suggest from your personal experience in your countries that have noticeably contributed to a more equal, happy, fair and satisfied society? Tax-wise, of course...
[Edited at 2007-09-13 11:04] ▲ Collapse
| | | | | Thank you, Francesca | Sep 13, 2007 |
Francesca Pesce wrote:
Thank you both Andrej and bale002 for your objective, very useful, informed and constructive analyses and criticism.
[Edited at 2007-09-13 11:04]
I've been reading all this forum and was very annoyed by some of the posts, especially those mentioned by Francesca. I can't add more, because it'd be against the forum's rules, but oh, please, please refrain from giving us political advices... if you see what I mean.
Thanks a lot.
Paola
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| I just jumped ship | Sep 13, 2007 |
Hi Jo,
I'm getting into this a bit late, but I do think that my story has some pertinence here. My husband, my two children and I just moved to the US last June after 15 years in Italy, ten of which I worked as a translator. One of the biggest reasons for our move was the impossibility of the Italian tax system, and what I perceived to be no real future for my children there.
The move has not been anything like a piece of cake, but I am reaping the benefits of no longer dealin... See more Hi Jo,
I'm getting into this a bit late, but I do think that my story has some pertinence here. My husband, my two children and I just moved to the US last June after 15 years in Italy, ten of which I worked as a translator. One of the biggest reasons for our move was the impossibility of the Italian tax system, and what I perceived to be no real future for my children there.
The move has not been anything like a piece of cake, but I am reaping the benefits of no longer dealing with running a business in Italy, for reasons ranging from impossible taxes to impossible payment terms, and the sky high 20% VAT that I was forced to cough up in advance every three months.
My husband is also self employed, and since we have been in the US, I have finally been able to print this poetic phrase at the bottom of his invoices ( most of my clients are in Italy, but I do get this small vicarious pleasure!)-
Total due in 15 days. Overdue accounts subject to a service charge of 1% per month...
Ironic in light of the fact that until now every single client has put a check in my hand as I handed over the invoice.
So far I haven't looked back for a minute.
[Edited at 2007-09-13 21:50]
[Edited at 2007-09-13 22:54] ▲ Collapse
| | | | Jo Macdonald
Spain
Local time: 04:35
Italian to English
+ ...
TOPIC STARTER | Thanks Jennifer | Sep 14, 2007 |
Might be what I have to do.
Had first contact with accountants in the Uk and it doesn’t look like you can live and work in Italy and avoid the Italian tax system. Even setting up a company in the Uk and working for it in Italy the work produced in Italy is taxed under the Italian system.
I’m really trying to find a solution that will let me stay in Italy near family and friends; the family doesn’t want to leave.
Been calculating income minus rent, family co... See more Might be what I have to do.
Had first contact with accountants in the Uk and it doesn’t look like you can live and work in Italy and avoid the Italian tax system. Even setting up a company in the Uk and working for it in Italy the work produced in Italy is taxed under the Italian system.
I’m really trying to find a solution that will let me stay in Italy near family and friends; the family doesn’t want to leave.
Been calculating income minus rent, family costs, tax, was fine until this year, now with around 10.000€ more tax to pay this year the figures just don’t add up. I can’t live on a few thousand euro per year with the cost of living in Italy.
Currently considering:
Living in my camper to avoid paying rent to be able to pay taxes
Closing Vat number and working without
Moving to the Uk leaving family and friends here
Dropping everything and moving somewhere else ▲ Collapse
| | | | Melzie
Local time: 04:35
French to English
+ ...
| a small move. | Sep 14, 2007 |
You seem to be in the northeast of Italy, why not border-hop? What's the system like in Austria for example? You'd be earning in the euro zone - better for you than the UK perhaps -, you could keep you client base and still be available for interpreting if needed - see what the the transport system is like -, you wouldn't be too far from your family and the state health system would probably be ok.
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