Laws and legal documents when transferring large sums of money into Italy
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When you’re emigrating, starting a business or studying abroad, here’s how to navigate taxes on large transfers.
Sending a lot of money to Italy for even the most exciting reason can often involve at least one unexciting thing: tax laws and legal paperwork. Before you move your money out of the US, get familiar with the laws and regulations in beautiful Italia.
How Italy regulates large remittances
Americans sent more than $1.4 billion to Italy in 2015 alone. Many providers in the US offer transfer services to Italy. But if you’re sending large sums of money, your recipient could be on the hook for taxes regulated by the Italian Revenue Agency.
As far as we can tell, taxation rules on gifts depend in large part on whether you’re related to your recipient. In general, Italy does not tax gifts of any amount to spouses, children and grandchildren.
If you’re gifting more than about 180,000 euro to a nonrelative, your beneficiary may be subject to taxes on receipt. Tax rates vary from 4% to 8% of the amount you’re sending — a large bite out of your gift.
What are the penalties for not filing a large remittance?
With so much attention on money entering and leaving Italy, if you fail to report large sums, don’t know you have to report them or don’t report them correctly — it will likely be discovered. Encourage your loved ones to declare any large remittance as income on their general tax return with the Italian Revenue Agency.
Failure to file taxes can result in penalties that range from 120% to 240% of the taxes due. To avoid severe penalties that can reverberate throughout your financial future, speak with a professional to guarantee that you comply with the laws of both the US and Italy.
Do I have to report large transfers out of the US?
To be safe, yes. By law, banks report cash transactions that exceed $10,000 and any transaction of any amount that raises an eyebrow. And independent money transfer specialists are sometimes held to thresholds as low as $1,000.
How will my recipient receive my remittance in Italy?
How your recipient receives your money in Italy depends on your provider and how you sent it. You’ll typically have the option of bank-to-bank transfers, cash pickups and even delivery to a mobile wallet.
To receive your funds in person, your recipient may need to provide ID or a confirmation number. If they own an account with an Italian bank or money transfer company, they may not need to provide this information each time you transfer cash.
As with all international money transfers, be wary of potential fraud and only send money to people you know. Using a reputable provider can safeguard you from potential scams.
Money transfer services with no maximum sending limit
Frequently asked questions
If you follow the law and submit your legal documentation timely and accurately, you shouldn’t experience hassles with the IRS. If you choose not to follow the law, you may be on the hook for stiff penalties, including jail time.
Penalties can be avoided if you can show the IRS reasonable cause for a failure to file. However, the US does not consider reasonable cause to include information that might be a crime in another country.
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