In Brief (TL;DR)
Cards with a foreign IBAN offer great advantages for international transactions, but require attention to tax monitoring obligations for proper management.
We will delve into the operational advantages of these solutions for international payments and clarify tax monitoring obligations, such as filing Form RW.
Finally, we will analyze the aspects related to tax monitoring and correct reporting on Form RW.
The devil is in the details. 👇 Keep reading to discover the critical steps and practical tips to avoid mistakes.
In an increasingly connected world, where working, traveling, and managing savings cross national borders, financial tools are evolving to meet new needs. Prepaid cards with a foreign IBAN represent one of the most significant innovations in the fintech sector, a bridge between the Mediterranean tradition, historically linked to savings and trade, and the modern needs of a global market. These tools, offered by digital operators like Wise or Revolut, combine the convenience of a rechargeable card with the functionalities of an international account, opening up a range of opportunities but also responsibilities to be aware of.
This article explores in detail the operation, operational benefits, and tax obligations associated with owning a card with a non-Italian IBAN. We will analyze how these tools can simplify the lives of freelancers, digital nomads, travelers, and anyone operating on a European and international scale. At the same time, we will clarify aspects related to tax monitoring and income tax returns, to use these cards consciously and in compliance with Italian regulations.
What Are Cards with a Foreign IBAN
A prepaid card with a foreign IBAN is a payment instrument that combines the flexibility of a rechargeable card with the basic functions of a current account. Unlike traditional prepaid cards, this one is associated with an IBAN code that does not belong to an Italian credit institution, but to one located in another European country (e.g., Lithuania, Germany, Belgium, Malta). This allows not only for making payments and withdrawals worldwide but also for receiving wire transfers like a normal account. The main providers of these services are electronic money institutions and digital banks operating on a continental level.
Imagine having a small local bank account in Germany or France, but managed entirely through an app on your smartphone. This is, in essence, the experience offered by a card with a foreign IBAN. Although the IBAN is foreign, transactions within the SEPA (Single Euro Payments Area) have costs and times equivalent to domestic ones. However, it is important to note that, despite having functionalities similar to an account, these cards often do not offer complex services like checkbooks or access to traditional credit products.
The Operational Advantages: Why Choose Them
Cards with a foreign IBAN have established themselves thanks to a series of practical advantages that meet the needs of a dynamic and globalized economy. Their digital architecture offers agile, cost-effective financial management, free from the rigidities of the traditional banking system. These tools are particularly useful for those who regularly operate across national borders, but also for those simply seeking greater efficiency in daily operations, combining innovation and practicality.
Low-Cost International Payments and Withdrawals
The most obvious advantage of cards with a foreign IBAN is the drastic reduction in costs for transactions in currencies other than the euro. Traditional banks often apply high fees and unfavorable exchange rates. Fintech operators, on the other hand, use the real or interbank exchange rate, adding only a small, transparent fee. For a freelancer receiving a payment in dollars or a tourist traveling in the United Kingdom, this translates into concrete savings. For example, receiving $1,000 in a traditional account can cost tens of euros in fees hidden in the exchange rate; with a card like Wise, the cost is explicit and often lower.
Speed and Simplicity of Management
The entire user experience is designed to be intuitive and immediate. Opening an account takes just a few minutes and is done completely online, without queues or complex bureaucratic procedures. Through the dedicated app, you can monitor expenses in real-time, set limits, freeze and unfreeze the card with a tap, and receive instant notifications for every transaction. This simplicity also extends to more complex operations, such as sending money in exotic currencies or creating virtual savings pots to manage your budgets. Financial management thus becomes a fluid activity, integrated into everyday digital life.
A Bridge Between Tradition and Innovation in the Mediterranean
Mediterranean culture is steeped in trade, travel, and family ties that cross borders. In this context, cards with a foreign IBAN represent a natural evolution of financial tools. Think of a young person studying in Spain and receiving an “allowance” from their parents in Italy, or a family that owns a vacation home in Greece and needs to pay local utilities. Tools like Revolut or N26 simplify these operations, eliminating the costs and delays of traditional international wire transfers. They become a bridge connecting the tradition of exchange and family support with the efficiency of digital innovation, making it easier to manage the economic aspects of daily life in a borderless Europe.
