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SOLE TRADER MOVING TO EU - S.A. LOSS TRANSFERABLE?

uk losses transferable when I move Italy - sole trader?

Didn't find your answer?

Sole trader registered for VAT for last 5 years.

I will be declaring a loss on SA for 20/21 (6/4/20 to 5/4/21) of say £45k 

Im also hoping to move permanently to Italy early January 2022 and my understanding is I would have to pay half my expected tax in end of June in Italy and submit tax returns etc to Ialian authorities at the end of 2022. 

So Im wondering whether the losses of my sole trader busniess in UK could be offset against income tax for the exact same business when im then tax resident in Italy?

Due to covid from 5/6/21 to 31/12/21 I think profits after personal allowance will only be around £17,000 leaving £28,000 loss unused.  

If the losses are not transferable, I may have to delay moving for another 9-18 months. 

Thanks for your help.

 

 

 

 

 

 

Replies (16)

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By Wanderer
13th Aug 2021 15:59

bigdaddy wrote:

Ive always done my SA and VAT bookingkeeping and returns myself.

This is, of course turned out to be stupid as Ive made some glaring and expensive errors over the years.

https://www.accountingweb.co.uk/any-answers/advice-on-finding-right-acco...
You also said in that thread "Apologies in advance if I seem like a clueless fool".
Thanks (2)
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By Leywood
13th Aug 2021 16:05

What have you done since November 2020 about finding that Accountant you said you were looking for? This plan was muted then. Its really not that hard to find someone.

Why on earth do you think any of us should provide free advice?

This is not a charity. We are not charity workers.

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Replying to Leywood:
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By bigdaddy
13th Aug 2021 17:06

Leywood wrote:

What have you done since November 2020 about finding that Accountant you said you were looking for? This plan was muted then. Its really not that hard to find someone.

Why on earth do you think any of us should provide free advice?

This is not a charity. We are not charity workers.

Im not asking for same advice as in the previous thread.

But to answer your question, for Uk matter I now have a qualified bookkeeper helping with both SA and VAT.

I have also had correspondence with accountants in Italy including a very helpful video call with a specialist.

Although, as it happens, the Italian accountant and KPMG have both confirm that I would in fact qualify for the 'Freelancer' Scheme that has been in place for some time now to encourage migration to Italy and this scheme means for 5 years an effective tax rate of 13.5% in the north and 4.5% in the south.

From memory my suggestion about this was ridiculed by some. But hey ho, no hard feelings here.

As it happens social security rates are extremely high in Italy so its not a complete win.

Thank you, always for you time.

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Replying to Leywood:
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By bigdaddy
13th Aug 2021 17:17

Leywood wrote:

What have you done since November 2020 about finding that Accountant you said you were looking for? This plan was muted then. Its really not that hard to find someone.

Why on earth do you think any of us should provide free advice?

This is not a charity. We are not charity workers.

So Ive answered your first question

Second question, please explain to me, the idiot, the purpose of this forum.

It may or may not be off interest to you that I don't currently want to trouble my bookkeeper as she is currently dealing with a terminally ill son in hospital and a serious personal health condition.

Personally I feel very charitable towards her, billions of my fellow humans around the world suffering right now and indeed any human being asking for help.

Thanks again for your time.

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Replying to bigdaddy:
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By Leywood
13th Aug 2021 17:21

Purpose of this forum is for Accounting professionals to exchange information.

NOT for getting free advice from Accounting professionals. It says so on the tin. Clearly.

Dont use a bookkeeper for tax advice, whether terminal or not.

Thanks (3)
Replying to Leywood:
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By bigdaddy
13th Aug 2021 19:47

Leywood wrote:

Purpose of this forum is for Accounting professionals to exchange information.

NOT for getting free advice from Accounting professionals. It says so on the tin. Clearly.

Dont use a bookkeeper for tax advice, whether terminal or not.

Ok good to know.

Because I did not know. And I have a brief look specifically to see where it says that and I cannot easily find it.

So Im afraid in my view it doesn't say so on the tin. Nor is it clear.

I won't ask for advice on here again. But I am grateful those people who have been kind enough to offer it.

Ive always made an effort to be courteous and appreciative of people's help and time as I think that its important to respect, appreciate, and care people.

I have to say, however, I find you most unpleasant, and utterly lacking in empathy.

Thanks (1)
Replying to bigdaddy:
Stepurhan
By stepurhan
14th Aug 2021 21:13

bigdaddy wrote:

Because I did not know. And I have a brief look specifically to see where it says that and I cannot easily find it.


