When Luca sold his Italian home

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Luca opened an Italian company. Then his biggest client asked one question.

October 12, 2026

The group was ready to seek tax certainty. The next question was whether the business would still match the agreement.

October 11, 2026

Internationl Tax lecturing for the UK Chartered Institute of Taxation

October 2, 2026

The Founder (Luca) moved abroad. Then the first Year-End arrived.

September 29, 2026

The double-tax position had been reconciled. The next question was whether the group should keep defending it every year.

September 28, 2026

The Founder moved abroad but the UK Company stayed behind

September 19, 2026

The UK PE profit had become reproducible

September 19, 2026

Moving to Italy while keeping a UK Limited Company

September 12, 2026

The group had accepted an intentional UK PE. The next question was how to stop its profit becoming a year-end guess.

September 12, 2026

The company said it was foreign.The facts said it was not.

September 2, 2026

Luca moved to London over ten years ago. He built a career, bought a flat in Shoreditch, and only returned to Italy for holidays. Back in Rome, however, he still owned a small apartment that he had inherited from his father.

In 2024, Luca decided to sell it. The market was strong, and he wanted to free up funds for a new project in the UK. The sale went smoothly — notarial deed, funds transferred, Italian capital gains calculation checked. His Italian accountant confirmed there was no Italian tax due because the property had been inherited.

Luca thought that was the end of the story.

Then came the surprise.

The UK Tax angle

As a UK tax resident, Luca was required to report the gain in the UK — even if Italy did not tax it. Under UK rules, foreign property disposals are within the scope of Capital Gains Tax (CGT), unless the property qualifies for special relief (such as the private residence exemption).

His gain was calculated using the Euro-to-GBP exchange rates at acquisition and disposal. After deducting the annual CGT allowance (£3,000 in 2024/25) and applying the residential property rates (18% or 24% depending on his income), Luca faced a significant tax bill in the UK.

Lessons learned

Luca’s case illustrates a common misunderstanding:

  1. Inheritance rules differ – Italy may exempt an inherited property disposal, but the UK does not automatically follow.
  2. Currency conversions matter – fluctuations between Euro and GBP can increase or decrease the taxable gain.
  3. Reliefs are limited – Private Residence Relief cannot apply if the property was never your main UK residence.
  4. The treaty does not eliminate UK tax – it only prevents double taxation, and in Luca’s case, Italy taxed nothing.

The solution

With careful planning, Luca could have prepared better:

  • Forecasting the UK tax before the sale.
  • Considering timing (selling in a year with lower UK income).
  • Using available allowances and structuring transfers efficiently.

At Vectigalis Tax, we guide clients through exactly these situations — ensuring that a sale in Italy does not create unexpected UK liabilities.

If you are a UK resident thinking of selling a property in Italy, don’t assume the Italian exemption is the end of the story. The UK will want to review the transaction.

Contact us at angelo@vectigalistax.co.uk to clarify your position before signing the deed.

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