Asset taxes are fundamentally unfair, because just because you have Item Value X does not mean that you have Income Y from which to pay the tax.
They are unfair in an ideal world where everybody is honestly declaring his income. But after having lived in Italy for twenty years, I do not believe in this kind of honesty any more. There are plenty of lawyers and surgeons who have a declared yearly income of 19,500 Euros yet commute beween their appartment in the center of Milan and their holiday homes on the beach and in the mountains with their private helicopter. On what other basis than their assets can you tax them? And if you don't then you and I - stupid northern European honest taxpayers - will have to pay for them as well.
There are plenty of lawyers and surgeons who have a declared yearly income of 19,500 Euros yet commute beween their appartment in the center of Milan and their holiday homes on the beach and in the mountains with their private helicopter. On what other basis than their assets can you tax them?
I agree, but surely the solution is for Italy to collect income tax properly.
Here in the UK, for example, if you have money in a bank (etc) and the bank pays you interest, they send a report on the interest paid to the tax people, who then check (not a 100% check but pretty good nowadays) if you have declared it. The UK has had this system for something like 30 years. This is not complicated, in days of, ahem, computers.
The UK has treaties with loads of countries, including the bastion of banking secrecy - Switzerland - to tell them of interest paid to UK people.
Sure one can find ways around it but it is non-trivial.
Why don't Italy, Spain, etc do this? They have computers and they are "modern" nations in the "IT" sense. It must be totally uncontrolled corruption right through the system.
it's more than fair to draw conclusions from assets.
That's definitely an "interesting" take on fairness
I was referring to the same issue what next pointed out: it is "fair" to conclude that you have a certain income when you own such luxury toys while at the same time declaring an income that can not explain how you acquired and support these toys. Of course the tax itself is less fair because as an honest tax payer, you've paid for the assets with what was left after you paid taxes.
Here in the UK, for example, if you have money in a bank (etc) and the bank pays you interest, they send a report on the interest paid to the tax people, who then check (not a 100% check but pretty good nowadays) if you have declared it.
That was the system in Germany from 1948 until ca. 1998. Unfortunately there were Switzerland and Austria with a sophisticated infrastructure to welcome German money and no cooperation on tax evasion. In order to fight tax evasion, the system was changed to a 25% flat tax on capital gains, withheld by the banks. You no longer have to declare your capital income which is nice. 25% is also a good number but I fear it will go up now that hiding money has gotten a lot riskier and most countries exchange information.
Why don't Italy, Spain, etc do this? They have computers and they are "modern" nations in the "IT" sense. It must be totally uncontrolled corruption right through the system.
Some of the Southern European countries are trying hard to improve their revenues, I think Greece is probably the most impressive example. Italy's biggest issue probably is the dysfunctional legal system.
Asset taxing is a typical example of low hanging fruit when the government is in need of money. It's unfair but easy to implement and fairly quick. The most creative measure of all is the Greek property tax collected via the electricity bill. No, wait, taking money from bank accounts in Cyprus is even smarter!
There would be a huge uproar here in the UK if they tried that here
The proposed "mansion tax" springs to mind.....
They are unfair in an ideal world where everybody is honestly declaring his income. But after having lived in Italy for twenty years, I do not believe in this kind of honesty any more. There are plenty of lawyers and surgeons who have a declared yearly income of 19,500 Euros yet commute beween their appartment in the center of Milan and their holiday homes on the beach and in the mountains with their private helicopter. On what other basis than their assets can you tax them? And if you don't then you and I - stupid northern European honest taxpayers - will have to pay for them as well.
I remember reading an article that described how in Italy if everybody paid all the taxes they officially owed, it would be over 100% of their income. Outrageous taxes are what breeds outrageous tax evasion, and the way to avoid tax evasion is to tax at a rate where people's time is better spent earning money than evading taxes. Italy is an example of where the current EU tax situation is headed when it has time to develop more fully - the Italian situation has had a couple of thousand years to go in that direction.
Love the place by way, have been there often, learned the language, and will be there in a couple of weeks again.
it is "fair" to conclude that you have a certain income when you own such luxury toys while at the same time declaring an income that can not explain how you acquired and support these toys
It's easy to see that in a totally outrageous scenario (like the ones that always make the papers) of somebody with a €20M boat and €20k declared income.
But take it a bit lower... say a €500k house (bought for €50k 20 years previously) and €20k income, and a 2% tax on the asset i.e. €10k/year in tax.
Or, coming back to the topic, a €100k plane (bought 15 years previously when your business was doing well) and now you are asked to pay €10k/year tax on it.
Or better still a plane bought as a syndicate and the other members dropped out because they couldn't afford to fly, you got it below market value, and now you take the hit.
I realise Spain has a lot of microlights (as has Italy) but I would bet it's a lot easier to keep a lot of those types under the radar. Anything that can fly from a private strip is good for that.
The proposed "mansion tax" springs to mind.....
It will be interesting to see how far that goes. So far, it has effectively suppressed the market around the £2M mark, which is basically every house in London that's big enough for an old spinster with her cat.
the system was changed to a 25% flat tax on capital gains
I think you mean 25% tax on the interest.
The UK does that too, so if you don't earn above c. £35k you have nothing more to declare (in general). But many people are above the 35k and they have to pay the extra bit.
On what other basis than their assets can you tax them? And if you don't then you and I - stupid northern European honest taxpayers - will have to pay for them as well.
Wow...I hope details of their assets are not available online WN! 
So far I knew about Greece, where there is an annual tax on the value of assets. If say you have a TB20 then this is valued (according to its 250HP) at something like, IIRC €200k. If you are declaring €200k+ annual income (and obviously you will then be paying tax on that) there is no extra to pay on the plane. If however you are declaring €120k of income then you pay income tax on the difference i.e. on €80k. This is every year and is obviously a huge hit. There are several workarounds, which are not too bad and which every Greek will know about.
I have just heard that Canada is doing something similar. This time it is a one-off tax hit. An aircraft would be subject to a tax equal to the lesser of 20% of the value above $100k or 10% of the full value. I don’t know how the value is assessed.
Years ago, Italy proposed a similar “luxury tax”, which has been discussed here. AFAIK this was eventually abandoned as far as visitors to Italy were concerned (not least because Italian marinas quickly emptied of yachts, which just moved down the road to Croatia) but maybe something remains for Italian residents. Does anyone know?
Spain:
As a private individual, if you want to register an aircraft on Spanish reg, in case of an MTOM of more than 1550 kg: one time fee of 12% of its value. Aircraft below that MTOM and school planes etc are exempt.
Yearly tax is part of the patrimony tax which depends on your wealth, typically 0,3-3,5% of your taxable patrimony.
Years ago, Italy proposed a similar “luxury tax”, which has been discussed here. AFAIK this was eventually abandoned as far as visitors to Italy were concerned (not least because Italian marinas quickly emptied of yachts, which just moved down the road to Croatia) but maybe something remains for Italian residents. Does anyone know?
The italian “luxury” tax is still very much alive, with a few modifications done in 2016 – increase in the minimum starting size for the brackets based on ship length (now starting from 14m instead of 10m), discount for ship age, discount if the sail / engine power is above a certain ratio. For planes it is weight based, still following the 2011 schedule.