Tax Advantages: Let’s Clarify
Often, a misconception of tax advantages or a supposed “invisibility” to the Italian tax authorities arises around cards with a foreign IBAN. It is crucial to clarify this point: owning a card with a foreign IBAN is perfectly legal, but it does not exempt you from the tax obligations required by Italian law. The absence of the Italian stamp duty of €34.20 on current accounts is a real advantage, but it only applies if the average annual balance does not exceed €5,000. Above this threshold, specific reporting obligations are triggered.
Having an account or card with a foreign IBAN does not mean you are shielded from audits. Thanks to international agreements for the automatic exchange of information (like the Common Reporting Standard – CRS), the Italian Revenue Agency (Agenzia delle Entrate) receives data on accounts held abroad by Italian tax residents.
Therefore, the concept of a “tax advantage” must be interpreted correctly. The savings primarily come from reduced operational costs and the absence of certain taxes below specific thresholds, not from a lack of transparency. Ignoring monitoring obligations can lead to significant penalties, nullifying any economic benefits obtained. The convenience of these tools lies in their efficiency, not in supposed tax loopholes. Correct and informed use is the key to fully harnessing their potential.
Tax Obligations: Monitoring with Form RW
Tax residents in Italy who hold financial assets abroad, including prepaid cards with an IBAN, are subject to specific reporting requirements. The main tool for fulfilling these obligations is the completion of Form RW (Quadro RW) of the “Redditi Persone Fisiche” tax return model. This form is not used to calculate new income taxes, but to monitor assets and financial activities held outside national borders, in line with anti-money laundering and tax evasion regulations. Failure to complete it correctly or at all can result in severe penalties.
What is Form RW and When Must It Be Filed
Form RW is the section of the tax return dedicated to tax monitoring. Filing it becomes mandatory when at least one of the following conditions related to the foreign account or card is met: the average annual balance exceeds €5,000, or the maximum value reached during the year exceeds €15,000. If you fall into one of these cases, you must declare the existence of the financial relationship. It is important to emphasize that the monitoring obligation exists even if owning the card does not generate any taxable income in Italy. For a complete guide on how these tools impact tax returns, it is useful to consult in-depth articles on prepaid cards, ISEE, and tax monitoring.
Calculating IVAFE: The Tax on Financial Assets Held Abroad
IVAFE (Imposta sul Valore delle Attività Finanziarie all’Estero) is the equivalent of the stamp duty applied to Italian financial products. For current accounts and cards with a foreign IBAN, the tax is due only if the average annual balance exceeds €5,000. In that case, a flat tax of €34.20 is applied to each account or card. If the account is jointly held, the tax is due from each holder based on their share of ownership. For other financial assets held abroad, such as stocks or bonds, IVAFE is calculated by applying a rate of 0.2% on the value of the investment.
Penalties for Failure to Report
Omitting the filing of Form RW, when mandatory, results in administrative penalties. The base penalty ranges from 3% to 15% of the undeclared amount for accounts held in “white list” (cooperative) countries. This percentage doubles, ranging from 6% to 30%, if the assets are held in countries considered tax havens or “black list” countries. There is also a legal presumption that capital held in black-list countries is considered to have been formed with income evaded from taxation, unless the taxpayer proves otherwise. It is possible to rectify one’s position through the ‘ravvedimento operoso’ (voluntary disclosure) mechanism, which allows for reduced penalties by spontaneously paying what is due before the tax administration initiates an assessment.
Cards with a Foreign IBAN and Garnishment: What You Need to Know
One of the most widespread, and at the same time incorrect, beliefs is that cards with a foreign IBAN are immune to garnishment. Although the procedure for garnishing a foreign account is objectively more complex and costly for the creditor, it is not impossible. Thanks to judicial cooperation agreements and the automatic exchange of financial information within the European Union, a creditor with an enforceable title can initiate procedures to garnish funds deposited in a foreign account. The idea of a garnishable card with an IBAN is therefore not a remote hypothesis, but a legal reality.
The difficulty for the creditor lies mainly in identifying the credit institution where the debtor holds the funds and in navigating the legal procedures of the foreign country. However, the Financial Accounts Registry (Anagrafe dei Rapporti Finanziari), combined with data from the CRS, provides the Italian Revenue Agency and, consequently, creditors who request it with court authorization, an increasingly clear picture of assets held abroad. Therefore, relying on a card with a foreign IBAN as a shield against garnishments is an ineffective and risky strategy. These tools offer operational and cost advantages, not legal immunity.