That must have been an astonishingly brief look. This is literally the first sentence of the "About AccountingWeb" page (link at the bottom of every page on this site).

Quote:
AccountingWEB.co.uk is the largest independent online community for accounting and finance professionals in the UK

I'm pretty sure that the same information appears on the sign-up page, which you would have to have seen to set up an account.

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By David Ex
13th Aug 2021 16:33

Yes, I’m pretty sure the Italian tax authorities will be delighted to waive Italian tax in the circumstances.

EDIT: No, actually, thinking about it, they won’t.

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Replying to David Ex:
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By bigdaddy
13th Aug 2021 19:41

David Ex wrote:

Yes, I’m pretty sure the Italian tax authorities will be delighted to waive Italian tax in the circumstances.

EDIT: No, actually, thinking about it, they won’t.

They actually do. When I have the answer on the point Ive raised this time, I'll be sure to update here. Meanwhile they actually are waiving huge amount of tax currently in order to attract inward migration.

A couple of examples below.

90%/ 70% of income non-taxable:

https://www.withersworldwide.com/en-gb/insight/relocating-to-italy-the-i...

100k tax limit:

https://taxsummaries.pwc.com/italy/individual/taxes-on-personal-income

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Replying to bigdaddy:
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By David Ex
13th Aug 2021 23:23

bigdaddy wrote:

David Ex wrote:

Yes, I’m pretty sure the Italian tax authorities will be delighted to waive Italian tax in the circumstances.

EDIT: No, actually, thinking about it, they won’t.

They actually do. When I have the answer on the point Ive raised this time, I'll be sure to update here. Meanwhile they actually are waiving huge amount of tax currently in order to attract inward migration.

A couple of examples below.

90%/ 70% of income non-taxable:

https://www.withersworldwide.com/en-gb/insight/relocating-to-italy-the-i...

100k tax limit:

https://taxsummaries.pwc.com/italy/individual/taxes-on-personal-income

None of which deals with your question about using UK tax losses against foreign source income in a foreign country.

Have a little respect for finance professionals. If it was that easy, it wouldn’t take years of study and experience.

Thanks (1)
RLI
By lionofludesch
13th Aug 2021 16:35

Well, maybe not as long as you think.

You say "profits after personal allowance" ? I take it from that that your profits were about £30000, leaving £17000 to be covered by losses.

You may be surprised to learn that you need to use £30000 of losses, leaving only £15000 to carry forward.

Let me know if I have misunderstood what you say.

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Replying to lionofludesch:
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By bigdaddy
13th Aug 2021 17:13

Thank you.

Forgive me im confused. I was estimating as follows:

Net Profit 20/21
29570
minus pers. allowance
12570
= 17000 taxable profit
minus
= 17000 loss
= 0

45,000 loss -17,000 offset = 28,000 losses left

Thanks (0)
Replying to bigdaddy:
RLI
By lionofludesch
13th Aug 2021 17:26

bigdaddy wrote:

Thank you.

Forgive me im confused. I was estimating as follows:

Net Profit 20/21
29570
minus pers. allowance
12570
= 17000 taxable profit
minus
= 17000 loss
= 0

45,000 loss -17,000 offset = 28,000 losses left

No.

£29570 profit

£29570 losses used

Personal allowance lost.

£15430 losses to carry forward.

Them's the rules, I'm afraid.

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Replying to lionofludesch:
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By bigdaddy
13th Aug 2021 19:50

Ahhh I see. Yes of course. Makes sense.

Thank you very much.

Would you be kind of enough to PM with your details/ website as I could with an accountant who both helpful and nice!

thanks again :)

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Replying to lionofludesch:
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By bigdaddy
13th Aug 2021 19:54

All is not lost I think...

as this looks promising:
". For sole traders, trade losses of tax years 2020/21 and 2021/22 can claim additional relief by carrying back unrelieved losses and setting these against profits of the same trade for three years before the tax year of the loss."

https://www.taxassist.co.uk/resources/articles/the-new-rules-for-trade-l...

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Replying to bigdaddy:
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By DKB-Sheffield
14th Aug 2021 15:49

So why don't you contact the company behind the website link you posted and ask for their advice on the matter? For a fee, they will advise you accordingly!

It only seems right that, if you are basing your decisions around articles published by a commercial enterprise, you do the decent thing and approach them directly (even if you choose to use someone else).

Incidentally, I am in no way associated with the company referred to by the OP and, other tax advisors are available!

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