New rules on tax residency in Italy for individuals, corporations, and entities

News Flash No. 35/2024

In News recent News , the Italian Revenue Agency News the effects of the changes introduced by the International Taxation Decree (Legislative Decree No. 209/2023) regarding the tax residency of individuals, companies, and entities, which will take effect in 2024. Individuals are considered residents of Italy if they have their domicile within the country for the majority of the year and maintain their personal and family relationships primarily in Italy. The concept of “domicile” has therefore changed: unlike under the previous regulations, it is no longer derived from the Civil Code but, in line with international practice, priority is given to personal and family relationships rather than economic ones. This is, in any case, without prejudice to the possible application of provisions contained in double taxation treaties. The practice document illustrates the new rules with concrete examples.

A new “residence” for individuals

Following regulatory changes, mere physical presence within the country for the majority of the tax year—183 days in a non-leap year or 184 days in a leap year, including fractions of a day—is sufficient to establish tax residency in Italy. The circular provides clarification on the calculation of fractions of a day. It also explains that, as a result of the introduction of the new criterion of physical presence, individuals who work remotely in Italy for the majority of the tax year are considered tax residents of Italy, without the need to meet any of the other connecting factors provided for by the law (civil residence, domicile, registration in the resident registry). Finally, as a result of the changes introduced, registration in the resident population registry now constitutes a relative (rather than absolute) presumption of tax residency in Italy: it applies, therefore, unless the taxpayer provides evidence to the contrary. The residency criterion under the Civil Code remains in effect, as does the principle of the alternative nature of the various criteria.

Companies and organizations: new residency criteria

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