A Practical Comparison: Wise vs. Revolut
In the market for cards with a foreign IBAN, Wise and Revolut are two of the best-known names, although they offer slightly different approaches. The choice between the two largely depends on the user’s specific needs, whether for international transfers, daily management, or access to additional financial services. Both represent the forefront of digital finance, but with distinct strengths.
Wise, originally known as TransferWise, excels at its original mission: transferring money internationally at the lowest possible cost. Its strength is absolute transparency. It offers a multi-currency account that allows you to hold money in dozens of different currencies and provides local bank details (IBAN, US account number, UK sort code, etc.) to receive payments without fees. Its debit card is ideal for those who travel or work with foreign clients, thanks to the use of the real exchange rate with low, clear fees. It is the perfect choice for those primarily seeking efficiency and savings on cross-border transactions.
Revolut positions itself more as a financial “super app.” In addition to offering international payments and transfers at competitive rates, it integrates a wide range of services: budgeting tools, stock and cryptocurrency trading, travel insurance, and airport lounge access in its premium plans. Revolut is designed for those who want to centralize their financial life on a single platform, going beyond simple payment operations. Even receiving your salary on a prepaid card like Revolut has become a common practice for many. Its flexibility makes it attractive to a young, digitally savvy audience seeking a complete and innovative banking experience.
Conclusions
Prepaid cards with a foreign IBAN are confirmed as extremely versatile and powerful financial tools, perfectly in line with the needs of a borderless world. They offer undeniable operational advantages, especially in terms of reducing costs for international transactions and simplicity of management through intuitive apps. They represent an effective synthesis of the tradition of exchange, typical of Mediterranean culture, and the technological innovation that characterizes the European digital payments market.
However, it is crucial to approach these tools with full awareness. Operational convenience should never overshadow tax obligations. Monitoring through Form RW and paying IVAFE, when due, are essential steps for correct and legal use, safe from penalties. Ultimately, cards with a foreign IBAN are not a shortcut, but an accelerator: tools that, when used responsibly, can simplify personal and professional financial management in an increasingly global context.
Frequently Asked Questions
Yes, in principle, the card must be declared. As a financial instrument held abroad, it is subject to tax monitoring obligations. Filing Form RW of the ‘Redditi’ tax model is mandatory if the total maximum value of foreign assets exceeds €15,000, even for a single day. However, many tax advisors recommend filing it regardless for transparency, even below this threshold. The reporting obligation is separate from the payment of taxes.
No, if the total average annual balance of all your accounts and savings books held with the same foreign intermediary does not exceed €5,000, you do not have to pay IVAFE. IVAFE is the tax on the value of financial assets held abroad, and it is a flat fee of €34.20. It is important to remember that even if you do not have to pay the tax, you may still be required to file Form RW for tax monitoring if you exceeded a maximum value of €15,000 during the year.
The main difference lies in the nature of the institution issuing the instrument. Cards like Wise or Revolut are often issued by Electronic Money Institutions (EMIs), not traditional banks. EMIs are authorized to provide payment services, such as wire transfers and managing ‘electronic money,’ but they cannot grant loans or collect deposits like a bank. A foreign current account, on the other hand, is opened with a full-fledged credit institution, which can offer a wider range of services and adheres to bank deposit protection schemes.
Yes, Italian law allows for salary to be credited to an account with a foreign IBAN, as long as it belongs to the SEPA area. The employer is obliged to accept any European IBAN. However, sometimes the payroll systems of more traditional companies may have technical or administrative difficulties in handling non-Italian IBANs (those not starting with IT). It is always advisable to check with the HR department beforehand to ensure the process is smooth and does not cause delays.
These cards are issued by regulated institutions in Europe, such as the National Bank of Belgium for Wise or the Bank of Lithuania for Revolut, which impose high security standards. They use advanced protection systems, such as two-factor authentication, biometrics, and the ability to create single-use virtual cards for online purchases. The main difference from a traditional bank concerns the protection of funds: instead of the deposit guarantee scheme up to €100,000, EMIs use the ‘safeguarding’ method, keeping customer funds separate from their own in secure accounts.
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